What payments does a person make in a Medicare drug plan?

If a person joins a Medicare drug plan he or she usually pays a separate monthly fee, or premium, in addition to the Part B premium. If someone belongs to a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium may include an amount for prescription drug coverage. The amount of the monthly premium isn't affected by the person's health status or how many prescriptions he or she uses.

Other payments a person may make include yearly deductibles, co-payments, and co-insurance. There are also costs associated with the coverage gap and catastrophic coverage.

The yearly deductible is the amount a person pays for prescriptions before the plan begins to pay. Some drug plans charge no deductible.

Co-payments or coinsurance are the amounts a person pays for prescriptions after the deductible. The person pays his or her share, and the plan pays its share for covered drugs. In some plans, a person pays the same co-payment or coinsurance for any prescription. In other plans, there might be different levels or "tiers," with different costs. For example, a person might have to pay less for generic drugs than brand names. Or, some brand names might have a lower co-payment than other brand names. Also, in some plans, a person's share of the cost can increase when the prescription drug costs reach a certain limit.