Answers to ease Part D concerns
The new prescription drug benefit is the biggest change to Medicare -- the government health program for those over 65 and people with disabilities -- since it was created in 1965. The added benefit will change the way about 30 million Americans pay for their medications. It is also one of the most confusing government plans ever launched. Here are some of the basics:
Q. What is Medicare Part D?
A. Medicare has always paid for hospital care, doctor visits, and other outpatient medical care, but not prescription drugs. Part D is the name for the new prescription drug benefit, which takes effect Jan. 1.
Q. How did the drug benefit come about?
A. Periodically, there have been efforts to add drug coverage to Medicare. In 1988, a prescription drug benefit was added, but it was repealed the following year. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 was passed largely because President George W. Bush wanted to expand Medicare benefits and Republicans controlled both houses of Congress.
Q. How does the benefit work?
A. Medicare designed a basic program that pays for many prescription drug costs and has an annual premium of $386. But the actual coverage will be provided by insurance companies, pharmacy benefit managers, and other healthcare organizations, each with their own version of the basic design. Three out of four people are expected to spend less on drugs than they do now.
Q. How many choices are there in Massachusetts?
A. In Massachusetts, seven companies will offer drug coverage along with Medicare Advantage plans, which provide traditional Medicare hospital and doctor benefits. In addition, 17 companies will offer stand-alone drug coverage. Each company typically offers several different versions of each plan, with different premiums and benefits.
Q. If there are so many alternatives, how do I choose what's best for me?
A. There's no alternative to sitting down and crunching the numbers on out-of-pocket expenses, coverage, and convenience. Work with a family member or trusted adviser.
Q. What is the ''doughnut hole" I've heard about?
A. Under the basic plan, Medicare does not pay anything toward drug expenses between $2,250 and $5,100. Some alternative plans will feature lower out-of-pocket expenses, and even provide coverage to fill the doughnut hole.
Q. What about low-income seniors or those on fixed incomes?
A. There are numerous subsidy plans for people who cannot afford the $386 annual premium.
Q. What if I already have a health plan with a prescription drug benefit? Do I still need to sign up for Medicare Part D?
A. Not necessarily. For instance, retired state employees covered by the Group Insurance Commission do not need additional drug coverage. Call your insurance plan representative to find out.
Q. What if I decide to sign up after the enrollment period ends May 15?
A. Those who qualify for Medicare drug coverage, do not have similar coverage from an existing health plan, and do not sign up during the initial period will be charged a penalty equal to 1 percent of their base premium for each month they wait. That can significantly increase drug costs because the increase is permanent.
