The Medicare Prescription Drug Plan kicked off January 1, and if you are still confused as to what you should do, join the club. A Harvard study conducted in early November 2005 found that 60 percent of seniors surveyed did not understand the plan.
Medicare Part D is complex, but you have a lot to gain by finding out exactly what it will mean to your health care budget. Everyone currently with Medicare Part A and Part B is eligible, but Part D is voluntary. The first question is whether to participate.
If you don’t have drug coverage at the moment, you probably stand to gain. In fact, if your income is below $14,355 a year for a single person or $19,245 for a couple, you may qualify for “extra help” in paying your premium, deductible and co-pay.
If you’re healthy, a prescription drug plan may cost you more than you presently spend for medications, but that situation could change in a hurry, and you’ll pay a premium penalty for each month you delay signing up after the deadline of May 15, 2006. That premium penalty is tacked on to your regular premium for the rest of your life.
If you already have prescription drug coverage from an employer or union, your employer is required to tell you if the plan qualifies as “creditable coverage,” meaning it’s at least as good as Medicare coverage. Coverage from the federal government or military, Veterans’ Affairs or Tribal Health Service is likely to be more comprehensive than any PDP.
Enrolling in a Medicare plan will automatically kick you out of your present plan, and you may not be able to get back in. If your coverage is creditable, there’s no penalty for signing up late.
If you have a Medigap policy that covers drug costs, on the other hand, your coverage probably does not meet the “creditable” standard. You can cancel only the drug benefit, if you wish, and keep the rest of the policy.
Seniors with Medicare and Medicaid, known as dual eligibles, have to join a PDP, and if they didn’t make a choice by January 1, they were automatically switched to a plan, chosen at random.
Unlike Medicare Part A and Part B –which are operated by the government–the drug benefit is being made available only through private companies.
And there are two types of drug plans: 1) stand-alone plans offering only prescription drug coverage (PDPs) and 2) private managed care plans that take money from the government to provide all of a client’s Medicare-related services, including prescription drugs.
The 2003 law set a basic value that each drug plan must meet: a premium of about $35 a month; an annual $250 deductible followed by a 25 percent co-pay for covered drugs; a “doughnut hole” with no coverage between $2,251 and $5,100; and a 5 percent co-pay for covered drugs over $5,100.
The actual plans now being offered all have at least that value but are structured in various ways. Premiums range from $13 to more than $50, depending on the coverage. Some have no deductible and a few have eliminated the doughnut hole. As a consumer, you should realize that insurance companies designed their plans in order to be competitive in gaining market share and to maximize their profits.
As you choose a plan, look at the benefits and costs carefully. Make a list of the drugs you take and what you pay for them each month. Then go to or call 1-800-MEDICARE to see what plans are available in your area.
The web site has a Plan Finder that will help you do the math and find out exactly what you pay with each plan. You can then compare this to what you pay now.
Medicare and You, the official guide mailed to you last year, gives a list of plans available in your state but has some errors and is not very helpful in comparing costs. If you don’t have access to the Internet, call the providers listed in this book and ask for detailed information about their plans. Then do the math yourself. How much did you spend on prescription drugs last year? How much will you pay under the plans you’re considering? Don’t be afraid to ask for help from senior advocacy groups or your local Area Agency on Aging.
There’s no question that the new prescription benefit poses complex issues. But if you do your homework, you could save yourself some money.
