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Careful Planning for the New Medicare
According to the Pennsylvania Institute of Certified Public Accountants, this new Medicare plan can offer savings on prescription drugs.
Medicare beneficiaries who choose to remain in the traditional fee-for-service Medicare program can sign up for drug coverage through a stand-alone prescription-drug plan (PDP) from a private insurer. All beneficiaries are guaranteed to have at least two qualifying plans from which to choose.
You can also elect to receive all Medicare-covered benefits, including new prescription-drug benefits, under Medicare Advantage, the new name for the Medicare HMO program.
If you have coverage for prescription drugs through a former employer or union, check with the benefits administrator. Medicare prescription-drug coverage may be different for you.
The initial enrollment period for Medicare beneficiaries runs for six months, beginning as of Nov. 15, and ending May 15. For those who join by Dec. 31, drug coverage takes effect on Jan. 1.
Join after that date and coverage becomes effective the first day of the following month.
If you become eligible for Medicare after Nov. 15, the Medicare program will inform you of your six-month enrollment period.
The new drug benefit is voluntary, but if you sign up after your six-month enrollment period, you will pay more. The late enrollment fee is approximately 1 percent of your premium for each month you delay, or 12 percent per year, and you'll pay it as long as you stay in a Part D plan.
For example, should you decide not to join a Part D plan when eligible, but change your mind two years later, your monthly premium will be 24 percent higher for the entire length of time you are enrolled in a Part D plan.
Subject to Change
Each plan has a formulary - its own list of covered drugs -and the list may change during the year. Prepare a list of the name, dosage and cost of the prescriptions you use. Since the drugs covered vary from plan to plan, this will help you choose the plan that best meets your needs.
Be aware that you will be required to pay the full cost of drugs not on the plan's formulary.
Medicare Part D participants pay a monthly premium set by the plan, an annual deductible and co-payments. Each plan can set up its own premium and co-payments, within certain guidelines set by Medicare. Under the standard plan, in 2006, individuals will pay a premium of about $37 per month and will have a $250 annual deductible.
After meeting your deductible, you are responsible for paying 25 percent of the cost of covered drugs, with Medicare making up the difference until your total drug expenditures reach $2,250.
Beneficiaries are responsible for paying 100 percent of drug costs between $2,250 and $5,100. Once the $5,100 threshold is exceeded, Medicare pays 95 percent of your prescription-drug costs, with no maximum benefit amount.
As part of the new benefit, extra assistance is available through Medicare Part D for low-income individuals. Applications mailed this past summer will provide millions of qualifying individuals with a Medicare drug plan with little or no premiums or deductibles and low co-payments.
For more information about Medicare Part D and how it could address your medical needs, visit: www.medicare.gov.