Articles by  Alice Reiter Feld

THE NEW MEDICARE PRESCRIPTION DRUG PLAN:
The Good, the Bad, and the Ugly

The Good News: Starting in January 2006, Medicare beneficiaries will be able to get some assistance paying for prescription drugs through a new Medicare Part D. Part D will not be part of the traditional Medicare program, but will be offered through private insurance plans. Medicare beneficiaries will have to choose and enroll in a Part D plan. While coverage does not begin until January, beneficiaries are now beginning to receive information about their options.

The Confusing News: Because the Part D drug benefit is new, the extent to which private drug plans will be available and how much assistance will be provided for the drugs Medicare beneficiaries require is still uncertain. This is a summary of the available information.

The Bad News: In 2006, the standard benefit requires payment of a $250 deductible. The beneficiary then pays 25% of the cost of a covered Part D prescription drug up to an initial coverage limit of $2250. Once the initial coverage limit is reached, the beneficiary is subject to another deductible, known as the "doughnut hole," in which they must pay the full cost of medicine. When total out-of-pocket expenses on formulary drugs (see below) for the year, including the deductible and initial coinsurance, reach $3600, the beneficiary pays $2 for a generic or preferred drug and $5 for other drugs, or 5% coinsurance, whichever is greater.

The Ugly News: Part D plans are not required to pay for all covered Part D drugs. They may establish their own formularies, or list of covered drugs for which they will make payment. For example, a beneficiary whose only drug expense in January 2006 is $300 for a drug that is not on her plan's formulary will not meet her deductible, and the $3600 in out-of-pocket expenses she will incur for the year will not qualify her for the reduced cost-sharing for high out-of-pocket costs.

Clear as Mud: The Medicare beneficiaries who are in the traditional Medicare program will be required to purchase drug coverage through prescription drug plans (PDPs) that offer only prescription drug coverage. Individuals who are enrolled in a Medicare Advantage plan established under Medicare Part C (HMO's) must receive their drug coverage through their Medicare Advantage prescription drug plan, known as an MA-PD. They may not purchase a separate PDP. However, individuals who are enrolled in a Medicare Advantage private fee-for-service (PFFS) plan that does not include a prescription drug option may purchase a PDP for their Part D coverage.

For more information, contact your social security office or http://www.medicare.gov/.