How will the Medicare drug benefit work?
The Medicare drug benefit has a unique design. Enrollees must pay monthly premiums, which will vary depending on the plan they choose. Most plans will also have an annual deductible and cost-sharing once the deductible has been met. This cost-sharing will likely take the form of copays associated with filling a prescription. The copay levels may vary by the type of drug; for example, there may be one copay amount for generics, and other copay amounts for brand drugs. At some point during the year, enrollees may face what is called “the donut hole,” where they must pay the entire cost of their medications. After they have reached a catastrophic spending limit, the plan pays for most of their drugs, and they have a small copay. The MMA envisions a standard benefit, with a $35 premium, a $250 annual deductible, 25% cost sharing up to $2,250 drug spending, a “donut hole” through $5,100 in drug spending, and 5% copays after the $5,100 catastrophic limit is reached. A plan may offer this ben
