New Medicare Prescription Drug Benefit Worth Investigating

New Medicare Prescription Drug Benefit Worth Investigating
January 06, 2006

Recently, my office conducted community meetings, regarding the new Medicare prescription drug benefit, throughout Ohio's Third Congressional District. Winter weather may have prevented some people who planned on attending a meeting from joining us. Therefore, I will review some of the critical information from those meetings.

In 2003, I voted for the Medicare Modernization Act. That legislation reformed the Medicare program, and sought to make prescription drugs affordable to the 40 million Americans enrolled in Medicare. Since last November, Medicare beneficiaries have been eligible to sign up for a Medicare prescription drug plan. The prescription drug benefit begins on January 1, 2006.

The community meetings brought together representatives from the Center for Medicare and Medicaid Services (CMS), the Ohio Senior Health Insurance Information Program (OSHIP), the Social Security Administration (SSA), and several of the companies offering Medicare approved prescription plans.

One of the key goals of the Medicare legislation was to provide the maximum flexibility and options for seniors. These options have resulted in competition among various companies to encourage beneficiaries to enroll with their plan.

When creating the new Medicare prescription drug plan, Congress established cost standards for seniors who choose to participate in the new Medicare prescription benefit. The maximum annual deductible was set at $250 and monthly premiums were estimated at around $35. After the first $250, Medicare will pay for 75% of prescription drug costs, with seniors contributing 25%, up to $2,250. After seniors reach $3,600 in out-of-pocket costs, Medicare will pay 95% of remaining prescription drug costs. This is the "catastrophic coverage" portion of the new Medicare prescription drug coverage.

In fact, some of the plans offered have no deductibles and monthly premiums lower than $35. Each of the drug plans seniors can select from has been approved by Medicare to provide coverage that is at least as good as what Congress specified. If seniors are dissatisfied with their initial choice, they can switch one time before May 15, 2006. Afterwards, they can switch annually during the open enrollment period between November 15 and December 31.

Seniors with the greatest need will receive the most help. Single seniors with annual incomes below $12,920, and couples with incomes less than $17,321, will have no deductible, no monthly premium and co-payments of just a few dollars. Seniors with incomes slightly higher may receive "extra help" with out-of-pocket costs and should contact the Social Security Administration to apply for this assistance.

Most seniors will fall into one of four categories:

1) Enrolled in Medicare but no drug coverage. Seniors who fall into this category first have to determine if they want to participate in the Medicare prescription drug benefit. The plan is completely voluntary. Seniors who decide to participate have until May 15, 2006 to choose which program to enroll in. The advice given was to sign up as soon as possible to start receiving the benefit but take the time necessary to pick the right plan. After May 15 your premium will go up at least 1% per month for every month you wait to join.

2) Enrolled in Medicare with supplemental drug coverage. Seniors who fall into this classification will receive a letter letting them know if their current prescription coverage is considered as good as the minimum standard of the new Medicare drug benefit. If it's not as good, they have to make the same decision as in the first case, whether to enroll in a plan prior to May 15th without penalty.

3) Seniors with drug coverage through a past employer or union should have received a letter informing them whether their current coverage exceeds Medicare's plan. If so, in most cases it is recommended that seniors maintain their current coverage.

4) Low income seniors receiving prescription benefits through Medicaid will be auto-enrolled in one of the new Medicare programs. These seniors are able to change to a plan they prefer and are advised to make sure the plan suits their needs or switch to one that does.

As of January 1, 2006, the new Medicare prescription drug benefit is available to all 40 million Medicare beneficiaries. The open enrollment period lasts until May 15, 2006, after which there will be a penalty that will increase the premium at least 1% per month. The program is completely voluntary. Seniors happy with their current prescription drug plan do not have to participate. The program was designed to create maximum flexibility and choices. There are many choices, however, the only truly bad choice may be to make no choice and miss out on the biggest Medicare reform since the program was enacted in 1965.

http://www.house.gov/miketurner/news/columns/1.06.06.shtml