Beginning Nov. 15, if you are on Medicare, you are eligible to sign up for Medicare Part D, the new prescription-drug program designed to help seniors pay for their prescription medicine. When the benefit kicks in on January 1, 2006, the government will pay for part of the drug costs for people enrolled in the voluntary program, and participants will pay for the rest through premiums, co-payments and deductibles. This is the first time Medicare has provided an outpatient prescription-drug benefit. Each company offering Medicare Part D coverage will have a formulary — a list of the drugs it covers. The rules state that a company’s formulary must include generic and brand name drugs and have at least two drugs in each of the categories and classes most commonly prescribed to people on Medicare. By law, certain drugs or classes can’t be covered under Medicare Part D, including fertility drugs, drugs for symptomatic relief of coughs or colds and drugs for hair growth. Prescription vitamins also can’t be covered — except for prenatal vitamins, which is an interesting benefit for seniors!
For some, the decision will be easy: Don’t do a thing. If you are already covered by a Medicare supplement with a prescription drug benefit, for example, you will likely already have better drug benefits than those offered by the standard Medicare Part D plan. For others, though, the choices may be overwhelming. There is not one Medicare Part D plan; instead, there are a variety of options from private insurers. The companies who offer the plans have different premiums, different deductibles and different formularies, or lists of drugs that they will cover.
U.S. Health and Human Services Secretary Michael Leavitt calls the new drug benefits the most significant change in health care since Medicare began in 1965. The drug program, approved by Congress in 2003, is projected to cost the federal government about $700 billion over 10 years.
A common misunderstanding of the new benefit is that many seniors think their income is too high to qualify for the drug benefits. This is not a concern, however, since everyone who is eligible for Medicare is eligible for the prescription-drug program: It is not based on income.
The average senior enrolled in Medicare Part D will save $700 next year on prescription drug bills, according to a study by PricewaterhouseCoopers.
Enrollment in Medicare Part D is voluntary. Those who don’t sign up by May 15, 2006, the end of the initial enrollment period, will pay a penalty if they sign up later, equal to an increase in premiums of 1 percent a month for every month they wait to join. The penalty doesn’t apply to those already on a plan that is as good or better than the standard Medicare Part D plan, who can switch later without increased premiums. Experts point out that Medicare Part D is an insurance plan, and like other insurance plans it is partly about peace of mind and not just dollars and cents.
Our advice? Don’t wait to sign up for a plan until you have a health crisis later requiring costly drugs. You will have to wait until the next enrollment period to get drug benefits. Seniors currently enrolled in drug-assistance programs from the manufacturer, which give them free or reduced cost drugs need to realize that they may loose this benefit. We are seeing evidence that many of these programs will be eliminated or reduced once Medicare drug benefits are in place.
What if your drug bills are now low, but you would like to sign up for a drug plan now to avoid penalties later? A good idea may be to wait until May to enroll so you won’t pay any premiums until then. And find a low-cost plan. Though the coverage may not be as good, you can switch to a better plan without penalty in the next enrollment period if your drug needs increase.
If you need to do some calculations to figure out the best plan, online tools at the Medicare Web site, http://www.medicare.gov, make the calculations simpler.