|Terms and Definitions
|Glossary of terms
often used in information about Part D.
Annual Deductible: The amount you pay out-of-pocket each year
before your insurance coverage pays. In Part D, you may have to pay the first
$325 each year.
Annual Premium: The amount you pay each year for insurance
coverage. The monthly premium multiplied by 12. The Part D annual premium
average is $31.17 per month for 2013. The annual premium average is $374.04.
The amount is per person.
Coinsurance: Coinsurance is the term for splitting costs or
cost sharing. It is the amount that you pay. For example, in Part D after the
$325 deductible you pay 25% coinsurance and the plan pays 75% up to $2,970
worth of drugs.
Co-payment: The term for cost sharing where you pay a pre-set
dollar amount for each prescription (for example, $2.65 for generics).
Coverage Gap: This is the term for the period during which you
pay 100% of your drug costs. The standard Medicare plan has a coverage gap from
when your total drug costs are between $2,971 and $6,733.75. This has been
nicknamed the "doughnut hole".
Formulary: List of prescription drugs that are covered by Part
D (may vary by company and plan).
Generics: Drugs that cost less than brand name drugs but have
the same medical effect.
Guaranteed Coverage: Medicare beneficiaries are guaranteed the
availability of a Medicare Prescription drug plan (Part D) option and have
guaranteed issue rights during open enrollment. This means you cannot be denied
access to coverage.
Network: Plans will usually require you to get your
prescription drugs from certain pharmacies that participate in the plan. These
are called "Network" pharmacies. This means you may not be able to go to the
pharmacy of your choice. Check to see if the pharmacy of your choice is
included before you choose a plan.
Out-of-Pocket Costs: When you get Medicare prescription drug
coverage, you pay part of the costs and Medicare pays part of the costs. Your
out-of-pocket costs are the portion of the costs that you pay. You also pay a
premium each month to join the drug plan. Your costs will vary depending on
which plan you choose.
State Health Insurance Assistance Program (SHIP): A state
organization that receives money from the Federal Government to give free
health insurance counseling and assistance to people with Medicare.
Standard Medicare drug coverage: The minimum drug coverage
required by law. Plans can offer better benefits and lower costs.