People With Medicare

A Medicare Drug Benefit Glossary

Actuarial equivalence - This means you have drug coverage considered to be at least as good as another plan. This drug coverage is computed in dollar amounts. In this case, your current drug plan must be at least actuarially equivalent to the standard Part D plan. If it is, then you will not have to pay penalties if you enroll at a later date.

Appeals - You may appeal any time that you are denied coverage. The plan usually hears the appeal first. If you are still unhappy, an outside body can look at the denial. The outside body is an independent review entity (IRE) contracted by Medicare.

As good as - This term compares the cost of a drug insurance plan to the Medicare Prescription Drug Coverage insurance. If your other drug insurance is as good as the Medicare Prescription Drug Coverage insurance, and you choose to stay with that insurance, there will be no penalty if you decide in the future to enroll in the Medicare Prescription Drug Plan.

Assets - Medicare will look at your assets to decide if you are eligible for Low Income Subsidy. Assets include bank accounts, stock accounts, real estate, homes and cars. A primary residence and one car are not considered assets. If you are married and live in the same household as your spouse, your assets will be added together to determine eligibility for extra help. Your income would be added together, too.

Auto-enrollment - When you are enrolled in a Medicare Prescription Drug Plan (PDP) and do not have to fill out paperwork.

Catastrophic coverage - Coverage for prescription drug expenses that are considered very high and unusual. At this level, you will get the most help. In a standard plan, you will only have to pay up to 5% of the drug cost (or less, depending on income) above $6,733.75 in 2013 ($6,455. in 2014).

Coinsurance - The amount you pay each time you buy a covered drug, when the drug cost is more than your deductible. The coinsurance may be different for one drug than for another. There can be one value for a generic drug, one for a preferred drug, and one for a non-preferred drug.. The coinsurance may also vary throughout the year, from 0 to 100%.

Copay - The amount you pay each time you buy a covered drug, when the drug cost is more than the deductible. There can be one value for a generic drug, one for a preferred drug, and one for a non-preferred drug. For example, in 2013 a subsidy eligible individual who has a very low income will pay no more than $1.15 for each generic drug filled at the pharmacy, and $3.50 for each brand name, no matter how much the drug costs (in 2014, $1.20 and $3.60, respectively).

Coverage determination - A decision made by a Medicare Prescription Drug Plan that your prescription counts towards your total drug cost, no matter how much the plan actually pays for the drug.

Coverage Gap - When you have to pay a discounted percentage of your drug cost. It is the period after your drug spending exceeds the initial coverage limit and before your out-of-pocket expenses reach the TrOOP limit. This is referred to as the donut hole or coverage gap.

Covered Drug, or Covered Part D drug - These are prescription drugs that are on the plan's drug list, or formulary, that you can get at a network pharmacy or under a special circumstance.

Creditable coverage - This means your plan has comparable coverage (actuarial equivalent) to Part D plans. Some plans offering creditable coverage may be through an employer, TRICARE, or a union.

Deductible - The amount you must spend on covered drugs before the Part D Plan pays insurance benefits. For standard coverage in 2013, you pay a $325 deductible (in 2014, $310) before the plan begins to pay for your drugs. Payments for non-covered drugs do not count.

Donut hole - When you have to pay a discounted percentage of your drug costs. It is the period after your drug spending exceeds the initial coverage limit and before your out-of-pocket expenses reach the TrOOP limit. This is referred to as the coverage gap or donut hole

Dual-eligible - Also called duals, these are people who are eligible for Medicare and for full benefits under Medicaid. As of 2011, there are approximately 8.9 million Americans that are dual eligible. In the past, Medicaid paid for their drugs. Dual eligibles now get most of their drugs from a Part D Plan. Their premium and deductible will be fully subsidized and their copayments will be zero or very low (as low as $1.15 for generics/$3.50 for brand in 2013; $1.20 and $3.60 in 2014).

Enhanced alternative coverage - see also supplemental benefit Coverage that provides both the standard prescription drug coverage plus supplemental benefits.

Enrollment period - also initial enrollment period. This is a 7-month period which begins three months before the month you first become eligible for Medicare and ends three months later.

Exceptions process - also exception, appeals, rights of Part D enrollees. You can use this process to ask Medicare to cover drugs not on your plan's drug list, or formulary. You can do this if a doctor decides the drugs that are available are not as effective, harmful, or both. In the first step, you may ask for an exception. If the plan does not grant an exception, you may appeal.

Fail first - A policy that requires you to try one drug, usually a less costly drug, and for it to fail, before you can get approval to use a more costly drug.

Facilitated enrollment - The process to enroll you automatically if you qualify for a low-income subsidy, but are not on Medicaid. This process is different from auto-enrollment, which is for Medicaid recipients. In facilitated enrollment, you will have the entire initial enrollment period to voluntarily apply for the subsidy and then choose and enroll in a plan. During this period, you will receive a variety of materials from the Social Security Administration and other agencies to encourage you to apply and enroll.

Formulary - A list of covered drugs you can get through your Part D plan. A Part D plan's formulary must include at least 2 drugs in each therapeutic category and class. Money spent on medicines "on formulary" count towards TrOOP; money spent on "non-formulary" drugs do not count towards TrOOP. Your doctor or health professional may be able to help you get an exception if a drug you need is not "on formulary." If the exception is approved, your share of that drug's cost would then count towards TrOOP.

FPL - Federal Poverty Level, (officially: the HHS Federal Poverty Guidelines.) The level set by the federal government that states how much money an individual or families of varying sizes need to live a basic existence. Many federal and state programs use the FPL to decide if people are eligible for programs. The Census Bureau publishes the federal poverty statistics, including the FPL, each year. For 2013, the annual Federal Poverty Level (100% FPL) is: $11,490/single; $15,510/couple for the 48 contiguous states (HI and AK have different and higher FPL figures).

Full Subsidy - see also low-income subsidy, partial subsidy. If you are eligible for the full subsidy, Medicare pays for your entire premium and deductible , and nearly all of your cost-sharing. In 2013, you pay a copayment of $1.15 per generic and $3.50 per brand name drug until your total drug spending has reached $6,733.75. (In 2014, you pay $1.20 generic/$3.60 brand-name until total drug spending reaches $6,455.) To qualify for a full subsidy low-income, you need to be below 135% FPL.

Initial coverage limit - The point where you and Medicare stop sharing covered drug costs. The initial coverage limit for 2013 is $2,970 in total drug spending ($2,850 in 2014). This includes the $320 deductible where you paid 100% of the costs, and an additional $2,645 worth of drugs, where you only paid 25% of the costs. After that, you must pay a discounted percentage of the cost of Part D covered drugs, up to the TrOOP limit.

Late enrollment penalty - A higher premium you may have to pay as a penalty if you join a Medicare drug plan late. The premium is cumulative; that is, for each month you were not enrolled, you can expect to pay an additional 1%. If you enrolled one year after you were eligible, your monthly premiums would be 12% higher. That penalty will be in effect for as long as you have Medicare.

Low-income Subsidy - LIS - see also full subsidy, partial subsidy - Financial assistance that lowers the premiums and copayments you must pay if your income is below 150% of the FPL and you have limited assets. The greatest assistance goes to those with the lowest income and resources(full subsidy).

MA-PD (Medicare Advantage Prescription Drug Plan) - A private managed care plan established under Medicare Part C (formerly known as Medicare + Choice) that also provides standard Part D drug coverage or its actuarial equivalent.

Medicare Health Plans - Another name for Medicare Advantage Plans (HMOs, PPOs and Private Fee-For-Service) and Medicare Cost plans.

Medigap - Plans that provide wrap-around insurance coverage for Medicare Parts A and B. These plans often pay the deductibles and copayments. They also pay for services those programs do not cover.

MMA - Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub No 108-173). This Act created Medicare Part D.

Negotiated prices - Prices for covered drugs that you can get at the network pharmacy. These reflect any costs savings that the plan has chosen to pass through to you.

Network Pharmacy - A licensed pharmacy that is under contract to a plan to provide covered drugs at negotiated prices to anyone enrolled in the plan.

Non-interference - A two-part provision in the MMA. The first bars the Secretary of Health and Human Services from interfering with the negotiations between drug manufacturers and drug plans. The second bars the Secretary from requiring a particular formulary or price structure for a covered Part D drug. The Congressional Budget Office (CBO) has stated that striking this provision would have a negligible effect on federal spending.

Non-Preferred drug - A drug that your plan discourages you from getting, usually by requiring a higher copay.

Original Medicare - also called "fee-for-service Medicare" - One way to get your Medicare Parts A and B. If you have Original Medicare and want drug coverage from Medicare, you will need to enroll in a stand-alone Medicare Prescription Drug Plan. In Original Medicare, the doctor or hospital is not in a network as usually the case in a Medicare Advantage plan.

Out-of-Network Pharmacy - A licensed pharmacy that is not under contract with a Part D sponsor. This pharmacy will not give you negotiated prices.

Out-of-Pocket Payments (OOPs) - This is an official name to help you see how much of your drug cost you will have to pay, including the deductible, coinsurance, copay, and the cost of drugs in the donut hole. This official designation does not include other OOPs, such as the amount you pay for non-covered drugs.

PAP -Patient Assistance Program - Programs that provide free or low price drugs to qualifying patients who have limited income and resources. Charitable foundations usually offer these.Learn more about PAPs here.

Part D - Part D is Medicare's prescription drug benefit. In general, Medicare Part A covers hospital services, Part B covers doctor services, and Part C covers comprehensive managed care programs. Part D is voluntary, and the Social Security Act provides it.

Part D Eligible Individual - Someone who is entitled to Medicare Part A and/or enrolled in Medicare Part B.

Plan or Sponsor - Any private insurance company that is certified by Medicare to provide Medicare prescription drug coverage. It can be a stand-alone Prescription Drug Plan (PDP) that you choose along with traditional Medicare. It could also be a Medicare Advantage Health Plan that offers Part D coverage (MA-PD).

Prescription Drug Plan - also PDP, A plan that offers the outpatient prescription drug benefit to you if you choose to stay in the Original Medicare program.

Premium - also monthly beneficiary - premium - The amount you may pay monthly for Medicare Prescription Drug coverage. In 2013, the average Part D premium is $30.

Prior Authorization - Requires a doctor to get prior approval from the plan before the plan will pay for a certain drug.

QMB - Qualified Medicare Beneficiary - A program that provides for premium and/or cost-sharing assistance to Medicare beneficiaries. Medicaid pays for it.

Re-determination - see Appeals.

Rights of Enrollees - Generally, you have:

• The right to have a grievance heard,
• The right to a timely coverage determination (which may be expedited under certain circumstances),
• The right to an appeal, which includes coverage re-determination (expedited under certain conditions), and
• The right to review by an independent review entity contracted by Medicare.

Same as - A term used to describe if another drug insurance program costs you the same or less for your drugs than a Medicare Prescription Drug plan does.

SLMB - Specified Low-Income Beneficiary - A program that provides for premium and/or cost-sharing assistance to Medicare beneficiaries. Medicaid pays for it.

Sponsor - A non-governmental entity approved by Medicare to offer a Prescription Drug Plan.

State Pharmaceutical Assistance Program - also SPAP, A state-operated program (other than Medicaid) that provides Medicare beneficiaries help with costs to buy prescription drugs in selected states. SPAPs can provide assistance to enrollees with their premiums, deductibles and coinsurance , under a Part D Plan. As of February 2013, 27 states and territories offer an SPAP.

Standard coverage - also standard prescription drug coverage. The basic type of Prescription Drug Plan to be used for comparison purposes. In 2013, standard coverage will have a $325 deductible ($310 in 2014), 25% coinsurance on the next $2,645 worth of drugs ($2,540 in 2014), and catastrophic coverage after the TrOOP limit. Each Medicare Prescription Drug plan must offer standard coverage so you can comparison shop between different sponsors' plans and their supplemental benefits options with greater ease.

Step therapy - Requires you to try one drug before having access to another; that is, you may use a non-preferred drug only after you have used a preferred drug and it has not worked.

Subsidy Eligible Individual - A Medicare beneficiary enrolled in a Medicare Prescription Drug plan who qualifies for one of several levels of Low-income Subsidy assistance.

Supplemental benefits - Benefits that are additional to the basic, standard prescription drug coverage. They include no or low deductible, a reduced cost-sharing percentage or copay, coverage when you are in some or all of the donut hole, or a different drug list or formulary.

Therapeutic Substitution - A plan's request that your doctor prescribe an alternate, preferred drug in the same category or class.

Tiered cost-sharing - also tiered formulary, tiered co-pay - A drug list or formulary that has different levels of cost sharing or copay for different drugs that could be used to treat the same disease or condition. These tiers typically include generic drugs, preferred drugs, brand-name drugs, and non-preferred drugs.

True Out-of-Pocket Spending - also TrOOP limit - The amount you must pay on covered drugs to reach catastrophic coverage. Your payment of the deductible, coinsurance and/or copayments, and drug costs in the donut hole count towards TrOOP. For 2013, the TrOOP limit is $4,750 ($4,550 in 2014). The Part D premium does not count towards TrOOP.