Part D Plans’ Standard Benefit Design 2015 The chart below shows Medicare's standard benefit design for all drug plans. Plans can either follow this design, or coverage guide, or offer a variation with different cost-sharing structures. The standard plan has an annual deductible with 4 different cost-sharing phases. • • • Phase 1 – Annual Deductible: Your cost-sharing is 100% of drug costs until your deductible is met ($320 in 2015). Phase 2 – Initial Coverage: Your cost-sharing is 25% of your total drug costs until you meet the Initial Coverage limit ($2,640 in 2015 — this is what you and your plan pay combined). Your drug plan pays the other 75% of your drug costs. Phase 3 – Coverage Gap: When your total drug costs exceed $2,960, your cost-sharing is 45% of covered brand name drugs and 65% of covered generics. For brand name drugs, the other 55% is covered by a 50% discount from drug manufacturers and a 5% subsidy. For generics, the remaining 35% is covered by a subsidy. This change is due to the health reform law passed in March 2010. Previously, the coverage gap or “donut hole” was so called because you had to pay 100% of your drug costs. The discount and subsidy will gradually increase over the next several years until the donut hole is eliminated in 2020 and you pay just 25% of your drug costs until you reach the last phase, catastrophic coverage. You receive the discount or subsidy immediately when paying for your drugs at the pharmacy. You won’t have any forms to fill out. The 50% manufacturer's discount applies to all “applicable” Part D covered brandname drugs on your plan’s formulary and drugs granted an exception by the plan. The 28% subsidy applies to all generic and other non-brand name Part D covered drugs on your plan’s formulary and drugs granted an exception. Thus you pay 72% of the cost of generic drugs. • Phase 4 – Catastrophic Coverage: Your cost-sharing is the greater of 5% of the covered drug cost or $2.65 for covered generics or $6.60 for covered brands. Your plan will pick up the remainder of your covered drug costs during this phase. Catastrophic coverage begins when you reach the out-of pocket threshold ($4,700 in 2015). The out-of-pocket threshold is the sum of the deductible, the 25% coinsurance during the Initial Coverage period, and your drug costs plus the manufacturer’s discounts during the coverage gap. Standard Part D Coverage for 2015 Coverage Part D Plan Pays You Pay Annual Deductible ($320) $0 100% ($320) Initial Coverage Period ($2,640) 75% of $2,640 ($1,980) 25% of $2,640 ($660) Coverage Gap (Donut Hole) Once your drug plan and costs exceed $2,960 ($320 + $2,640), you are in the donut hole. $0 (For brand named drugs, the 50% discount for brand name drugs comes from drug manufacturers + a 5% subsidy, and the 35% subsidy for generic drugs comes from Medicare.) 45% of covered brand name drugs plus dispensing fee; 65% of covered generic drugs Catastrophic Coverage Begins once you've reached your out-of-pocket threshold, which is your total annual drug cost of $4,700 in 2015. ($320 deductible + $660 initial coverage + $3,720 donut hole).* 95% or the drug cost minus the copay Greater of 5% of the drug costs or $2.65 for a generic drug or $6.60 for a brand name drug *Only drugs on your plan's formulary count toward the $4,700 out-of-pocket costs you pay before catastrophic coverage begins. Companies may vary from the standard design as long as the beneficiary's out-ofpocket costs remain the same or lower than $4,700. For example, a company may offer a plan with no deductible, or more coverage and additional drugs for a higher monthly premium. Source: California Health Advocates