Summary
of Medicare Prescription Drug Coverage
- Congress passed legislation
which set up Medicare Prescription
Drug Plans to meet the individual
needs of the beneficiary. In order
to meet individual needs, the
process that Medicare uses requires
the beneficiary to make a choice
from among several options.
- Medicare Prescription Drug
Plans will be administered
through many different plans
developed by private companies,
Unions, churches, etc. These
companies have submitted their
plan for approval to Medicare.
- Beneficiaries may choose
one drug plan from the Medicare-approved
drug plans (or Medicare Advantage
HMO or PPO plans) that offer
drug coverage in the beneficiary’s
locale. There may be as many
as 20 different drug plans
in Illinois from which beneficiaries
will choose the plan which
best fits their needs.
- Plans may not cover all
prescription drugs or have
the same monthly premium cost.
- There are 112 different
illness/injury/affliction
categories. Drug plans
must offer at least two
prescription drugs in
each category. Therefore,
not every drug may be
covered by every drug
plan. Beneficiaries should
choose the plan that includes
all of their prescription
drug needs.
- The different drug plans
can offer their plans
at a different monthly
premium than the standard
Medicare plan.
- The initial Medicare Prescription
Drug Plan drug benefit enrollment
period begins November 15, 2005
and lasts until May 15, 2006.
- The standard prescription drug
benefit in 2006 is:
- Beneficiaries pay a monthly
premium, on average of about
$32 for the standard Medicare
plan (some will be lower and
others may be higher). The
exact premium amount will
depend upon which prescription
drug plan beneficiaries choose.
- Beneficiaries are not required
to enroll in Part D, but if
they enroll later they will
pay a higher monthly premium.
- Medicare Beneficiaries
who decide to enroll later
than their initial enrollment
period will have their
monthly premiums cost
1 percent more per month
that they wait to enroll
(for example, if a beneficiary
waits 6 months past their
initial enrollment period
to enroll, their monthly
premium will always pay
6 percent more than what
others pay).
- The premium penalty
does not apply to beneficiaries
who have comparable coverage
from another source (such
as retirement health plans)
which have certified in
writing as at least “as
good as Medicare”.
- Beneficiaries with
a group health plan
which include prescription
drug coverage will
receive a letter from
their plan administrator
which announces whether
their group drug coverage
will be continued,
and if so, whether
it is as good as Medicare’s
coverage ... or if
their group drug coverage
will end and whether
their health plan
will offer subsidies
to retirees to supplement
Medicare’s prescription
drug coverage out-of-pocket
costs.
- Retirement health
plans with drug coverage
which is as good as
Medicare’s can receive
subsidies in order
to discourage the
retirement health
plan from dropping
their drug coverage
for their beneficiaries.
- Beneficiaries pay $250 annual
deductible before Medicare
pays anything.
- Beneficiaries pay 25% of
the costs of the next $2,000
of drug expenses (beneficiary
pays $500 of next $2,000 of
drugs costs plus all of the
first $250 of drug costs for
a total of up to $750).
- After $2,250 of drug costs,
there is no coverage until
the beneficiary has paid another
$2,850 worth of drug expenses
(beneficiary pays up to $3,600
for up to $5,100 in drug costs).
- Catastrophic coverage begins
after beneficiary has paid
$3,600 of out-of-pocket expenses
($5,100 total drug costs).
The beneficiary pays the greater
of $2 for generic, $5 for
brand name drugs, or 5 percent
of the costs, whichever is
greater.
| Your
costs in 2006 (basic plan)
... |
If your
annual drug costs
are between.. |
You pay.. |
Up to
a
maximum of.. |
Your total
costs are shown below,
not including the annual premium. |
| $0-250 |
100% |
$250 |
$250 |
| $251-$2,250 |
25% |
$500 |
$750 |
| $2,251-$5,100 |
100% |
$2,850 |
maximum of
$3,600 |
| Over $5,100 |
5% |
No limit |
$2 for generic,
$5 for brand name drugs,
or 5 percent of the cost,
whichever is greater |
“Extra Help” financial
assistance is available for low
and moderate income individuals:
Prescription
Drug Coverage: Basic Information
What
is Medicare prescription drug coverage?
Medicare prescription drug coverage
is insurance that covers both brand-name
and generic prescription drugs at
participating pharmacies in your
area. Medicare prescription drug
coverage provides protection for
people who have very high drug costs.
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Who
can get Medicare prescription drug
coverage?
Everyone with Medicare is eligible
for this coverage, regardless of
income and resources, health status,
or current prescription expenses.
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When
can I get Medicare prescription
drug coverage?
You may sign up from November 15,
2005 to May 15, 2006. If you join
by December 31, 2005, your coverage
will start January 1, 2006, and
you won't miss a day of coverage.
If you don't sign up when you are
first eligible or by May 15, 2006,
you may pay a penalty. Your next
opportunity to enroll is from November
15, 2006 to December 31, 2006.
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How
does Medicare prescription drug
coverage work?
Your decision about Medicare prescription
drug coverage depends on the kind
of health care coverage you have
now. There are two ways to get Medicare
prescription drug coverage. You
can join a Medicare prescription
drug plan or you can join a Medicare
Advantage Plan or other Medicare
Health Plans that offer drug coverage.
Whatever plan you choose, Medicare
drug coverage will help you by covering
brand-name and generic drugs at
pharmacies that are convenient for
you.
Like other insurance, if you join,
you will pay a monthly premium,
which varies by plan, and a yearly
deductible (no more than $250 in
2006). You will also pay a part
of the cost of your prescriptions,
including a copayment or coinsurance.
Costs will vary depending on which
drug plan you choose. Some plans
may offer more coverage and additional
drugs for a higher monthly premium.
If you have limited income and resources,
and you qualify for extra help,
you may not have to pay a premium
or deductible.
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Why
should I get Medicare prescription
drug coverage?
Medicare prescription drug coverage
provides greater peace of mind by
protecting you from unexpected drug
expenses. Even if you don't use
a lot of prescription drugs now,
you should still consider joining.
As we age, most people need prescription
drugs to stay healthy. For most
people, joining now means protecting
yourself from unexpected prescription
drug bills in the future.
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What
if I have a limited income and resources?
There is extra help for people with
limited income and resources. Almost
1 in 3 people with Medicare will
qualify for extra help and Medicare
will pay for almost all of their
prescription drug costs.
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Prescription
Drug Coverage: Things to Consider
To
get Medicare coverage for your prescription
drugs, you must choose and join
a Medicare drug plan. Regardless
of how a Medicare drug plan decides
to offer this coverage, there are
some key factors that may vary.
Some of these factors might be more
important to you than others, depending
on your situation and drug needs.
These factors are:
Cost
Premium
This is the monthly cost you pay to
join a Medicare drug plan. Premiums
vary by plan.
Deductible
This is the amount you pay for your
prescriptions before your plan starts
to share in the costs. Deductibles
vary by plans. No plan may have a
deductible more than $250 in 2006.
Copayment/Coinsurance
This is the amount you pay for your
prescriptions after you have paid
the deductible. In some plans, you
pay the same copayment (a set amount)
or coinsurance (a percentage of the
cost) for any prescription. In other
plans, there might be different levels
or "tiers," with different costs.
(For example, you might have to pay
less for generic drugs than brand
names. Or, some brand names might
have a lower copayment than other
brand names.) Also, in some plans
your share of the cost can increase
when your prescription drug costs
reach a certain limit.
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Coverage
Formulary
A list of drugs that a Medicare drug
plan covers is called a formulary.
Formularies include generic drugs
and brand-name drugs. Most prescription
drugs used by people with Medicare
will be on a plan's formulary. The
formulary must include at least two
drugs in categories and classes of
most commonly prescribed drugs to
people with Medicare. This makes sure
that people with different medical
conditions can get the treatment they
need.
Prior Authorization
Some drugs are more expensive than
others even though some less expensive
drugs work just as well. Other drugs
may have more side effects, or have
restrictions on how long they can
be taken. To be sure certain drugs
are used correctly and only when truly
necessary, plans may require a "prior
authorization." This means before
the plan will cover these prescriptions,
your doctor must first contact the
plan and show there is a medically-necessary
reason why you must use that particular
drug for it to be covered. Plans might
have other rules like this to ensure
that your drug use is effective.
Coverage Gap
If you have high drug costs, you may
consider which plans offer additional
coverage until you spend $3,600 out-of-pocket.
In some plans, if your costs reach
an initial coverage limit, then you
pay 100% of your prescription costs.
This is called the coverage gap. This
"gap" in coverage is generally above
$2,250 in total drug costs until you
spend $3,600 out-of-pocket. Some plans
might offer some coverage during the
gap. Even in plans where you pay 100%
of covered drug costs after a certain
limit, you would still pay less for
your prescriptions than you would
without this drug coverage.
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Convenience
Drug plans
must contract with pharmacies in your
area. Check with the plan to make
sure your pharmacy or a pharmacy in
the plan is convenient to you. Also,
some plans may offer a mail-order
program that will allow you to have
drugs sent directly to your home.
You should consider all of your options
in determining what is the most cost-effective
and convenient way to have your prescriptions
filled.
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Peace of Mind Now and in the Future
Even if you don't
take a lot of prescription drugs
now, you still should consider joining
a drug plan in 2006. As we age,
most people need prescription drugs
to stay healthy. For most people,
joining now means you will pay a
lower monthly premium in the future
since you may have to pay a penalty
if you choose to join later. You
will have to pay this penalty as
long as you have a Medicare drug
plan. If you reach the point where
you have spent $3,600 out-of-pocket
for drug costs during the year,
the plan will pay most of your remaining
drug costs. This protection could
start even sooner in some plans.
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Prescription
Drug Coverage: Common Situations
To help you get started thinking
about Medicare drug coverage, find
the situation that describes you
and learn what you need to do.
-
"I have Original
Medicare only, or Original Medicare
and a Medigap ('Supplement')
Policy without drug coverage"
What
you need to do
-
"I have Original
Medicare and a Medigap ('Supplement')
Policy with drug coverage."
What
you need to do
-
"I am a retiree
and I have drug coverage through
my (or my spouse's) former employer
or union."
What
you need to do
-
"I have a Medicare
Advantage Plan (like an HMO
or PPO) or other Medicare Health
Plan."
What
you need to do
-
"I have Medicare
and Medicaid, and I get my drug
coverage from Medicaid."
What
you need to do
-
"I have limited
resources and live on limited
income."
What
you need to do
"I
have Original Medicare only, or
Original Medicare and a Medigap
('Supplement') Policy without drug
coverage."
If you use an average amount of
prescription drugs, Medicare's new
prescription drug coverage could
pay over half of your drug costs
next year. If you have very high
unexpected drug costs, Medicare
will pay up to 95% of these costs
after you spend $3,600 out-of- pocket
in a year.
What you need to do:
To get this drug coverage, you can
join a Medicare Prescription Drug
Plan that covers prescription drugs
only and keep your Original Medicare
coverage the way it is. Or you can
join a Medicare Advantage Plan or
other Medicare Health Plan that
covers doctor and hospital care
as well as prescriptions.
Medicare Advantage Plans usually
give you extra benefits and/or lower
costs, but only if you use the doctors
and hospitals that participate in
the plan's "network."
If you do not opt for prescription
drug coverage by May 15, 2006, you
will have to pay a late enrollment
penalty to get drug coverage later.
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"I
have Original Medicare and a Medigap
('Supplement') Policy with drug
coverage."
Medicare prescription drug coverage
will generally provide significant
savings compared to what you are
paying in copayments for drugs under
your Medigap plan, and will generally
provide much better protection against
unexpected drug expenses as well.
What you need to do:
Decide between keeping your Medigap
policy with drug coverage or joining
a Medicare plan that offers prescription
coverage. You have probably received
information in the mail for plans
in your area offering coverage.
Compare your current coverage to
the new Medicare coverage.
Unlike Medigap, most of the cost
of Medicare drug coverage is paid
by Medicare, and will never run
out if you have unexpected drug
costs. Also, if you do not join
a Medicare Drug Plan or a Medicare
Advantage Plan that offers prescription
drug coverage by May 15, 2006, you
will have to pay a late enrollment
penalty to get drug coverage later.
If you opt for Medicare prescription
drug coverage, tell your insurer,
and the drug portion of your Medigap
policy will be removed.
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"I
am a retiree and I have drug coverage
through my (or my spouse's) former
employer or union."
Medicare will help employers or
unions continue to provide retiree
drug coverage that meets Medicare's
standard. Your former employer or
union has choices about how they
will work with Medicare.
What you need to do:
Your former employer or union probably
mailed you a letter already. This
information will explain how they
will work with Medicare on prescription
drug coverage and what decisions
you will have to make. If you do
not hear from them, visit their
website or call your benefits administrator.
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"I
have a Medicare Advantage Plan (like
an HMO or PPO) or other Medicare
Health Plan."
Medicare is working with Medicare
Advantage and other Medicare Health
Plans to help them provide even
more coverage and/or lower costs.
Your plan will let you know about
the prescription drug options they
will offer. You can also choose
to switch to another Medicare Advantage
Plan or Medicare Health Plan. Or
you could choose the Original Medicare
Plan and join a Medicare Prescription
Drug Plan.
What you need to do:
Read the information you got in
the mail explaining any additional
prescription drug coverage your
plan will offer.
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"I
have Medicare and Medicaid, and
I get my drug coverage from Medicaid."
Starting January 1, 2006, you will
get your prescription drug coverage
from Medicare instead of Medicaid.
The prescription drug coverage from
Medicare has no premiums, no deductibles,
and no gaps, and you will pay very
little or nothing for almost all
prescriptions.
What you need to do:
Starting in the fall, you will need
to decide which Medicare plan that
offers prescription drug coverage
you would like. If you do not sign
up for a plan, Medicare will sign
you up for one to make sure you
do not miss a day of coverage. Medicare
will send you a letter to let you
know which plan you are in. You
can switch to a different plan if
you choose.
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"I
have limited resources and live
on limited income."
What you need to do:
If your resources are less than
$11,500 (single) or $23,000 (married),
you may qualify for extra help paying
for Medicare Prescription Drug Coverage.
If you haven't received an application
or information about the extra help,
and you think you may be eligible,
you should apply. Remember, as Department
of Health and Human Services Secretary
Leavitt says, "If in doubt,
fill it out!" You can apply
Online by visiting the Help With
Medicare Prescription Drug Plan
Costs section on the Social
source Medicare.gov |
