How the Long-Awaited Medicare Prescription Drug Plan Will Work

By Teresa Ambord

Senior citizens have been clamoring for it for years, especially since the price of medicine has grown out of control.   January 2006 brings with it the arrival of Medicare Part D, the outpatient prescription drug program.

If you haven’t already, you should be receiving information from Medicare and from any other health insurance plan or subsidy you might be on.   CMS (the Center for Medicare and Medicaid Studies) warns those eligible for Medicare to read and keep every piece of information received from these sources.  And if there are issues you don’t understand, ask.

Here are some resources you can use to get more information and get your questions answered:

• Social Security at 800-772-1213.
• Centers for Medicare and Medicaid Services at 877-267-2323 or 800-MEDICARE.
• Medicare.gov

Here’s how the dollar figures break out.   For those who are eligible and enroll in Medicare Part D by the deadline, you’ll pay a monthly premium of about $37, and have an annual deductible of $250. After your deductible is met, any drugs you purchase up to a total of $2,250 will cost you 25 percent of the price, with Medicare picking up the rest.   After that, there is a gap in coverage, called a “donut hole”.   For total drug costs between $2,251 and $5,100, you’ll have no coverage at all.  Then Medicare kicks in again if your total drug costs exceed $5,100.  At that point, you’ll pay a small copay, and the remainder will be paid for by Medicare. See the chart below for a little clarification.  

When should you sign up?

Enrollment begins on November 15, 2005.  If you sign up any time between this date and December 31, 2005, your benefits can begin January 1,2006.   This initial enrollment period ends May 15, 2006.  If you sign up after the program begins in January, your benefits will kick in on the first day of the month after you enroll.   You can still enroll after May 15, 2006, but you may have to pay a slightly higher monthly premium.

What if you are covered by Medi-gap or by an employer or former employer’s plan?

By November 15, employers, former employers, and subsidy plans should notify you how their coverage compares to Medicare Part D.

If their coverage is less than Medicare Part D, you can:

• enroll in Medicare and still keep your old plan.
• stick with your plan, but it may mean paying a higher premium if you later wish to join Medicare.
• leave your plan altogether and join Medicare.   If you do this, wait until you’re sure you want to leave your old plan forever because you may not be able to return to it.

If their coverage is equal to or greater than Medicare Part D, you can:

• stick with your plan.   If you later cancel it and wish to join Medicare, you can do so without paying a higher premium.
• drop your plan and join Medicare.   Again, if you do this, wait until you’re sure you want to leave your old plan forever because you may not be able to return to it.

What if your income is such that you cannot afford the $37 monthly premium or the $250 deductible?

Use the contact information above to talk to someone at CMS. Naturally some people on very limited incomes will find it hard to pay these amounts.   That’s why there is a provision for those with limited incomes and assets (your assets will include savings and investments, but not your home).   If you fall into this category, you may qualify for to have the premiums and the deductible lowered or eliminated.

One word of caution: CMS warns those eligible for Medicare that they be flooded with calls and mailings from telemarketers that may provide misleading information.  They may offer you unbelievably great deals in connection with prescription drug coverage. Keep in mind the old saying: if it sounds too good to be true, it probably isn't true.

For More Information:

• SSA.gov
• CMS.HHS.gov
• Medicare.gov