The New Medicare Prescription Drug Benefit
The Delaware County Office of Services for the Aging

The first ever federally subsidized drug program for seniors took effect January 1, 2006. Under this program, private health insurers offer limited insurance coverage for prescription drugs to those persons who are Medicare recipients. This includes disabled persons who also receive Medicare benefits. The drug benefit is available only through private insurance companies who contract with Medicare to provide drug plans.

Keep in mind the following points:

1.    The program is solely voluntary, although there is a financial penalty for those who do not sign up during the initial enrollment period.
2.    To obtain the coverage, you will pay a monthly premium which, on an average, will run from $11.00 up to $35.00 per month, or more, depending on the coverage you choose. However, it will be waived in instances of those with limited income. Currently, that is $14,355 per year for a single person and $19,245 per year for a married couple.
3.    Be careful when you decide to enroll because you normally can only switch plans one time per year.

The standard plan provides for a $250.00 deductible, after which you will pay 25% of the drug cost up to $2,250.00 per year. Coverage will then stop completely until your drug costs reach a total of $5,100.00. This is sometimes called “doughnut hole.” In other words, after you reach the $2,250.00 limit described earlier, you are responsible for the next $2,850.00 in drug costs yourself. After that point, Medicare will pay about 95% of the cost. This is what is known as the “catastrophic coverage.” This means that once you have $3,600.00 in out-of-pocket costs in 2006, then the Part D Program will pay the majority of your drug cost. Be careful, because only the covered drugs under the plan count toward your out-of-pocket costs.

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