Effective January 1, 2006 Medicare instituted a prescription medication program. The program provides partial coverage for medications which vary based upon the specific plan selected by the beneficiary.

In developing this program Medicare has committed to paying for a portion of prescription medications in conjunction with deductibles and co-payments which remain the responsibility of the beneficiary. 

Part “D” coverage requires enrollment in a selected program which includes a monthly premium and has four “tiers” depending upon the annual usage.  The coverage breaks down as follows:

The above illustrates the current status of the program.  Essentially, the beneficiary is responsible for $4,350 of the first $6,153 spent annually with Medicare covering $1,803.  Beyond these limits, Medicare assumes responsibility for 95% of the costs with the beneficiary being responsible for the remaining 5%.  In addition to the above, the beneficiary is responsible for the monthly premium associated with their medication plan. These vary based upon the different formularies, however, they typically range from $15-75 per month.  (NOTE: Medicare has specifically stated that the monthly premium cannot be paid through the Medicare Set-Aside). 

In April 2009 Medicare issued a Memorandum that altered the nature in which consideration must be given to prescription medications.  Essentially, Medicare has set forth a requirement to include all medications for the lifetime of the beneficiary.  There is no provision for the reduction in cost based upon prescription medications that will ultimately have a generic form, only those where generics are available at the time the Set-Aside is submitted for review and approval.