The New Federal Prescription Drug Plan
(Medicare Part D)
At our May 2005 General Meeting, Shirley Force of the Passaic County Office on Aging described Medicare Part D, the prescription drug plan that will go into effect at the beginning of 2006. The plan could have a profound effect on what you spend for medication.
Health insurance companies are required to send information to you by this coming October, and some companies are already sending letters to their subscribers, but Shirley advised us that some plan details have yet to be worked out.
The audience expressed such a high level of interest that we prevailed on Shirley to return this autumn with an update. In the meantime, here is the best information we have so far, gathered from Shirley and other sources:
1. When does the plan take effect?
January 1st, 2006. If you are on Medicare or SSI, you can sign up starting on November 15th of this year. If you have signed up by December 31st, your coverage will begin on January 1st of 2006. If you join after December 31st of 2005, the coverage will begin on the first day of the month subsequent to when you enroll.
2. What will I have to pay?
In 2006 you will pay $37 per month, but if your income is low enough, you might qualify for help.
IMPORTANT: If you are eligible but join the plan later than May 15th, 2006 your premium will be increased by 1% for every additional month you have waited. So, for example, if you wait until the middle of December of 2006 (and if the basic premium is not increased for 2007) your premium will be $39.60, and if you wait until November of 2007 your premium will be $44.05.
3. I already have prescription drug coverage. Will the federal plan affect it?
If you join the federal plan, it will replace your private plan.
4. Could I be required to join the plan?
No. However, if you currently have prescription drug coverage through a retirement system, it is possible that your former employer will decide to stop providing prescription drug coverage to retirees. In that case, your choices would be: To join the federal plan; to obtain private coverage entirely at your own expense; or to do without prescription drug coverage.
5. How much will the federal plan pay?
That depends on how much your prescription drugs cost you: Medicare will pay nothing until you have spent $250 (the “deductible”). It will then pay 75%, on subsequent prescriptions, until your out-of-pocket total1 reaches $2250. It will pay NOTHING in the “donut hole” above that, until your out-of-pocket expenses total $3600. When your out-of-pocket expenses have exceeded that $3600 threshold2, Medicare will pay 95% on all prescriptions thereafter.
6. How do I make a comparison between the federal plan and my current plan?
The insurance company is required to tell you whether it believes its plan is better than, as good as, or not as good as the federal plan. Beginning in the fall, the government will offer help in evaluating the federal plan for your specific situation. The help will be available via the Medicare Web site www.medicare.gov and also through the toll-free telephone number 1800-MEDICARE3. Help might also be available from agencies in your local area.
7. Can I join the federal plan any time I choose?
In 2006 only, the sign-up period will be extended to May 15th. After that and in subsequent years, you will be able to join only during open season, November 15th through December 31st.
8. Will I be able to change back and forth between the federal plan and my private plan?
You will be able to leave or return to the federal plan during any year’s open season between November 15th and December 31st. Realize though, that if you leave the federal plan for a plan that is not at least as good, and then return to the federal plan at a later time, you will incur that 1% surcharge on your premium for each month that you were out of the federal plan. Also, although you can leave the federal plan you might find that your retirement-based plan does not accept you back.
9. Will Medicare be getting us reduced prices?
No: The people who are supposed to represent us, agreed to put a provision in the law forbidding Medicare to negotiate drug prices, so you and I will have to pay whatever the pharmaceutical companies dictate. Shirley Force will be the featured speaker at our General Meeting on Wednesday, October 19, when she will provide any updates to the information and will answer more questions from the audience.
W. A. Shapiro