ASK KIM Medicare Drug Coverage: A Difficult Pill to Swallow by Kimberly Lankford
How does the new medicare prescription-drug program work and how much money will I save on my medications?
The drug coverage will be offered like other medigap policies -- in fact, they're calling this plan Part D -- but the coverage is tricky, the law is complex, and determining your savings will depend on the amount and types of drugs you take.
The coverage won't be available utnil 2006 and many details are still being sorted out. But you can expect to pay around $35 in monthly premiums. You'll also have to meet a $250 deductible.
Once you meet the deductible, medicare will cover 75% of your drug costs up to $2,250. Anything above $2,250 comes out of your pocket, until your drug bills top $5,100. Medicare will cover 95% of your costs above that threshhold. (See the illustration below.)
The amount of savings will vary a lot based on your drug costs. Because of the premium, deductible and copayments, you'll pay more in fees than you'll receive in benefits if you have less than $810 in annual drug expenses. And because of what people are calling the doughnut hole -- that 100% you have to pay yourself from $2,250 to $5,100 -- the savings aren't that big unless your drug costs are quite high.
If your drug bills are near the national average, estimated to be $3,104 in 2006, you'd pay $2,024 yourself (including premiums), while medicare Part D would pick up $1,500. With drug costs of $10,000, you'd pay $4,265 (including premiums) while medicare would cover $6,155. You can use our calculator to estimate your savings.
Part D will be offered by private insurers and medicare HMOs, which can adjust the premiums they charge and the drugs they cover.
If you have better coverage, say through the military or an employer, for example, you aren't required to sign up for medicare's plan, but there is a stiff penalty if you don't enroll as soon as you're eligible. (You'll pay an extra 1% for every month you delayed signing up for Part D. The penalty gets tacked onto your premium forever.)
But don't get too bogged down in the details just yet, the medicare prescription drug plan remains controversial and could change some more before it's scheduled to take effect. To keep up with any changes, visit Medicare.gov, the Medicare Rights Center and the Kaiser Family Foundation's medicare page.
The law also created medicare-approved prescription drug-discount cards, which help seniors save from 10% to 25% on their medications for the next year and a half. After April 29th, you'll be able to use Medicare.gov's prescription drug card tool for help finding the card that will save you the most money (you can start using the cards on June 1).
Medicare Part D coverage is broken into three levels:
GETTING STARTED
