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What are Medicare presciption drug plans?

Editor's Note: Medicare prescription drug coverage is a topic currently on the minds of many senior citizens and pharmacists. Some are finding the new program confusing. We offer this basic information from to assist those who are looking into the program.

What are Medicare prescription drug plans?

Beginning January 1, 2006, Medicare will offer prescription drug coverage to people with Medicare. For the first time, you can choose coverage for this important health need, and Medicare will help pay for it. Medicare will provide coverage to help you pay for both brand-name and generic drugs you need. To get Medicare prescription drug coverage, you must choose and join a Medicare drug plan.

Medicare drug plans will be offered by insurance companies and other private companies approved by Medicare. There are two types of Medicare plans.

  • There will be Medicare Prescription Drug Plans that add coverage to the Original Medicare Plan, Medicare Private Fee-for Service Plans that donít offer Medicare prescription drug coverage, and Medicare Cost Plans.
  • There will also be prescription drug coverage that is a part of Medicare Advantage Plans (like a HMO, PPO, or a PFFS Plan) and other Medicare Health Plans. You would get all of your health care, including prescription drug coverage, through these plans.

If you have limited income and resources, you may get extra help to pay for your Medicare drug plan costs.

How much will the plans cost?

Your costs will vary depending on your financial situation and which Medicare drug plan you choose. All Medicare drug plans will offer at least the standard level of coverage below. Medicare drug plans may design their plans differently as long as what their plan offers is, on average, at least as good as the standard coverage described below. Some plans may offer more coverage for higher premiums.

Standard Coverage (the minimum coverage drug plans must provide):

If you join in 2006, for covered drugs you will pay:

  • A monthly premium (varies depending on the plan you choose).
  • The first $250 per year for your prescriptions. This is called your "deductible."

After you pay the $250 deductible, here's how the costs work:

  • You pay 25% of your yearly drug costs from $250 to $2,250, and your plan pays the other 75% of these costs, then
  • You pay 100% of your $2,850 in drug costs, then
  • You pay 5% of your drug costs (or a small copayment) for the rest of the calendar year after you have spent $3,600 out-of-pocket. Your plan pays the rest.

Some plans may be called standard plans but may be designed so that the deductible is lower and the coinsurance is slightly higher. Other plans may charge copayments or set amounts instead of coinsurance.

In general, your out-of-pocket costs should work out to be about the same under these plan designs.

How do I enroll?

Starting November 15, 2005, you can enroll in three ways:

  • Enroll online at the web site
  • Call the plan directly.
  • Call 1-800-MEDICARE and Medicare will help you enroll.

Can I change plans after I enroll?

Yes. After May 15, 2006, you can change your plan during the annual open enrollment period, which will be from November 15 through December 31 each year. Your Medicare prescription drug plan will begin January 1 of the following year.

Remember: May 15, 2006 is the last day to sign up on 2006. Join by this date or you will have to wait until Nov. 15, 2006 to join and you may pay higher premiums.

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