Medicare's Prescription Drug Coverage Debuts

WASHINGTON – Medicare's prescription drug coverage rolls out Sunday, a benefit being hailed as the most significant advance in the program's 40-year history. Most senior citizens should see their medicine become more affordable because of the new coverage. Still, not everyone will save, and Medicare's 42 million beneficiaries have been patient, if not hesitant, about enrolling in a private plan.

Dr. Edward Langston, a family physician from Lafayette, Ind., says the elderly make up about a third of his patient load. The most common question he gets from them is, "Do you think I should sign up?

His reply: "Certainly."

"My average Medicare patient has heart disease, diabetes, arthritis, and then a few other things you want to throw in there," Langston said. "They're the most vulnerable patients we have out there except for the infant. We have some excellent drugs to help treat them, but a lot of them have fixed incomes, and they need the help."

The best way to ensure that people get the most out of the new coverage is to find the private plan that best suits their needs. It's a task that takes time and effort.

People can compare plans on their own through the government Web site http://www.medicare.gov or they can call 1-800-Medicare and get an operator to do the comparison for them.

In each state, beneficiaries can choose from among dozens of plans. Those offering drug coverage include the biggest names in the health insurance industry. In Langston's state, for example, there are 42 private plans offering prescription drug coverage. The choice increases even more when including Medicare Advantage programs. Those programs operate like an HMO and offer more comprehensive medical coverage, such as visits to a doctor.

All the choices have proven daunting for some senior citizens, but government officials counter that choice is good. The competition drives down beneficiaries' expenses and improves benefits, they say.

"Choice can be baffling when it's hard to tell the differences between the different plans," said Diane Rowland, executive vice president of the Kaiser Family Foundation, a research organization. "I think for people who don't have coverage, who are very low income, this is an important supplement to their Medicare coverage. But people above the low-income subsidy really have to look at the plans closely."

While the plans differ in many respects, the benefit package they offer must at least be equal in value to what is called the standard benefit. And the standard benefit looks like this:

Beneficiaries will pay a monthly premium of $32.20 per month. They will also be responsible for the first $250 in drug expenses, and then will pay, on average, 25 percent of the costs until they reach the benefit limit of $2,250.

Once they reach the benefit limit, they will face a gap in coverage. They will have to pay all of their drug costs up to about $5,100 in total drug spending. Medicare will then pay 95 percent of drug costs above that amount.

That's a lot of numbers for beneficiaries to take in. But the federal government offers some suggestions about the type of plan beneficiaries should consider.

If you're a senior citizens will little-to-no drug expenses, you'll want to consider plans with extremely low monthly premiums. Every state in the country except Alaska has one plan with premiums below $20 a month.

If you want your drug expenses to be balanced throughout the year, consider a plan with no deductible, and that way you won't have a lot of out-of-pocket expense at the beginning of the year.

If your annual drug expenses fall within $2,250 and $5,100, consider a plan that offers some coverage within the so-called doughnut hole.

And, always remember that if you take specific drugs important to your health, make sure those drugs will be covered by your plan.

The agency responsible for making sure the benefit gets off to a smooth start is the Centers for Medicare and Medicaid Services. Mark McClellan, the agency's administrator, said he's heartened by the number of people who have applied for the benefit as well as surveys of those who have enrolled.

"They are overwhelmingly saying it is worth the effort, and they will get savings and security, and in many cases, more savings than they expected," he said. "And we have the resources to help any other senior who is interested in taking advantage of the same program."

So far, about 10.6 million people have been automatically enrolled for the new benefit, but only 1 million have voluntarily signed up. Employers will get a government subsidy to continue providing 5.9 million retirees with coverage. Applications for another 600,000 people are under review.

"We had more than 1 million people sign up in the first four weeks of the program," McClellan said. "For a voluntary program, with a six-month enrollment period, that is extraordinary."

Others aren't so optimistic.

"I think it's off to a slow start. And there's a lot in 2006 they have to do to explain this benefit better and to help make the choices more realistic," Rowland said.

While the benefit begins Sunday, people will have until May 15 to enroll and ensure they get some coverage this year. If they wait beyond that date, they could face a financial penalty, plus they may not get coverage until 2007. The penalty equals 1 percent of the premium amount, and it accumulates each month enrollment is delayed. So, if a person delays enrollment in Part D for one year, he will pay an additional 12 percent on top of the premium.

It is the poor that stand to gain the most from the new benefit. That's because the government will subsidize their coverage to the extent that many will have no premium, deductible or gaps in coverage.

"Seniors in this country will never again have to choose between paying for their drugs and paying for their basic necessities, such as food and utilities," McClellan said.

However, people who qualify for such aid must have limited assets and a maximum annual income of about $14,355 for individuals or $19,245 for married couples.

So far, about 1 million have been approved for the low-income subsidy. About 6 million to 7 million more are believed to be eligible.