Are you looking for some inside information on Medicare? Here's an up-to-date report from Medicare experts who should know.
Medicare's new Prescription Drugs Benefit
What does it means for you?
On January 1, 2006, Medicare's new prescription drugs benefit (Part D) began. Most seniors are eligible and most drugs are covered. The first open enrollment period runs from November 15, 2005 to May 15, 2006. Everyone with Medicare is eligible, regardless of income and resources, health status, or current prescription expenses.
Medicare's Prescription Drug Benefit is provided by several insurance companies, HMOs, and other health-related companies. To receive approval from the federal government, each prescription drug plan must meet the following minimum requirements.
Premium. The average Part D premium will be approximately $32 per month ($384 annually) in 2006. This premium is in addition to the Part B premium you now pay (for most people, it can be automatically deducted from your Social Security check each month).
Annual Deductible. You will pay the first $250 of your prescription drugs expenses.
Coinsurance. Medicare will pay 75% of your costs between $250 and $2,250. You will pay the other 25% out-of-pocket; that's a maximum of $500 for coinsurance.
Coverage Gap (the infamous "donut hole"). After your total prescription drugs expenses reach $2,250, Medicare pays nothing until you have spent a total of $3,600 out-of-pocket. The $3,600 includes your $250 deductible and your $500 coinsurance maximum.
Catastrophic Protection. After you've spent $3,600, Medicare will cover 95% of your prescription drug expenses for the remainder of the year.
Because a prescription drug plan may, if it chooses, offer better benefits (lower deductibles coinsurance amounts, and/or full or partial coverage of the donut hole), it pays to shop around.
Low-Income Assistance. People eligible for both Medicare and Medicaid will pay no premium, no deductible, and have no gap in coverage. They will pay a $1 copayment per prescription for generic drugs, and a $3 copayment per prescription for brand name drugs. Other subsidies will be available for low-income seniors who are not eligible for Medicaid.
There are several potentially nasty surprises you need to be aware of:
Nasty Surprise #1 — "inflation increases"
The $250 deductible, $32 average monthly premium and other coverage amounts described above apply only to 2006. Those amounts will be adjusted for inflation in 2007 and later years. However, the copayment amounts for people eligible for low-income assistance will not be adjusted for inflation.
If you base what you do on inaccurate information, you might be unpleasantly surprised by the consequences. Make sure you get the whole Medicare story from informed sources.
Nasty Surprise #2 — "separate enrollment"
Most people must enroll separately for the new Plan D prescription drug benefit if you wish to participate, even if you are already enrolled in Medicare Part A and B (the government loves paperwork!).
Nasty Surprise #3 — "freedom of choice"
Medicare's new Part D prescription drug plan is voluntary — you don't have to enroll. For many seniors, it might cost more than you could expect to receive in benefits, especially if you are healthy. Or, you might put off enrolling because you simply can't afford it.
But, if you delay enrolling for more than 3 months after first becoming eligible, you will be penalized for the rest of your life! The penalty will permanently increase your premium 1% for every month you delay. For example, if you delay 10 months, you will pay 10% more than almost everyone else. If you delay 2 years, your premium will be about 25% more than other people pay.
— How to Enroll —
If you are already on Medicare, you can join a plan in the following ways:
By paper application. Contact the company offering the drug plan you want and ask for an application. After you fill out the form, mail or fax it back to the company.
On the plan's website. Visit the drug plan company's website. You may be able to join online.
On Medicare's website. You will also be able to join a drug plan at www.Medicare.gov by using Medicare's online enrollment center. More information is available through their online tool, the Medicare Prescription Drug Plan Finder.
By calling Medicare. Call 1-800-MEDICARE (1-800-633-4227) and talk to a Medicare customer service representative. TTY users should call 1-877-486-2048.
For more information, including a description of people who do not have to enroll in the new Part D benefit, visit the Medicare.gov website.
If you are NOT YET on Medicare, you can apply for the new Part D prescription drug benefit at any time beginning 3 months before the month of your 65th birthday, or you can delay your decision for up to 3 months after the month of your 65th birthday. For example, if your 65th birthday is August 20th, you can apply for Part D at any time from May 1st to November 30th without any penalty.
For more information about Medicare, including how you can contact your local State Health Insurance Assistance Program (SHIP) for more information, visit Medicare's Web site, or call Medicare toll-free at 1-800-633-4227.
That's how things stand right now. Keep in mind that any subject can change over time, so be sure you keep up with the latest news.