The new Medicare Prescription Drug program started on January 1st, 2006. Like most things in life, it has been a bit of good news/bad news. Hopefully, it has made prescription medications more affordable for people with Medicare coverage. However, there remains considerable confusion about the program, and finding out whether it is of benefit or not requires a fair amount of effort. Therefore, not many people have signed up for the program. For this article, we’re just going to cover some program basics. So, those of you who are still deciding what to do will have a starting place for informed decisions.

Just what is Medicare Prescription Drug Coverage, Part D? This is the new, and separate, part of Medicare coverage. Persons receiving Medicare can join one of a number of prescription drug plans (run by private companies who are approved and presumably regulated by Medicare) to help pay for their prescription drug costs. These plans have a separate and additional monthly premium, above and beyond the cost of Medicare Part B – which is $88.50 per month in 2006.

The average premium cost for the different Part D drug plans appears to be about $35 to $40 per month. While there are different types of plans, the standard coverage requires each Medicare recipient to pay a monthly premium, and then also pay the first $250 each year of his or her prescription drug costs. After the $250 deductible is met, the drug plan then pays 75% of the cost for the next $2,000 in drug costs (so the person pays an additional $500 as his or her 25% share). The Medicare recipient is then fully responsible for paying the next $2,850 in drug costs (meaning he or she has received a total of $5,350 in drugs to this point, after which the Medicare drug plan pays 95% of all remaining prescription costs for the year). While the above seems like more math than anyone should have to deal with, the following examples may (or may not) help:

• For an individual whose monthly medication cost averages $250 (or $3,000 for the year), the person pays for the first $250 of drugs (i.e., the person pays for January), and then $500 for the next $2,000 worth of drugs, for a year to date total of $2,500 in drug costs (pays $62.50 each month for 8 months, or February through September). The person then pays the final $750 of costs (for the months of October, November, and December). Cost to the individual for this coverage: $1,500 (plus the yearly premium). Cost paid by the insurer: $1,500.
  
  
• For an individual whose monthly medication cost averages $600 (or $7,200 for the year), the person pays for the first $250 of drugs (i.e., the person pays for part of January, and then the carrier pays the remaining $350), and then $500 for the next $2,000 worth of drugs, for a year to date total of $2,500 in drug costs (pays $150 each month for 3 months, or February through April, and the individual pays $50 towards the initial cost of May’s drugs, while the carrier pays the remaining $300, after which the individual pays $250 more for the end of May). The person then pays $600 a month for June, July, August, September, and $200 a month for October, while the carrier picks up 95% of the remainder ($380 in October, and $770 in November and December). Cost to the individual for this coverage: $3,650 (plus the yearly premium). Cost paid by the insurer: $3,450.

Everyone who now receives Medicare, and who is not already on a prescription drug plan, still has time to decide whether to enroll in one of the new plans. However, if this applies to you, please be aware you must make your decision no later than May 15th, or else you will be paying an extra cost when you do join. Although the Medicare program is considering extending the deadline, it has not done so to date.

Some Medicare recipients are either still working or are retired but still have prescription drug coverage through their employer. If the prescription drug coverage they are receiving from their current (or former) employer is good enough, then they do not have to join a Medicare drug program now. Employers have mailed out letters telling recipients whether or not their current coverage is as good as the new Medicare prescription drug programs. If the employer’s program is as good, then the recipient does not need to join the new Medicare drug program. If, however, the employer’s program is not equivalent, or if the employer stops the drug coverage program in the future, then Medicare recipients will have as little as 63 days to identify and join one of the new Medicare drug plans.

Additionally, some Medicare recipients also purchase prescription drug coverage from their Medicare supplemental insurance coverage. Again, if the coverage they already have is as good as the new Medicare drug program, these individuals can continue with that coverage. As with employers, the private insurers have mailed out letters indicating whether their current supplemental drug coverage is adequate, or whether the Medicare recipient will have to join one of the new Medicare drug plans. Again, if the current coverage is not as good, or if coverage is discontinued, then Medicare recipients will have as little as 63 days to identify and join one of the new Medicare plans.

Medicaid recipients have different choices

For persons who are in the Medicaid program (which is operated by the state, and which covers most nursing home residents), or who become eligible in the future for Medicaid, do not have to pay for the new prescription drug coverage, BUT these Medicaid recipients are all placed into one of the new Medicare prescription drug plans.

For persons who are not quite eligible for Medicaid, Medicare will pay for their prescription drug coverage plan, providing the person’s income is below $12,920 ($17,321 for a married couple) and their resources are below $11,500 ($23,000 for a married couple). Additionally, there is a discount for individuals with incomes above $12,920 but below $14,355 (above $17,321 but below $19,245 for married couples), provided that the individual or couple meets the above resources test.

For further information regarding these matters, please contact Mr. Trainer at 248.740.5673 or click here to send an email.