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A new enrollment period for Medicare supplement policies began October 15, 2013 and will close December 7, 2013. Here's what Medicare recipients need to know about closing the gap between medication costs and medication coverage.

Medications used to be the major medical cost for Americans over the age of 65. The introduction of Medicare Part D in 2006 and changes ushered in by the Affordable Care Act in 2010 have greatly reduced the amount Medicare recipients have to pay for drugs, but the "Medicare donut hole" won't be completely eliminated until 2020.

Between now and 2020, it's possible to get help with drug expenses by purchasing supplemental insurance. But open enrollment in Medicare supplemental insurance plans ends December 7.

Drugs Aren't Free, But They Are a Lot Less Expensive Than They Used to Be

Older Americans on Medicare have been paying less for their medications every year since 2010, the year the Affordable Care Act was first passed. The gap between standard coverage and "catastrophic" drug coverage has been shrinking every year. The fact is, however, that most older Americans are on fixed incomes and have a hard time paying for their medications, and for most, the easiest solution for an expensive prescription drug problem is to buy supplemental Medicare insurance.

Almost everyone on Medicare needs to sign up for Part D.

Part D of Medicare will cost just $25.83 a month in 2014, down from $27.40 in 2013. In exchange for their $25.83 a month ($310 a year), purchases will get the first $2,850 of their medications paid for, and they will also get catastrophic coverage when medication expenses pass $4,550. However, they have to pay the $2,700 difference themselves before catastrophic coverage kicks in, taking a big chunk out of Social Security checks that will be barely going up next year.

If you don't sign up for Part D, however, you could pay a lot more than just $4,550 a year. First, make sure you sign up for Part D.

Reviewing Policies During Open Enrollment Is Essential.

Just about everyone needs to sign up for supplemental Medicare insurance, Part B, too.This is the insurance that takes care of the 20% of non-drug costs that basic Medicare doesn't. Part B helps out with prescription meds  that fall into the "donut hole." But the insurance companies can change their coverage amounts from year to year. 

If you take an expensive medication on a regular basis, it is essential to verify that your Part B plan will help fill in the gap--some policies won't--and if it won't, you need to consider getting another policy that does.

Many insurance plans offer "preferred pharmacies" and lower co-pays, but some medications aren't always covered. You could save on the $5, $10, $20, or $30 co-pays for medications you don't use very often, and get stuck paying as much as 50% of retail price, potentially hundreds of dollars per month per medication, for medications you have to use every day. Review is a must.

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