Medicare Drug Benefit: Q & A

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For the first time, Medicare beneficiaries can now get help in paying for prescription drugs. But with dozens of private insurers offering their own version of the new Medicare drug plan, analysts say the only sure bet for those eligible is that they'll be confused about which plan to choose. To help make sense of the options, science editor Joe Neel answers some of the key questions.

Q: Who is eligible for the Medicare drug plan?

A: Anyone who qualifies for Medicare and is also enrolled in Medicare Part A or Part B. This includes most people over the age of 65 and certain people who receive disability benefits.

Q: How does the new plan work?

A: Starting Nov. 15, those who are eligible can sign up for one of many insurance plans being offered in each state. These private insurance plans are subsidized by Medicare. You will have to pay a deductible in some cases, and share the cost of each prescription.

How much you pay varies according to the plan you choose. You can sign up through May 15, 2006. After that, you'll have to pay a substantial penalty for signing up late.

Q: How quickly does the coverage take effect?

A: Medicare says that if you sign up by Dec. 31, 2005, your plan will be effective on Jan. 1, 2006. After that, it becomes effective on the first day of the month after the date you sign up.

Q: Last year, I signed up for a Medicare discount card for prescriptions. Do I need something else now?

A: Yes. The discount cards will expire on May 15, 2006, or sooner, if you sign up for the new Medicare drug benefit.

Q: What kinds of plans will Medicare be offering?

A: There are two main categories: 1) a prescription drug plan for drug coverage only; or 2) a Medicare Advantage plan such as an HMO that covers drugs and all other Medicare benefits.

Q: How much will the prescription-only plan cost?

A: The monthly premium for the prescription-only plans will be an average of $37, depending on where you live and which plan you choose. (You may pay less if you qualify for low-income assistance, see below.)

Some plans may charge an annual deductible. In 2006, this could be up to $250. Plans are also charging a fee for each prescription you get filled.

Q: How big will the per-prescription fee be?

A: It varies in each plan. Some plans may not require a per-prescription fee. Others will charge a flat fee called a "co-payment." That could be $5-$30 or more per prescription and may vary according to whether the prescription is for a brand-name drug or a generic.

Q: I'm in a Medicare Advantage plan, or I want to join one. Will things be different in these plans?

A: If you're a member of a Medicare Advantage plan or you decide to join one, your plan will include all Medicare services and certain prescription drugs. One of the significant downsides of Medicare Advantage is that these plans restrict which doctors you can see, which hospitals you can use, and their drug plans may not be as generous as the prescription-only plans.

Q: What's covered?

A: By law, each private Medicare drug plan must cover at least two drugs in each therapeutic class or category of drugs that Medicare covers. Medicare expects that plans will cover more than just two drugs in several major classes, including antidepressants, antipsychotics, anticonvulsants, antiretrovirals, immunosuppressants and antineoplastics. Certain drugs aren't covered at all, such as tranquilizers.

Some plans are offering a no-frills plan with premiums below the average. Other plans are offering a no-deductible plan, meaning coverage starts with the first prescription purchase of the year. Again, premium rates vary according to what's offered.

Q: What other red tape do I need to know about?

A: The private prescription plans can charge higher co-payments for certain drugs. For example, you might pay a higher co-payment for a brand-name drug than for a generic drug. Drug plans can require that you get approval before they'll pay for certain drugs. Plans are also allowed to place restrictions on benefits as long as they do not "substantially discourage enrollment."

Q: Will I have to get reimbursed for my drug costs, or will the pharmacy file the claim?

A: If you enroll in one of the prescription-only drug plans, you'll receive a card to present at the pharmacy. The pharmacy will scan the card to determine what you'll need to pay on the spot.

Q: Right now, I have a Medicare supplement policy that pays for my prescriptions. Should I keep that or switch to Medicare?

A: You can keep your current private supplement policy, but it may be better to sign up for a Medicare plan. Your current insurer should send you a letter telling you what they will be offering in 2006. Use that information to shop among the various plans being offered through Medicare. Experts tell NPR that most of the new Medicare plans will be more generous than existing supplement policies. You should weigh how much you will save by no longer paying the supplement premium against the costs of the Medicare plan. Also consider that if you keep your supplement policy and change your mind after May 15, 2006, your premium for the Medicare plan could be higher.

Q: I've heard that there's assistance for people with low incomes. How does that work?

A: It all depends on your yearly income. If your income is at or near the poverty line, you won't pay monthly premiums or the annual deductible and your co-payments for prescriptions will be low. It also depends on how many assets you have. Your savings accounts or investments must be worth less than $11,500 if single or $23,000 if married. (The assets amount does not include your house.)

Q: If I have Medicaid, am I automatically enrolled?

A: Yes, people who get both Medicare and Medicaid are supposed to be automatically enrolled in a Medicare drug plan. After Jan. 1, 2006, Medicaid will no longer pay for drugs, but Medicare will. It's important to realize that you have a choice if you're on Medicaid — you don't have to accept the plan that Medicare automatically enrolls you in. You can follow the instructions to choose the plan that suits you best.

Q: I'm not on Medicaid. Do I need to apply for the low-income assistance separately?

A: If you don't qualify for Medicaid in your state, and your income falls within the range shown in the chart (at bottom), you will need to apply for assistance from Social Security or your state Medicaid program.

Q: My state has a pretty good plan that helps me with prescription costs. What should I do about that?

A: State programs are permitted to continue under the new plan and they may offer benefits above and beyond what you can get with a Medicare drug plan. Check with your state.

Q: I want to wait and see how this thing will work. Can I sign up anytime?

A: Yes. But if you sign up after May 15, 2006, there could be a penalty of 1 percent of the monthly premium added for each month you delayed in signing up.

Q: I'm in my early 80s and I don't really use many medications. Do I have to sign up?

A: No, participation in the plan is voluntary. But you should think about what kinds of medications you might need if you get a major illness in the future. Studies are projecting that most people on Medicare will save money over the long run by signing up for drug coverage now.

Q: I'm ready to shop for a prescription drug plan. What should I do?

A: Collect all the information you can about the medications you take.

By now, you should've received a booklet from Medicare listing all the drug plans available to you. If you have a supplemental policy that pays for prescriptions, you probably have a letter from them explaining what they're offering.

Next, make a list of all of the drugs you're currently taking. Put down how many pills you get filled each time, the dosage of each medication and the price you pay.

You have several options on how to enroll — either on the Web, by calling Medicare or by contacting one of the insurance companies offering a plan.

On the web, go to www.medicare.gov to start comparing plans.

By phone, call toll-free 1-800-MEDICARE (1-800-633-4227) and a Medicare customer service representative will help you choose a plan. (TTY users should call 1-877-486-2048.)

Q: I've heard there's a lot of confusion about which plan to choose.

A: Yes, in most areas there are at least 40 prescription-only plans from which to choose. Each plan has a different list of drugs that it will pay for, so be sure that the drugs you are taking are on a plan's list - especially your most expensive prescriptions.

Each plan will charge a different premium and will charge a different amount per prescription. Also, each plan will have certain pharmacies that you must use. Make sure the plan you choose has a pharmacy that's close to you or to whomever picks up your prescriptions for you.

Q: What if I already have a drug plan through my old employer or union? Should I switch?

A: Medicare is hoping that you won't. The government is giving employers and union plans subsidies to continue their retiree plans. You are free to choose a Medicare plan and drop your retiree coverage, if that seems like a better deal. But be cautious —you might not be able to go back to your employer or union plan after you've dropped out.

Q: What if I don't like the plan I picked? Can I change?

A: Yes, but only once a year (unless you move out of your region). The kicker is that the private insurance plans can change which drugs they will cover as often as they like, even though you will be locked into your plan until a new enrollment period is announced each year.

Q: What if I qualify for Medicare B, but, because I am covered by my spouse's health insurance, I elect to neither sign up for Medicare B or the drug plan?

A: According to a Medicare spokesman, you should be fine and you won't have to pay any late-enrollment penalties. But — and this is essential — you must make sure that your current coverage is "creditable." Creditable means that the benefits are at least equivalent to Medicare's. If that's the case, you can sign up whenever your spouse's coverage ends; i.e., when your spouse retires. You will need to get a letter from your spouse's insurance company to certify that your current coverage is "creditable."

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