Updated On  06/28/2007
 

Medicare’s New Coverage for Prescription Drugs
 Effective January 1, 2006

How Plans Work:  (Using 2006 as example)

Medicare prescription drug plans will vary, but in general, this is how they will work.  When you join, you will pay a monthly premium (varies depending on the plan you choose, but generally about $37) in addition to any premiums for Medicare Part A and/or Part B.  You will pay the first $250 per year for your prescriptions.  This is called your “deductible.”  After you pay the $250 yearly deductible, here’s how the costs work:

·        You pay 25% of your yearly dug costs from $250 to $2,250, and your plan pays the other 75% of these costs, then

·        You pay 100% of your drug cost from $2,251 until your out-of pocket costs reach $3,600, then

·        You pay 5% of your drug costs (or a small co-payment) for the rest of the calendar year after you have spent $3,600 out-of-pocket and your plan pays the rest.

Here is an example as to how this might work:

*$250 deductible + $500 (25% share $250 to $2250) + $2,850 = $3600 out of pocket cost.

How to Enroll in a Medicare Prescription Drug Plan:

To enroll, you must have Medicare Part A or Part B.  You can first enroll from November 15, 2005 through May 15, 2006.  This is called the ‘initial open enrollment period.”  Enrolling is your choice.  Note:  After this initial open enrollment period, you can change your plan during the open enrollment period, which will be from November 15 through December 31 each year.  Your Medicare prescription drug plan will begin January 1 of the following year.  To join, you will need to decide how you want to get your prescriptions.  You can

·        Get all your health care benefits and prescriptions through a Medicare Advantage Managed Care Plan that offers optional coverage for prescription drugs,

·        Get your health care benefits through the Original Medicare Plan and choose a Medicare prescription drug plan, or

·        Get your health care benefits through another type of Medicare Advantage health plan or a Medicare Managed Care Plan that isn’t a Medicare Advantage Plan.  In these kinds of plans, you may be able to choose a Medicare prescription drug plan.

Medicare prescription drug plans can offer coverage like this or more generous coverage for higher premiums.  Joining is your choice.  However, if you don’t join when you are first eligible, you may have to pay a higher premium if you choose to join later.  You will have to pay this higher premium for as long as you have a Medicare prescription drug plan.

Note:  If you already have prescription coverage from other insurance, you can keep that coverage.  If that coverage offers, the same or better benefits as described above, you will not have to pay a higher premium if you decide to join later.  Check with you other insurance to see how your coverage compares.

How are the new Medicare drug plans that are starting in 2006 different from the Medicare-approved drug discount cards that are already available?

Medicare prescription drug plans are a new type of insurance that can give you prescription drug coverage from Medicare.  These plans work like other insurance you may already have.  If you join one of these plans, you will pay a monthly premium, and you will have to pay a co-payment or coinsurance for each prescription you fill.  You will first be able to sign up for one of these new plans beginning November 15, 2005.

The Medicare-approved drug discount cards that became available in May 2004 are a way for you to get a discount on your prescriptions at the pharmacy.  They work like other grocery store or pharmacy discount cards you may have.  You can sign up for one of these cards only until December 31, 2005.  They were offered as a transition step to help people with Medicare save money on prescription drug costs until Medicare prescription drug plans became available.

What happens to my Medicare-approved drug discount card when I sign up for a Medicare prescription drug plan?

You can use your Medicare-approved drug discount card until May 15, 2006 or until you join a Medicare prescription drug plan, whichever is first.  Once you have a Medicare prescription drug plan, you can’t use your Medicare-approved drug discount card.  You will get coverage for prescription drugs through the Medicare prescription drug plan instead of saving with the discount card.

Can I still use any credits left on my Medicare-approved drug discount card after December 31, 2005?

Yes, you can continue to use your Medicare-approved drug discount card and your credit until May 15, 2006 or until you join a Medicare prescription drug plan, whichever is first.  After you join a Medicare prescription drug plan, you can’t use your Medicare-approved drug discount card.  You also can’t use any of the credit you have left.

What if I don’t Take Any Prescription Drugs?

Even if you don’t use a lot of prescription drugs now, you should still consider joining a Medicare prescription drug plan.  As we age, most people need prescription drugs to stay healthy.  For most people, joining as soon as possible means you will pay your lowest monthly premium.

How Can I Learn More?

Medicare wants to make sure you get the coverage you need!  Medicare will provide more information in the fall to help you get ready, including how to choose and join a plan that meets your needs.  In the fall of 2005, the Medicare & You 2006 handbook will list the Medicare prescription drug plans available in your area.  There are several places you can find more information about Medicare prescription drug plans right now.

Click this button for information from Medicare's Drug Plan Effective 1/1/06 

Long Term Care

Facts:

• Over 50% of all Americans will need long term care in their lifetime.  (Americans for LTC Security, August 1999).

• For a couple turning 65, there is a 75% chance that one of them will need long term care.  (The Wall Street Journal, June 2000).

• Family caregivers provide 80% of long term care;  institutions such as nursing homes provide only 20%. (ALS Association, 1999).

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What is the cost of care?

• Cost vary by location.

• Nursing homes:  $44,895 per year, national average. (Life Plans, Inc., 2000 National Claimant study).

• Assisted living facilities: $12,000 to $36,000 per year (NCAL/AHCA, Survey of Assisted Living Facilities, 1996).

• Home health care aide:  $12.00 to $24.00 per hour. (Kiplinger's Retirement Report, Hourly Cost of Home-Care Help, January 2000).

• Depending on where you live, long term care can cost anywhere from $40,000 to $100,000 annually and the cost is projected to triple over the next 20 years.  (Financial Planning, September 2000).

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The facts about Medicare

• Medicare's skilled nursing facility (SNF) benefit does not cover most nursing home care.

• Medicare does not cover homemaker services.

• Medicare does not pay for home health aides to give personal care unless you are homebound and are also getting skilled care such as nursing or therapy.

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The facts about Medicaid

• Medicaid is jointly-funded.  Federal-State health insurance program for certain low-income and needy people.

• You may have to spend down or use up most of your assets on your health care before Medicaid is able to help.

• State laws differ about how much money and assets you can keep and be eligible for Medicaid.

• Nursing Facilities only reserve a limited number of beds for Medicaid recipients.

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Updated On  06/28/2007

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