Medicare Part D FAQ's

You've likely heard about Part D, Medicare's new coverage for prescription drugs. Of course, that doesn't mean you understand it. Here, we answer your frequently asked questions.

Who is eligible for Part D?
Anyone with Medicare - that is, anyone over age 65, or under 65 with disabilities.

What does Medicare Part D cost?
There are hundreds of different plans, with an average premium of about $22 a month. If you're under a certain income level, you may qualify for free coverage.

How do I get Part D?
You can sign up within three months prior to or three months after turning 65. If you don't sign up then, you can't sign up again until the following November and you may pay a penalty. Once you've chosen a plan, you have to stick with it for the rest of the year—but everyone is allowed to switch plans between November 15 and December 31.

What will I be paying for prescription drugs?
First, you must meet your plan's deductible (this year, the deductible can be no higher than $265). After that, you're responsible for 25 percent of the cost of covered prescription drugs until together you and your plan have spent $2,400. At that point you've reached the Part D coverage gap or "donut hole," in which you must pay the full cost of drugs. But once you have spent $3,850—including what you've paid for your deductible, copays and coinsurance, but not premiums—you qualify for catastrophic coverage. Under this, you pay $2.15 for a generic or preferred drug and $5.35 for other drugs, or 5 percent of the drug's price (whichever is greater) for the rest of the year.

Should I sign up for Medicare Part D, even if I don't take a lot of medications?
"We urge everyone to sign up," says Jeff Nelligan, spokesperson for the Centers for Medicare and Medicaid Services. "Situations change—and they can change pretty rapidly."

How should I choose a prescription drug plan?
Because there are so many plans, there are many different cost structures. Some plans may have a higher monthly premium, but they may also have a lower deductible or cover more medications. Their copayments may be lower as well.

Keep in mind the following factors:

Deductibles. These vary widely—they can be anything from zero to $265.

Participating pharmacies. Make sure there's one on the plan that's convenient to you. Also, if you spend winters in one state and summers in another, make sure both places have participating pharmacies. Some plans may offer a mail-order program that delivers drugs directly to your home.

Medications. Make sure that the drugs you currently take are in the formulary. If not, you won't get coverage for them, nor will they count toward your deductible. Some plans require doctors to prove that you really need the drug. You can find information about each plan and what it offers by visiting medicare.gov or by calling 1-800-MEDICARE. Now that you better understand Medicare Part D, you can make wiser choices about prescription drug coverage.