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Seniors Try to Decipher Complex Medicare Changes

June 21, 2005
With the expanded Medicare prescription drug program becoming effective in January, public support for the changes is increasing. A new poll finds that 38 percent of U.S. adults are pleased the Medicare bill passed, up from 20 percent in December 2003.

But the Wall Street Journal Online/Harris Interactive poll also found that 44 percent of Americans, including more than a third of those over age 65, say they don't know enough about the changes to have a firm opinion.

The drug plan, a centerpiece of the controversial 2003 Medicare law, is an intricate web of private insurance companies providing coverage to Medicare's 40 million beneficiaries. Hundreds of insurers, anxious to tap into Medicare's lucrative drug market, have applied to provide drug coverage.

President Bush praised the "modernization" private insurers would provide through "choice," but advocates warned that seniors would ultimately be disappointed with the complexity and limited coverage of the benefit.

"Seniors can expect a steep learning curve with this drug benefit," said Ruben Burks, secretary-treasurer of the Alliance for Retired Americans. A Kaiser Family Foundation poll found that one-third of those who knew about the drug benefit had an unfavorable impression.

Of most concern to advocates for the aging is the problem of reaching out and enrolling the 14.4 million low-income people with Medicare who are potentially eligible for additional assistance with premiums and cost-sharing as part of the new Medicare drug benefit. The progam won't help them if they don't sign up, but many social service workers are finding it hard to explain the many provisions of the program.

Also of concern are the seniors who don't realize that the Medicare changes will affect everyone in the program, not just those in need of extra help. The Journal/Harris poll found that 38 percent of those 65 and over said they did not plan to enroll the Medicare drug plan because they already have prescription-drug coverage under their Medigap policy.

What they may not realize is that Medigap plans will no longer be offered in 2006. Seniors will need to pick one of the many Medicare drug plans to get help with their prescriptions. Not surprisingly, fewer than half those surveyed said they're confident they can choose the right plan.

The Basics

Here are some basic facts about the Medicare revisions:

Starting January 1, 2006, Medicare will offer prescription drug plans to help older Americans pay for their prescriptions. If you don’t join a Medicare prescription drug plan by May 15, 2006, you will pay a higher premium unless you have drug coverage that, on average, is at least as good as standard Medicare prescription drug coverage (such as from a former employer or union).

Your insurer will notify you before fall to let you know if your coverage, on average, is at least as good as standard Medicare prescription drug coverage.

To get Medicare prescription drug coverage, you must choose and enroll in a Medicare prescription drug plan. You can first enroll in a Medicare prescription drug plan from November 15, 2005 through May 15, 2006. If you join by December 31, 2005, your coverage will begin January 1, 2006.

If you join, your costs will vary depending on which plan you choose. In general, you pay a monthly premium (generally around $37 in 2006) and a yearly deductible (up to the first $250 in 2006). You will also pay a share of your prescription drug costs, and your plan pays a share.

Medicare helps pay for drugs up to a limit ($2,250 in total) and once your total out-of-pocket costs for drugs reach $3,600, you pay 5% of the costs and Medicare pays 95% of the costs for the rest of the year.

Extra Help

If your annual income is below $14,355 for a single person (or $19,245 if you are married and living with your spouse), you may qualify for extra help. Slightly higher income levels may apply if you provide 1/2 support to other family members living with you, or if you work or reside in Alaska and Hawaii.

If your resources (including your savings and stocks, but not counting your home or car) are under $11,500 (for a single person) or under $23,000 (for a married couple) you may qualify for extra help paying for your Medicare prescription drug costs.

You can apply for this extra help through the Social Security Administration or your State Medical Assistance Office. Social Security is mailing the application for extra help to those who may qualify. If you receive an application, fill it out and return it in the enclosed postage paid envelope.

Some points to note:

• The amount of extra help you get depends on your income and resources.
• You still need to join a Medicare prescription drug plan for Medicare to pay for your drug costs.
• You can join a Medicare prescription drug plan from November 15, 2005 through May 15, 2006. If you join by December 31, 2005, your coverage begins January 1, 2006. If you join after January 1, 2006, your coverage starts the first day of the month after the month you join.
• If you qualify for extra help, you will have continuous drug coverage and will pay only a small amount for your prescriptions.

More Information

For more information on who can get extra help with prescription drug costs and how to apply, call the Social Security Administration at 1-800-772-1213, or visit www.socialsecurity.gov on the web. TTY users should call 1-800-325-0778.

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