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Step 1
Getting Started on Making Your Decision on Medicare
Drug Plan
A common sense approach to assist you
in considering your drug plan options
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Graph showing
your cost in basic Medicare drug plan. Click to expand.
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If you are a senior citizen covered by Medicare,
you must make a decision about the new Medicare Drug Program that begins
on January 1, 2006. To begin the process of making an intelligent
decision, you must begin by knowing the basics of the program and
clearly understanding your current coverage.
Before considering your current situation and steps
you should take in making a decision, you need to understand the
following basics about the program.
You do not have to participate, but there will be a
substantial penalty if you decide you need this coverage and want to
join in future years.
The first thing to understand about the Medicare
Prescription Drug Program (Medicare Part D) is that it is an
insurance program being offered by private insurance companies
whose plans have been approved by Medicare.
This is called Medicare Part D but it is not
operated and managed by Medicare is are Part A and Part B. There are
many "plans" available and they are offered by insurance companies and
approved by Medicare.
This new drug insurance is something like Medigap
insurance, which is also offered by private companies and is optional.
In the Medigap program, however, there are very specific plan provisions
that all insurance companies must provide. For example, a Medigap Plan F
policy provides the same coverage by all insurance companies. It can,
however, vary in price.
It is much different in the drug insurance program
in that the companies only had to meet basic requirements for approval
but are free to design their plans within these basic constrains.
This idea, for sure, encourages competition between
the companies to make their program more appealing to seniors than their
competitors. The problem is, however, that it makes the choices for
senior citizens much more complicated.
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Medicare says the decision to get Medicare
prescription drug coverage depends on how you pay for your drugs now and
how you get your Medicare coverage.
Most senior citizens get their health care or
prescription drugs in one of the ways listed below. When you find the
best description of your situation in the column on the left, you will
find the suggested options for you on the right.
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1. Original
Medicare only, or Original Medicare and a Medigap (‘Supplement')
Policy without drug coverage. |
The new Medicare
drug coverage should help most in this category, according to
Medicare. Medicare has said that on average it will cover half
of the costs for you if you have this kind of coverage now.
ACTION: The
primary options are to sign up for one of the basic plans
available in your area, to switch to a managed care plan (HMO,
etc.), or opt for no drug coverage.
Those with low
incomes need to investigate the help available from Medicare to
pay all or part of the drug program cost. |
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2. Original
Medicare and a Medigap (‘Supplement') Policy with drug
coverage. |
Medicare says the
new drug coverage will generally provide much more comprehensive
coverage at a lower cost. If you have one of these plans,
however, you can keep it but they will no longer be available
for new enrollments beginning in 2006.
ACTION: Basically,
you can stay with what you have, or, drop this Medigap plan and
choose another without drug coverage and then sign up for one of
the basic drug plans available in your area. You can also switch
to a managed care plan (HMO, etc.), dropping all Medigap
coverage, or opt for no drug coverage. |
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3. Retiree or
union coverage. |
In most cases,
people with good retiree or union coverage can continue to get
it, with new financial support for the plans from Medicare.
Employer and union plans are sending out letters to their
enrollees explaining if their current prescription drug coverage
is as good as or better than the standard Medicare prescription
drug coverage.
ACTION: In cases
where the coverage is as good or better than Medicare’s the
enrollee should continue in their current plan. If it does not
match Medicare’s, you can choose a Medicare plan but you need to
consider all the coverage provided by your current plan. |
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4. Medicare
Advantage Plan (like an HMO or PPO) or other Medicare Health
Plan. |
These should
already include drug coverage and other extra benefits. The plan
may simply add Medicare's prescription coverage, or else it may
bring the drug coverage it now includes up to Medicare's new
guidelines. These beneficiaries will get a notice from their
plan.
ACTION: If you are
happy with your plan, your best option is to stay with it. |
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5. Dual
coverage from Medicare with Medicaid drug coverage. |
These people will
automatically get comprehensive prescription drug coverage from
Medicare, starting on January 1. Be sure you are enrolled. |
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6. Prescription
drug coverage through TRICARE (military retiree benefits),
Department of Veterans Affairs (VA benefits), and FEHBP (Federal
Employees Health Benefits Program). |
Those with
prescription drug coverage through TRICARE, the VA, or FEHBP are
advised by Medicare to stay with it. |
The decision to participate in this drug insurance
program is easy for those who will get it free or with financial
assistance from Medicare. They, of course, should take it.
It is also a pretty easy decision for those with
company union and other government retiree programs, since they will
just keep the same program they have, but Medicare will pay the
providers for the drug coverage.
Another group with a not-too-difficult decision are
those who already participate in a Medicare Advantage Plan – HMO or PPO.
They just stay with what they have and take advantage of enhanced
prescription drug coverage.
Those who have to give some serious thought to a
decision are those not included in one of these three groups. That means
those who have no drug coverage or have been getting coverage through a
Medigap plan.
The first question many will ask is “do I need
prescription drug coverage?”
The answer is not as simple as it may seem. It is
not just a question of do you need prescription drug coverage now, it is
also a question of will you need this coverage in the future.
The question of your future need is very important
in your decision-making, because if you do not sign up in this first
enrollment period, you will pay a substantial penalty to join later.
If you don’t join a plan by May 15, 2006, and you
don’t currently have a drug plan that, on average, covers at least as
much as standard Medicare prescription drug coverage, you will have to
wait until November 15, 2006 to join. When you do join, your premium
cost will go up at least 1% per month for every month that you wait to
join. You will have to pay this penalty as long as you have Medicare
prescription drug coverage.
As you begin this decision-making process, you
should remember that this is “insurance.” Like insurance on your car,
your house or long-term care, it is designed to provide help when it is
needed.
With this thought in mind, the next step for those
who face a decision is to understand how the basic plan works and what
it will mean to you.
Now go to Step 2: Understanding the Basic Plan -
click here
• Go to our main page on "About
Medicare Drug Program" - click here
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