Learning More About Medicare's Drug Plan

Medicare’s long-awaited prescription drug plan is scheduled to be in full implementation in January 1, 2006. Many seniors have started receiving mailings about the drug program and there are some conflicting messages out there.

Formally known as Medicare Part D, several advocates in the system have dropped the “Part D” connotation in favor of a new name: Medicare RX. Many Medicare recipients get confused when they hear Part D, in part because they don’t understand what Parts A, B, or C cover. By referring to it as Medicare RX, advocates are hoping that Medicare recipients can easily identify the new benefit.

What is Medicare RX?
Medicare RX is optional program that will save individuals who are enrolled in Medicare money on their prescription drugs. With some exceptions, there is no obligation to join the program. There is a premium for the coverage as well. Individuals who are currently enrolled in Medicare can sign up for RX coverage starting November 15th. Plan coverage needs to be selected by May 15th. It is possible to join after May 15th; however the monthly premiums will go up. Individuals who enroll in a plan before December 31, 2005 will begin the program on January 1, 2006. Individuals who enroll in the plan after December 31, 2005 will start on the first of the month after their enrollment date. For example, someone who signs up for coverage on April 12th will start on May 1st.

In addition to premiums, there are co-pays as well. The amount of the co-pay varies depending on the drug coverage plan that you choose. Private contractors will work with Medicare to provide plans to Medicare beneficiaries. Depending on where you live, there may be more than one plan option. You will need to weigh your co-pay costs and your own health condition to decide which plan is appropriate.

What happens to my Medigap coverage?
You can keep your Medigap coverage as long as you don’t enroll in Medicare RX. Check with your Medigap provider to find out if your plan covers as much as or the same benefits as Medicare RX in order to make a decision. Your Medigap provider should be mailing information to you this fall concerning your coverage limits. You can use this to compare to Medicare’s prescription plan.

What if I have RX coverage through an employer or retirement program?
As with Medigap, your insurance provider should mail you a comparison package explaining their benefits and how they line up with Medicare RX. Since Medicare RX is a voluntary program, you do not have to give up your existing plan to enroll in Medicare’s plan.

What if I need help paying for the coverage?
The Social Security Administration (SSA) has started mailing out letters to potential low-income beneficiaries in June 2005 letting them know that they may qualify for assistance with the premium and some of the drug co-pays. The Medicare website (www.medicare.gov) refers to this assistance as “extra help.” Qualifying for extra help is determined by your income and assets (not including your home). The amount of help that you can receive is also determined by income and assets.

Most importantly in applying for the extra help is the letter SSA mailed to those who are potentially eligible. When you get ready to enroll in a drug plan, the provider will ask for a copy of this letter. If you have received any mail from SSA that you do not understand, contact your local Area Agency on Aging and ask to speak to a benefits counselor. They can help you understand the letters you have received as well as answer any questions you may have about the drug coverage plan.

I think I qualify for extra help, but I didn’t receive a letter.
If you are single and have yearly resources less than $11,500 ($23,000 for married couples), you can still apply for extra help coverage even if the SSA did not identify you as someone who is potentially eligible. You can apply online at https://s044a90.ssa.gov/apps6a/i1020/main.html. Be prepared to provide information about your income and other assets you may have. Remember that your home does not count as an asset for qualification purposes.

Medicare will qualify some individuals depending on their income or other benefits they may be receiving. These individuals include:

• Those already receiving Supplemental Security Income (SSI) benefits and who have Medicare;
• Those who have Medicaid prescription benefits; or
• Those whose state pays their Medicare premiums.

If any of those conditions apply, you will automatically receive extra help and be enrolled in a qualifying prescription drug program for Medicare.

How much will I have to pay?
Medicare has established out of pocket maximums depending on your income range and the amount of your assets. For example, let’s look at someone who is married with income between $16,862 and $18,734 with assets less than $20,000.
• Premiums – up to $35 each month on a sliding scale.
• Coverage starts after they pay $50 out of pocket.
• Will pay 15 percent of drug costs after the initial $50.
• Will pay approximately $800 out of pocket before co-pays drop to $2 for generic medications and $5 for name brand medicines
• Co-payments will increase after 2006.
This same scenario applies to an individual who is single with an income between $12,569 and $13,964 with personal assets less than $10,000.

What happens to my prescription drug discount card?
If you enrolled in the discount program in 2004 that helped offset the cost of prescription medications, Medicare RX replaces those programs. You will now apply for the program directly through SSA and choose a plan according to your specific needs. The discount cards expire on December 31, 2005.

Where can I find more information?
The “Medicare & You” booklet published by Medicare will be mailed to program recipients in October 2005. Review the information in this booklet for the latest in benefit information. You can also call 1-800-MEDICARE (TTY users should dial 1-877-486-2048) to speak to someone directly about the program. Finally, your local Area Agency on Aging can also provide information about the program or direct you to a local source of information.

 

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