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Deciphering the New Medicare Drug Program

By Joan E. Lisante
ConsumerAffairs.com

September 28, 2005
Along with holiday catalogs featuring L.L. Bean's down parkas and Harry and David's gourmet baskets, October will bring information on the new Medicare drug plans to your mailbox. Although less appealing than smoked brie and crackers, digging into this fact-pack can mean a fatter wallet in the years ahead.

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What it is: Effective January 1, 2006, Medicare will offer a series of prescription drug plans to its enrollees. The plans are offered through private drug plans as well as the "Medicare Advantage" plans," which used to be called Medicare + Choice. To be eligible, you must be enrolled in Part A and/or Part B for private drug plans, or both Parts A and B for Medicare Advantage plans.

How To Sign Up: October brings a marketing blitz, including a "Medicare & You" booklet the government will send you (if it thinks you're eligible). The initial enrollment period runs from November 15, 2005 through May 15, 2006. After that, you'll sign up for yearly enrollment periods of November 15-December 31. You have to sign up; enrollment is automatic only for so-called "dual eligibles," or people who participate in both Medicare and Medicaid.

How To Figure Out What To Sign Up For: The U.S. will be divided into different "enrollment regions," with a minimum of two choices per region. To figure out the best plan for you, consider several things.

First, list the prescription drugs you normally take -- plans will differ in which "formularies" or list of drugs they cover.

Second, consider whether or not you are currently covered under an employer or former employer's plan. If your employer's plan is considered "creditable," (as good as or better than Medicare's,) you may want to stick with your current coverage. Your employer will send such a letter so you can weigh your options.

What Are Some Across-the-Board Costs? No matter which plan you choose, certain costs remain constant. There's a $250 deductible, after which Medicare pays 75% of your drug costs between $250 and $2250. But watch out -- next comes the so-called "doughnut hole," or gap in coverage. For drug costs between $2250 and $5100, you're on your own: Medicare pays nothing!

But take heart -- and more drugs! After you've spent $5100, Medicare again covers 95% of your drug costs, labeling this "catastrophic coverage."

Details, Details More money talk: Enrolees will pay an average premium of $32.00 a month, although your personal premium depends on where you live and which plan you choose.

Drugs not considered "formularies" are not covered -- you pay full price for these. Providers can change "formularies" every 60 days, as well as "tier" different drugs so consumers pay more of higher-priced prescriptions.

Ordering your drugs from a preferred pharmacy or by mail-order will probably save you money. If you want to get a non-formulary drug covered or bring a drug's cost down to a lower tier, you can request an "exception" that triggers an appeals process. Either your plan or a qualified independent contractor will reconsider the request. Evidence from your physician is required.

Help for Lower-Income Consumers: The new drug benefit offers "extra help" for low-income seniors. Your eligibility for help is determined by your state's Medicaid or SSA (Supplemental Security Assistance) office. Generally, single people with incomes of $1200 a month or married couples earning less than $1600 a month are eligible.

If you qualify, several negatives of the new plans are eliminated. You won't have to pay premiums or deal with the $250 deductible; you'll be covered during the "doughnut hole" period, with Medicare picking up most costs; and you'll enjoy lower co-payments for extraordinary or "catastrophic" drug costs.

For more information:
• www.medicare.gov, which includes a plan comparison feature. You can also call 1-800-Medicare;
• The American Bar Association Commission on Law & Aging: www.abanet.org/aging;
• Center for Medicare Advocacy: www.medicareadvocacy.org
• Centers for Medicare & Medicaid Services: www.cms.hhs.gov
• BenefitsCheckUpRx.org, a National Council on the Aging site that helps you identify and apply for the programs that are right for you. ---

The author is an attorney in Fairfax County, Virginia

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