If you have filled prescriptions using your Medicare Part D prescription drug plan, you will receive a Medicare form called the Explanation of Benefits. This is important form both for your general understanding of your Medicare benefits and your personal records. While it is not a bill and requires no action on your part, you should review it to ensure that your pharmacy and Medicare have not made any mistakes relating to your drug coverage that may potentially cost you money. The Explanation of Benefits form is divided into six sub-sections, the second of which is detailed here
Section 2 of your Explanation of Benefits form shows your current drug coverage payment stage. There are four possible stages: deductible, initial coverage, coverage gap, and catastrophic coverage. Medicare shows all four stages on the form and highlights your current stage. You begin in the yearly deductible stage, during which you must pay the full cost of any drugs you need. You remain in the deductible stage until you have paid a pre-determined amount as specified on your plan. For example, if your Medicare Part D deductible is $2000, you will have to pay for the first $2000 worth of drugs that you use this year out of your own pocket. Once you have paid $2000, you move to the next stage of the plan.
The second stage is initial coverage, during which your Medicare Part D plan pays its share of any remaining drug costs over and above your deductible. You remain in this stage until your year to date drug costs reach the initial coverage limit, after which you move to the third stage.
The third stage of your Part D plan is the coverage gap. During this stage, you receive discounts on name brand drugs and you pay 58% of generic drug costs. You remain in the coverage gap stage until the amount of your year-to-date out of pocket expenses reaches the limit specified by your Part D plan.
The fourth and final stage is catastrophic coverage. Here, your Medicare Part D plan pays for most of your covered drugs. You remain in this stage for the rest of the calendar year, which ends on December 31.
If no deductible stage
Section 2 of your Explanation of Benefits chart may look a bit different if your Part D does not have a deductible stage. In this case, the first column (usually reserved for deductible information) will say the following: “Because there is no deductible for the plan, this payment stage does not apply to you.”
Depending on your Part D plan, there are dozens of possible variations in terms of how your individualized EOB Section 2 will appear. It will follow the general format listed above, but it may look slightly different based on whether or not you have brand name deductibles, Low Income Subsidy services, etc. For a complete listing of possible examples, reference the following PDF.