Perhaps one of the most confusing aspects of health insurance is determining just which policy is right for you. Whether you're covered by your employer or you have individual coverage through a private insurance company, understanding how it works can be a daunting task. The government's healthcare system also shares this fact.

Medicare consists of four distinct parts. Part A covers hospital care, Part B pays doctors' expenses, Part C is based on HMOs or PPOs, and Part D is prescription drug coverage. If you are on Medicare, then you're eligible for Medicare Part D. The only requirement is that you select a drug plan that covers your needs and is yet cost-effective. As a Part D recipient, you may obtain either generic or brand-name prescription drugs at an out-of-pocket cost to you of no more than 5 percent per prescription after you've met the yearly deductible. With the cost of prescription drugs already astronomically high and rising daily, having Medicare Part D can reduce the expense and protect the consumer in the event of an unforeseen illness that requires the purchase of a multitude of medicines. Even if you do not require many drugs at the present time, signing on to a Medicare Part D plan can alleviate any worries you may have in the future should you suddenly need them. It's just another form of protection.

For Part D coverage, you must pay a monthly premium – the price of which is dependent upon the plan you chose – along with a deductible. You may, however, qualify for extra help if your income is limited. (For qualification- and other information, contact the Social Security Administration at 1-800-772-1213 or visit their website at www.ssa.gov.) You may also be responsible for paying a co-payment for purchased drugs (again, depending upon the plan you choose). This is why it's vitally important to check out the various plans available, since most offer additional drug coverage and/or higher premiums. Be sure to research the only the drug plans that are specifically approved by Medicare. There are approximately 45 plans available, and it may take some time comparing plans and discussing your options with a healthcare professional in order to choose the best one for your needs. Even if you already have healthcare insurance that includes prescription drug coverage, you may still want to check out the Medicare Part D plans to ascertain if you can save additional money.

Listed here is some basic information regarding the cost factors involved in obtaining Medicare Part D. According to American Association of Retired Persons (AARP), under the standard benefit (i.e., the minimum set by law) over the course of a calendar year, you'll have to pay:

  • A monthly premium (as stated previously, the actual amount varies from plan to plan);
  • An annual deductible (no more $295 in 2009) before coverage kicks in;
  • About 25 percent of the cost of your drugs in the initial coverage period. This continues until your total drug costs – that is, the amount that both you and your plan have collectively paid – reach $2,700 in 2009 from the beginning of the year;
  • 100 percent of costs in the "coverage gap" (also known as the "doughnut hole") which begins when your total drug costs have reached the dollar limit of the initial coverage period and ends when you have incurred a total amount of out-of-pocket expenses of $4,350 in 2009 from the beginning of the year. This amount includes your deductible, any co-pays during the initial coverage period and anything that you've spent on drugs in the coverage gap. It does not include premiums
  • About 5 percent of your drug costs in the "catastrophic period" of coverage. This period begins after you've reached the out-of-pocket spending limit (which gets you out of the coverage gap) and continues until the end of the calendar year.

If you have elderly parents, you may also wish to check on the Medicare plans for them as well. It can sometimes be a bit confusing to decipher the differences between each plan and choose one that will ultimately offer the greatest protection both now and in the future. Even if you've already signed on to Medicare Part D, it's also recommended that you periodically compare your coverage to the other available plans so that you can ascertain if there are any better alternatives to the one you currently hold. Medicare officials and healthcare analysts suggest that beneficiaries use Medicare's Plan Finder, the most comprehensive tool for choosing a plan, by visiting the Medicare website. You simply enter the medicines that you take and pharmacies you use, and the Plan Finder tool will estimate your monthly out-of-pocket costs in different plans.

You can also call 800-MEDICARE to get more detailed information about the plans that are offered in your area. If you decide to make a change, be sure to call the plan to verify critical information before you enroll, such as coverage, costs and restrictions. The Plan Finder and 800-MEDICARE can only provide estimates.

Unfortunately, here's a bit of bad news. For 2009, experts predict an increase in premiums, rising deductibles, higher co-payments, and a larger percentage of plans discontinuing coverage of the "gap" (the "doughnut hole"). According to an analysis of Medicare data by Avalere Health, the largest drug plans will raise their premiums by an average of 31 percent in 2009, and some others by more than 60 percent. According to the Wall Street Journal, such price increases will be the largest since the program was initiated in 2006.

These expected increases, along with the current economic recession that we're all wading through, have caused a great deal of worry and stress among individuals that are ill and dependent upon medication – particularly the elderly. Nevertheless, without such prescription drug coverage, many would be in far worse condition. If you're eligible for Medicare but have yet to sign on with Medicare Part D, now is the time to consider it carefully. Somewhere down the line, your health and well-being could very well depend upon it.

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