Elder Law FAX -- October 3, 2005

It's Almost Here: The New Medicare Part D Drug Benefit (Part 1) (Medicare reform, continued)
Beginning January 1, 2006, Medicare beneficiaries will have prescription drug coverage available to them. Now, all Medicare beneficiaries will have to make a choice. Should they enroll in a prescription drug plan or not?

The U. S. Centers for Medicare & Medicaid Services (CMS), the federal agency that administers the Medicare program, has recently approved prescription drug plans and Medicare Advantage plans, which will offer new prescription drug coverage starting January 1, 2006.

Marketing of prescription drug plans, which work with traditional Medicare, and the Medicare Advantage plans, which offer drug coverage and additional benefits, started on October 1, 2005.

CMS has also approved:
* Prescription drug plans in every state -- with no area needing the "fallback" plan that would have been required without at least two organizations competing.
* Between 11 and 20 organizations offering prescription drug plans in each region.
* Ten organizations offering drug coverage nationwide.
* In every state but Alaska, at least one prescription drug plan with a premium of less than $20 a month.

All plans are required to provide coverage at least as good as Medicare's standard coverage, which pays on average 75 percent of drug costs after a $250 deductible up to $2,250 in total drug spending. The coverage also pays approximately 95 percent after $3,600 in out-of-pocket costs to protect against very high drug expenses.

This means that for a monthly premium that is lower than expected, Medicare would pay more than half of a typical beneficiary's drug costs, or more than $1,100.

CMS has identified five main audiences that most people fall into. This and the next issue of Elder Law FAX will list each of the five audiences and some key information people in each of these groups might need about Medicare prescription drug coverage.

1. People who do not have any prescription drug coverage.
Medicare prescription drug coverage will help with drug costs. For a typical person with Medicare, this coverage, on average, will pay 50% of drug costs next year. Savings could be more or less than this amount.

To get Medicare prescription drug coverage, you can join a Medicare Prescription Drug Plan that covers prescription drugs only and keep your other insurance. Or, you can join a Medicare Advantage Plan or other Medicare Health Plan (such as a Medicare HMO) that covers doctor and hospital care as well as prescriptions.

Here is a key fact that you should know: If you don't join a Medicare drug plan by May 15, 2006, you will have to pay a penalty if you decide to join later.

2. People who have health care or prescription drug coverage provided by their employer or ex-employer or by their union (including VA, TRICARE for Life, and Federal Employees Health Benefit program -- FEHB).
Medicare will help employers and unions continue to provide retiree drug coverage that meets Medicare's standards.

Your employer or union will let you know if your current coverage, on average, is at least as good as the standard Medicare prescription drug coverage. This information will help you understand what decisions you will have to make. If you don't hear from them, visit their website or call your benefits administrator.

Next week: Medicare prescription drug coverage (part 2).

Elder Law FAX Issues Index

Elder Law FAX is published weekly by Timothy L. Takacs, Attorney at Law. 201 Walton Ferry Road, Hendersonville, Tennessee 37077-0364. (615) 824-2571, (615) 824-8772FAX. Copyright 1995-2005 by Timothy L. Takacs. Would you like Elder Law FAX e-mailed to you free every week? To subscribe, please use the Elder Law FAX Subscription Form.