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When did medicare part d start

when did medicare part d start

Part D / Prescription Drug Benefits

  • ENROLLMENT (cont.)
    • The Late Enrollment Penalty (LEP)
    • LEP Reconsideration
    • Special Enrollment Periods (SEPs)
    • How to Enroll and other Enrollment Miscellany
    • EOCs and ANOCs (notices you need to know about)
    • Income Related Premium Increase
    • QMB
    • SLMB
    • QI / ALMB
    • QDWI
    • Deemed and Undeemed Eligibles
    • Full and Partial Subsidies
    • Income and Asset Levels Limits for Undeemed Individuals
    • Cost Sharing for Deemed and Undeemed Individuals
    • Auto-enrollment
    • Facilitated Enrollment
    • POS Enrollment
    • LINET
    • Coverage Determinations and Exceptions
    • Formulary Exceptions
    • Tiering Exceptions
    • What to Do When a Drug is Denied at the Pharmacy
    • The Medical Statement
    • Time Frames for Exception Requests and Authorized Representatives
    • How to File an Exception Request
    • Other Levels of Appeal
    • Grievances

Introduction to Medicare Part D

This section constitutes an introduction to Part D. For more detailed information on any of the topics in this section, please click on the links within the topics. There you will also find relevant legislative, statutory and CFR citation.

Prior to 2006, Medicare paid for some drugs administered during a hospital admission (under Medicare Part A), or a doctor’s office (under Medicare Part B). Medicare did not cover outpatient prescription drugs until January 1, 2006, when it implemented the Medicare Part D prescription drug benefit, authorized by Congress under the "Medicare Prescription Drug, Improvement, and Modernization Act of 2003." This Act is generally known as the "MMA."

The Part D drug benefit (also known as "Medicare Rx") helps Medicare beneficiaries to pay for outpatient prescription drugs purchased at retail, mail order, home infusion and long-term care pharmacies.

Unlike Parts A and B, which are administered by Medicare itself, Part D is "privatized." That is, Medicare contracts with private companies that are authorized to sell Part D insurance coverage. These companies are both regulated and subsidized by Medicare, pursuant to one-year, annually renewable contracts. In order to have Part D coverage, beneficiaries must purchase a policy (i.e. enroll in a plan) offered by one of these companies.

The costs associated with Medicare Part D include a monthly premium, an annual deductible (sometimes waived by the plans), co-payments and co-insurance for specific drugs, a gap in coverage called the "Donut Hole," and catastrophic coverage once a

threshold amount has been met.

Qualified low income individuals can receive help with their Part D costs for premiums, deductibles and co-pays through the Part D Low Income Subsidy (known as "LIS" or "Extra Help"), which is administered by the Social Security Administration.

Within parameters established in law, plans are free to establish their own formularies. There is an appeal process for members who need drugs that are not on their plan’s formularies.

Plans revise their formularies every year, adding new drugs, eliminating others, and generally charging higher co-pays and co-insurance for drugs. Beneficiaries need to re-evaluate their plan options every year to be sure their chosen plan will continue to meet their financial and medical needs.

Many Part D plan sponsors offer multiple plans that may be viewed as analogous to commercial "good, better and best" options. Buyers need to evaluate these choices carefully as it is sometimes the case that the "best" (and most expensive) plans offer little or no extra value for their higher prices.

Beginning with the 2011 plan year, Medicare required plans to eliminate their low enrollment plans and to consolidate duplicative plans. This lowered the overall number of plans available to beneficiaries, but there are still many plans to choose from and their differences are now more transparent to consumers.


Medicare doesn’t administer Part D directly. It contracts with private companies that are approved to sell Part D insurance coverage. There are two main sources of Part D coverage:

PDPs (Prescription Drug Plans) – these are stand-alone companies that sell prescription drug coverage only. They do not offer hospital or medical coverage.

PDP plan sponsors have a four-digit identifier that begins with the letter "S ." The different plan options offered by the sponsor each have a unique three-digit suffix identifier. For example, in 2015 United HealthCare sponsors the AARP Preferred Plan (S5820-002).

MA-PDs (Medicare Advantage Prescription Drug Plans) – these plans offer hospital, medical and prescription drug coverage under a single policy. Medicare Advantage plans are sometimes called "Part C" of Medicare. There are different types of MA-PDs, e.g. including HMOs, PPOs, PFFS plans, and SNPs). Plans need to identify their plan type in their plan names. People who wish to enroll in a Medicare Advantage plan must take their prescription drug coverage from the same plan, unless they are enrolled in a PFFS that does not offer prescription drug coverage .

MA-PD plan sponsors have a four-digit identifier that begins with the letter "H ." The various plan options offered by the plan sponsor each have a unique three-digit suffix. For example, in 2015 Anthem sponsors the MediBlue HMO Standard Plan (H5854-008).

Category: Insurance

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