November 3, 2005

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The Centers for Medicare and Medicaid Services (CMS) announced the details of the Medicare Part D Prescription Drug Plan in the fourth quarter 2005. Medicare Part D is being delivered as part of the Medicare Modernization Act of 2003.

Enrollment in the new Medicare prescription drug benefit plans, which go into effect January 1, 2006, begins on November 15 and extends through May 15, 2006. The new program is designed to provide some cost relief for prescription drugs to eligible Medicare recipients. Because the new plans provide a variety of options, health care professionals are encouraging seniors, their families and caregivers to carefully study the program in order to fully understand the options.

All Medicare beneficiaries — anyone who has Medicare Part A (hospital insurance) and/or Part B (medical/physician insurance) — including those on disability are eligible. The program is voluntary and must be purchased through private insurance plans.

The government is requiring all plans to offer a prescription drug plan equal to or better than the Medicare standard drug plan, which specifies the following benefit tiers:

  • Beneficiaries pay the first $250 of their drug costs per year
  • Beneficiaries pay 25 percent of their drug costs between $251 and $2,250 per year
  • Beneficiaries pay 100 percent of their drug costs between $2,251 and $5,100. This is a coverage gap where no coverage is provided. When $3,600 in total member out-of-pocket costs is reached, coverage picks up again and beneficiaries pay 5 percent or a $2-$5 co-payment on their prescriptions, whichever is greater.
Additionally, Medicare beneficiaries have two basic choices for Medicare Part D plans:

1. Medicare Advantage plans (MA-PDs). HMOs, PPOs and private fee-for-service plans which include Part-D enhanced benefits.

2. Stand-alone Prescription Drug Plans (PDPs). Stand-alone plans are just that; they supplement traditional coverage and cover only prescription drugs.

There is a premium penalty if seniors sign up after May 15, 2006. They will pay an extra 1 percent of the national monthly average rate for every month they go without qualifying coverage. For example, if they sign up two years after the initial enrollment period, their monthly premium, no matter which plan is selected, will be 24 percent higher.

While there is a lot to learn and the new benefits are mystifying to many seniors, they should just take the plunge and select from the creditable options.

Source:
The News-Gazette — October 2, 2005
Chicago Sun-Times — October 17, 2005
Newsday.com — October 21, 2005
San Francisco Business Times — October 21, 2005

MORNING COFFEE FLASH
Guide to Medicare Part D
Medicare is complex. Our approach is to "make it simple."
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