There have been a few milestones in the evolution of California Medigap insurance and none as important as the eventual addition of Part D. The addition of Part D reflects not just an expansion of Medicare for Californians but a reflection of how much health care has changed for seniors in terms of what is driving the costs. When original Medicare came out, the real concern for most people was hospital care and to a lesser extent, doctor costs. That defined the original dichotomy inherent in traditional Medicare with it\’s division of labor between Part A (hospital) and Part B (doctor). Things have changed. Part D was due to make it\’s entrance on the California Medicare market.

So what is Part D and how does it work with California Medicare supplement plans? I remember when it all changed. Believe it or not, health insurance premium were relatively stable over a period of years during the 90\’s as a result of PPO and HMO managed care introduction. I received the new rate increase information from one of our biggest carriers and it was terrible. The increase was 30% plus. 6 months later, there was another increase of about the same amount. It was a nightmare and then all of a sudden, we were getting declinations on new application (not California Medigap) due to allergy medications. It was the beginning of mass-marketed medications with the advent of allergy giants Allegra, Claratin, and . Unfortunately, it was the beginning of a new and very expensive trend. Prior to the addition of Part D, there was limited prescription coverage through the H, I, or J Medicare supplement plan. The benefits were not great and in no way addressed the spiraling increase in medication cost. Part D was created to address the increasing medication costs.

Let\’s look at Part D in more detail for California Medigap. As we\’ve said, Part D is the part of Medicare that provides medication coverage through Medicare. We say \”through\” Medicare since the actual coverage is administered and offered by private carriers in the California market. You actually pay premium directly to a private carrier and not to Medicare. Medicare did establish the basic framework of what should be covered with some flexibility to allow for different price points on the market. This is similar to how California Medicare supplement plans work. There are some general guidelines on how the Part D plans work so let\’s take a look at benefits in general.

Some of the plans will have deductibles while others will not. One carrier may offer 3 main different plans with or without deductibles. The deductible must be paid first before getting help paying for medication costs. The next wave of benefits is where the California senior gets help. Most plans have copays based on certain types of medication which usually delineate between generic and brand RX. Keep in mind that brand RX is generally based on a formulary or an accepted list of medications which are both effective and cost effective. There may be a separate benefit (generally higher copay) for brand non-formulary. This richer part of the Part D plan will continue until you hit the dreaded donut hole. After you reach the donut hole, you will generally again be responsible for your medication cost until the catastrophic coverage under Part D begins. This donut hole is scheduled to reduce annually till it is phased out.

It\’s best to look at actual plans when comparing and contrasting deductibles, benefits, and monthly premiums based on your situation. Of course, we\’re happy to walk through the California Medicare Part D options available to you.