The newly added Medicare Prescription Drug Plan, also referred to as Part D, is due to enter into force on January 1, 2006. And even with all the information that older people were flooded last fall, many still don’t know how to make sense of this program. Starting in January 2006, very simple, Medicare will provide prescription drugs for the first time to those who qualify for the Federal Government’s Medicare health insurance program. However, confusion begins here because enrollment in a prescription drug plan is optional, but if beneficiaries are not registered by the deadline of May 15, 2006, they risk paying a permanent premium for their premium, which increases at a rate of 1% per month. For example, a six-month deferment of registration can increase the monthly premium by 6 percent.
As a practical question, the best place to start is to see how this affects your wallet. Medicare prescription drug plans will be offered by insurance companies and other private companies approved by Medicare, and these plans will offer at a minimum a standard level of coverage that consists of the following:
- monthly premium, which will vary depending on your chosen plan.
- annual deductible of $ 250, which is the first $ 250 of annual drug costs.
- A 25% payment for the next $ 2,000 in drug costs with a Medicare Prescription Drug plan that pays the other 75% of these costs.
- There is also a coverage period called the Dunata Hole, where the beneficiary pays 100% of the following expenses in the amount of $ 2,850.
- After that, the beneficiary has a 5% payment for the remainder of the calendar year after $ 3,600 due to its own expenses.
The first beneficiaries will need to consider the formulations of drugs that they will use throughout the year. Before deciding on a Medicare drug plan, beneficiaries will want to confirm that their dosage forms are covered by this plan, and they will want to compare the co-payments that will be required for specific drugs. The Medicare website has a useful tool for comparing different prescription drug plans.
Below is an example of three Medicare prescription drug plans selected for comparison with the Plan Plan Finder Finder tool found on the Medicare website using the following assumptions:
- The beneficiary adds coverage to the Medicare service charge plan;
- not eligible for extra help for low-income people;
- is a resident of Ellicott City, MD using a zip code of 21042;
- and uses three commonly prescribed drugs: Diovan (high blood pressure angiotensin blockers), Mobic (anti-inflammatory NSAIDs) and lipitor (statins with high cholesterol)
(1) AARP MedicareRx Plan (contract code: S5820, plan ID: 004)
- Monthly premium of $ 28.61 and $ 0.00 deductible
- Annual Common Plan of Drug Plan for Beneficiaries - USD 1,756
- Monthly bonus of $ 19.80 and $ 0.00 deductible
- Annual General Plan of Drug Plan for Beneficiaries - US $ 2,925
- Monthly premium of $ 6.44 and $ 250.00 deductible
- Annual Common Plan of Drug Plan for Beneficiaries - US $ 1,038
In our example, AARP and WellCare plans did not require an annual deductible of $ 250, but they differed in the level of coverage of our drugs. In the case of WellCare, the beneficiary would have to pay 100% of the cost of drugs (and also pay a monthly premium!) Because this plan did not cover any of the three forms, while the AARP plan covered drugs, but a surcharge of 40% was required for Lipitor up to 66% for mobic. The best plan in our example — the Humana Standard — had the lowest monthly premium, and they also provided standard coverage for all three of our drugs, requiring only a 25 percent surcharge before reaching the initial coverage limit. In all three of these plans, there were 6 local pharmacies, including CVS, Giant, RiteAid and others, conveniently located in the area that accepted their plans.
While a new Medicare prescription drug plan can be misleading, with a small amount of research and some crunches, consumers can make an informed decision. With the rising cost of health and prescription drugs in general, a new Medicare prescription drug plan can be a positive new benefit for Medicare beneficiaries and an important part of a personal financial plan. Keep in mind that you are not locked in a certain plan forever. After May 15, 2006, there will be an annual open registration period from November 15 to December 31 of each year when beneficiaries can change their plans.
