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.
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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.
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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