Medicare Part D
Medicare recipients have a new choice to make regarding prescription drug coverage. Medicare Part D is the new drug insurance program that will be administered, for a monthly premium, by insurance companies and other private companies approved by Medicare. This new prescription program was created to help offset the rising out-of-pocket costs of prescription drug plans.
Part D is generally meant for people who do not have drug coverage through their former employer or other means. It is available for anyone with Medicare Part A or B, or for those who will turn 65 after November 15 and plan to enroll in Medicare.
There are some people who are automatically enrolled. Those who have both Medicare and Medicaid; those who are part of the Medicare saving program; and those who receive SSI automatically qualify for Part D and must now pick a prescription drug coverage plan. If these individuals do not pick a plan, they will be automatically enrolled in a plan chosen for them.
For those with Medicare, it is the type of coverage you have that will determine what the new prescription plan may mean for you.
- If you have the original Medicare plan or the original Medicare plan with a Medigap (Medicare Supplement Insurance) without drug coverage, the new plan will help with your drug costs.
- If you have the original Medicare Plan with Medigap with drug coverage, you may get better coverage with the new prescription plan. If you choose Part D, the drug portion of your Medigap policy will be removed and you will not be able to get it back.
- If you have drug coverage through an employer or union, Medicare will work with them to provide drug coverage that meets the new standards.
- If you are in a Medicare Advantage Plan or other Medicare health plan, your plan will inform you of the prescription drug choices they will offer.
- If you have Medicare and Medicaid with prescription drug assistance from Medicaid, your coverage will now come from Medicare.
How It Works
In addition to the monthly premium which varies by plan but is estimated to be about $37 in 2006 the Medicare recipient will pay set amounts for their prescriptions, but the nuances of this plan will be determined by the private insurance companies that are in charge of administering it. Heres how the standard plan works:
1. Beneficiary must first meet the deductible, which is $250 in out-of-pocket expenses. That means you will pay 100% of the costs for your prescriptions until you reach $250.
2. After reaching the deductible, the beneficiary will pay 25% of drug costs. This lasts until you reach the initial drug costs limit of $2,250. Medicare will pay 75% and the beneficiary will have spent another $500 in out-of-pocket expenses, totaling $750.
3. After the $2,250 drug cost limit is reached, the beneficiary will pay 100% of prescription costs. The beneficiary now has to reach an out-of-pocket expense limit of $3,600 ($5,100 in total annual drug costs). This gap between $2,250 and $5,100 is called a doughnut hole or coverage gap. It is expected that every state will offer at least one plan that covers the gap but the premium may be higher or there may be a restriction on the kinds of drugs that can be purchased.
4. After reaching the $3,600 out-of-pocket expense limit, catastrophic coverage begins. Medicare will now pay 95% of drug costs for the rest of the year and the beneficiary will pay either a set price for generic/brand name drugs or 5% of the drug cost, whichever is greater.
Enrollment is from Nov. 15, 2005 through May 15, 2006. You may sign up by paper application which can be downloaded from the Medicare website; on the Medicare website itself; by calling Medicare; or via your employer/union-sponsored plan. If you sign up by December 31, 2005, your plan will start Jan. 1, 2006. If you sign up after that, your plan will begin the 1st day of the next month after you join. If you do not sign up by May 15th you will not be able to sign up again until November 15, 2006 and there will be a penalty for each month you wait to sign up. That penalty will be at least 1% of the base premium for that calendar year. The company that is administering the program will determine the base premium.
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