Oregon Rheumatology Alliance

The Benefits of Choice: Medicare Prescription 2006

Beginning Nov. 15, Medicare beneficiaries can begin to enroll in the new Medicare prescription-drug benefit that launches Jan. 1. But with the initiation of the new program, seniors will have to choose a private policy, subsidized and regulated by Medicare, from one of up to 23 different companies, reported Sarah Lueck in the September 14th issue of The Wall Street Journal . Providers of the stand-alone drug policies range from national health insurers such as United Healthcare, Humana and Aetna, to smaller regional providers. Adding to the difficulty in choosing among the providers, experts report that costs, pharmacy networks, and medicines covered will vary considerably from plan to plan. Some monthly premiums are expected to be as low as $20, with others well above $30.

To help beneficiaries choose a plan, the government will unveil a Website in mid-October that will allow seniors to enter the drugs they take and the pharmacies they prefer. The site will then recommend the plans that match their needs.

Though the benefit is voluntary, anyone who delays signing on faces higher premiums after May 15 if they aren't part of an approved program such as a corporate retirement plan. For each month a person signs up late, he or she will automatically pay 1 percent more in monthly premiums forever. For example, people who are eligible for Medicare and lack qualified drug coverage would pay monthly premiums that are 24 percent higher if they join two years late. The penalties encourage people to start paying premiums even when they are relatively healthy instead of waiting until later when they become ill.

The bulk of the pharmacy tab will be picked up by the government. However, insurers must follow some broad requirements determined by CMS, such as a $250 cap on annul deductibles. Some plans may be structured to charge no deductible or to eliminate or lessen the coverage gap referred to as "the donut hole" that congress built into the plan to curb costs. The donut hole appears once beneficiaries' total drug bill, not including premiums, reaches $2,250 in a year. Beneficiaries must foot their own costs ($2850) until they spend a total of $3,600 out of pocket, not including premiums. After that, benefits kick in again, with policies required to pay at least 5 percent of drug costs for the rest of the year.

For more information, go to the CMS Web site at www.cms.hhs.gov