How the Plan Works
Yes, it's more government gobbledygook. But the new Medicare drug benefit--no matter how daunting it seems--can be a cost saver for many seniors
Phil Miles knows he's lucky. At 68, the retired adult education teacher has no serious health problems, a fact he chalks up to good genes and an exercise regimen that includes stationary cycling, yoga, and weightlifting. "I try to stay fit," he says. But despite his good health, he's paying close attention to the new Medicare prescription drug benefit. He's waiting to see if his existing coverage changes, and then he'll decide whether to keep his current drug plan or switch to a new one. "It's pretty complicated," says Miles. "There's a lot of fine print. I think seniors are pretty anxious about this."
That's an understatement. As the November 15 enrollment period looms, Miles isn't the only potential beneficiary trying to get up to snuff. But for anyone 65 or older (or younger people with certain disabilities) or anyone nearing Medicare eligibility, it's important to hunker down and learn the ins and outs of the new benefit, dubbed Medicare Part D. The new perk--the biggest expansion of Medicare benefits since the program's birth in 1965--is likely to save many seniors a chunk of money on prescription drugs. It will vary by individual, but the government estimates the program will cover half the average Medicare recipient's drug costs.
Multiple plans. One of the most bewildering things about the new benefit, which will replace the drug discount cards introduced last year as a stopgap, is that the plan isn't, well, a single plan. The government is subsidizing dozens of private insurers to offer their own plans (many are offering more than one), which have to meet or exceed the federal government's drug benefit standard. The plans will either be stand-alone prescription drug plans (PDP s) to supplement Medicare's existing medical coverage (or a private plan without drug coverage) or will be part of a more comprehensive Medicare private health plan like a health maintenance or preferred provider organization.
When people talk about the new Medicare benefit, what they are really talking about is the basic plan the government has created as a guideline for insurers. Here's the lowdown: In addition to a monthly premium, seniors must pay for the first $250 in annual costs for covered drugs, the standard deductible. When the year's drug costs reach $251, consumers start paying out of pocket 25 percent of the cost and keep paying until their contributions hit $2,250. Then comes the infamous "doughnut hole," in which Part D enrollees are responsible for the entire cost of drugs between $2,251 and $5,100. Above that, catastrophic coverage must kick in, whereby seniors shell out just a small portion (5 percent of the cost or a copay of a few dollars) of their annual drug costs.
Some insurers will offer plans that go above and beyond government-mandated coverage. Some will help cover seniors mired in the doughnut hole, while others will have no deductible. Humana, a large national health insurer, is offering stand-alone plans in almost every state. New Yorkers, for example, can choose from three plans ranging from the Humana PDP Standard plan, with a premium of $4.10 per month and a $250 deductible, to the insurer's more extensive Humana PDP Complete plan, with a premium of $47.93, no deductible, and coverage of drugs during the doughnut hole.
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