Wednesday, September 14, 2005

New Medicare drug benefit: What you need to know

Published in the Current

(Sep 14, 2005): Seniors on Medicare, or those approaching age 65, have a big choice looming regarding Medicare's new prescription-drug coverage program.

While seniors will be given plenty of information, including from government agencies and advertising by large insurance companies, the wealth of information may actually make it harder to decide on the best prescription drug program for you.

Starting Oct. 1, insurance companies will begin a marketing campaign targeting senior citizens, to convince them to buy one or another Medicare-approved prescription drug insurance plan, collectively called Medicare Part D.

Starting on Nov. 15, those on Medicare will need to sign up for a specific drug coverage plan in order to be eligible for help paying the costs of prescription drugs starting on Jan. 1, 2006.

In the lead-up to what promises to be a complex decision-making process, Medicare drug specialist Katlyn Blackstone from the Southern Maine Agency on Aging is holding a series of seminars around Cumberland and York counties to inform seniors about the new prescription drug system.

There are 77,000 Medicare recipients in Cumberland and York counties, and “all of you will have to make some kind of decision regarding Medicare Part D,” even if that choice is not to participate, Blackstone said at a meeting with seniors in South Portland last week.

How it works

The Medicare prescription drug plan is separate from the hospital insurance program, called Part A, and outpatient insurance covering doctor’s office visits, called Part B.

Medicare Part D replaces the Medicare-approved drug discount card program that started in early 2004, meaning that people involved in those programs will have to choose a new Part D plan.

These prescription drug plans are offered by private insurance companies, who will charge a premium – projected to be about $35 a month, at least for the first year.

Benefits, under Part D, start with a $250 deductible, which must be paid by the individual. There is no insurance to help pay for the first $250 of drugs you use each year.

Under all the Part D prescription drug coverage plans, fees are charged at the full rate, not a discounted rate like with the current drug discount cards.

So, for example, if a person is taking a drug, and is in a drug discount plan with a payment of $25 for a drug that costs $100, the person would have to pay the full $100 for two months, and then $50 the third month, before the insurance kicks in.

After the person pays the $250 deductible, the new drug coverage insurance plans, under Medicare Part D, will pay 75 percent of the cost of the drugs.

That means seniors will be required to pay the remaining 25 percent – until the total cost of the drugs reaches $2,250.

Under Part D, therefore, a senior has to pay $500 of their own money, in addition to the $250 deductible, for a total of $750 out-of-pocket.

Beyond that, there is what Blackstone called a “coverage gap” in which “you are responsible for all of your drug costs” until the total cost of your drugs reaches $5,100.

This means the senior would have to spend another $2,850 of their own money – for a total out-of-pocket cost of $3,600.

After that, the drug insurance plan will pick up 95 percent of the cost of all drugs, leaving 5 percent to be paid by the senior.

These out of pocket costs for prescription drugs are an annual expense. And, the $35 premiums must be paid monthly as well.

How to get help

Before the sign-up period begins, seniors can ask for help paying the costs of the premiums and prescription drugs, once they have decided on a prescription drug plan.

Blackstone said everyone should fill out a form from the Social Security Administration to see if they qualify for help, based on their income level and other assets such as bank accounts.

The value of a senior’s home, and any vehicles, are not included in the income calculation.

People with Mainecare and Medicare will have no premium, no deductible, no gap in coverage, and co-payments at or below $5 per prescription, even for brand-name medications – though only if their medications are on the list of specific drugs covered by their plan.

If those people spend more than $3,600 in a year, then even the co-payment is waived.

People who live in nursing homes and on Mainecare will have no co-payments or any out-of-pocket expenses, Blackstone said.

Choosing a plan

There will be as many as 20 prescription drug coverage plans available to choose from in Maine.

All of the Medicare Part D plans must be approved by the Maine Bureau of Insurance. None of the plans offered will provide coverage for purchasing drugs from Canadian pharmacies.

The Medicare information booklet, mailed each October to recipients, will include a listing of all plans available in Maine and phone numbers to call for more information.

But even before that, the insurance companies can advertise their plans, including calling seniors directly.

“They’re not allowed to enroll you over the phone,” Blackstone said, warning seniors not to be talked into signing up too quickly.

She urged seniors to look carefully at all the plans, including asking what medications each plan covers (called its “formulary”) and how much it will cost, including co-payments.

“The companies want your business. Up front they are most likely going to be very generous in their formularies. … Later on that might change. We’re not sure,” Blackstone said.

Some drug coverage plans will require prescriptions be filled by mail, while others will be honored by local pharmacies.

Penalty for delay

Enrollment is not automatic, except for people on Medicaid (or Mainecare) or in Medicare savings plans. But even then, there is a choice to be made.

“If you have Mainecare and Medicare … you will be automatically assigned to a plan by the end of the year if you don’t pick one,” Blackstone said.

People with Veterans Administration prescription coverage, TRICARE or Federal Employee Health Benefits coverage do not need to sign up.

People on retiree prescription plans will get a letter by Nov. 15, telling them whether they need to sign up for Medicare Part D.

A person who decides not to sign up by May 15, 2006, and is not in a comparable plan, will have to pay a penalty if they sign up later.

The penalty is a percentage of the premium, based on how many months after the May 15, 2006, enrollment deadline the person signs up.

For example, if a person signs up a month late, they will have to pay the premium, plus 1 percent of the premium, each month. If a person signs up a year late, the surcharge would be 12 percent of the premium.

For more information about the new Medicare Part D drug coverage plans, call Southern Maine Agency on Aging at 396-6500 or 1-800-427-7411.

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