Medicare Part D

Acronym: PDP

The implementation of the Medicare Modernization Act (MMA) amended title XVIII of the Social Security Act by establishing a new Part D—the voluntary Prescription Drug Benefit Program. This program became effective January 1, 2006 and established an optional prescription drug benefit for individuals who are entitled to or enrolled in Medicare benefits under Part A and/or Part B. Beneficiaries who qualify for both Medicare and Medicaid (full benefit dual-eligibles) automatically receive the Medicare drug benefit. Medicare Part D is the part of Medicare that provides outpatient prescription drug coverage. It has been provided through private insurance companies that have contracts with Medicare. Part D coverage is optional (although for most beneficiaries that want prescription drug coverage, it should be considered required), and purchasing the coverage should be based on the enrollee’s individual needs. However, if the beneficiary does not enroll when they are first required to (typically after achieving eligibility for Medicare Parts A or B at age 65 or after becoming totally disabled before age 65), the beneficiary will pay a late enrollment penalty if you need coverage later on. Beneficiaries obtain the Part D drug benefit through two types of plans administered by private insurance companies: the beneficiaries can join a standalone Prescription Drug Plan (PDP) for drug coverage only or they can join a private Part C health plan (a Medicare Advantage Organization) that jointly covers all hospital and medical services covered by Medicare Part A and Medicare Part B at a minimum, and typically covers additional healthcare costs not covered by Medicare Parts A and B including prescription drugs (MA-PD)