Medicaid: Part D Drug Coverage
What is Medicare Part D?
Beginning January 1, 2006, Medicare will offer insurance coverage for prescription drugs through Medicare drug plans. Insurance companies and other private companies approved by Medicare will provide these plans.
If you have drug coverage now, your insurer will send you more information about how your coverage works with, or is affected by, Medicare prescription drug coverage.
What Else Do I Need To Think About?
Before you make any decisions, you need to find out the following information:
• Do you have prescription drug coverage now?
• Does your current drug coverage cover at least as much as Medicare prescription drug coverage?
• How would Medicare prescription drug coverage affect your out-of-pocket costs?
• Should you keep the coverage you have now?
• Does a Medicare drug plan in your area cover the drugs you need?
• Can you get extra help paying for your prescription drug costs if you join a Medicare drug plan?
• If you wait to join a Medicare drug plan, would your premium be higher because you have to pay a penalty? Would your coverage start when you wanted it to?
• Do you spend part of each year in another state? This may be important if the plan requires you to use certain pharmacies.
Comparing Prescription Drug Coverage
When you decide you want Medicare prescription drug coverage, you will need to choose a particular Medicare drug plan. There may be many drug plans available in your area to choose from. Medicare drug plans will have different costs and cover different drugs.
How do I compare Medicare drug plans?
Step 1: Find out which plans cover your drugs.
Step 2: Find out the costs of each plan.
Medicare drug plans can vary on how much they charge and how much they cover. Choose the Medicare drug plans you want to know more about and compare the premium, deductible, co-payments and coverage limits for each plan.
Step 3: Find out each plan’s pharmacy locations and mail order options.
Standard Coverage for Every Plan
If you join during the initial enrollment period, you will pay:
• a monthly premium (varies depending on the plan you choose, but estimated at about $37 in 2006)
• the first $250 per year for your prescriptions. This is called your “deductible.”
After you pay the $250 yearly deductible, here’s how the costs work:
• you pay 25% of your yearly drug costs from $250 to $2,250, and your plan pays the other 75% of these costs, then
• you pay 100% of your next $2,850 in drug costs, then
• you pay 5% of your drug costs (or a small co-payment) for the rest of the calendar year after you have spent $3,600 out-of-pocket. Your plan pays the rest.
Coverage for People with Limited Income and Resources
If you have Medicare and have limited income and resources, you may qualify for extra help paying for prescription drugs. You may qualify for extra help:
• You can apply for this extra help through the Social Security Administration or your State Medical Assistance Office. Social Security is mailing the application for extra help to those who may qualify.
• The amount of extra help you get depends on your income and resources.
• If you apply and qualify, and don’t join a plan, Medicare will enroll you in one by May 15, 2006 to make sure you get this important coverage.
Coverage for People with Medicare and Full Medicaid Coverage
• People who have both Medicare and full Medicaid Coverage automatically qualify for extra help and do not need to apply. Starting January 1, 2006, Medicare will cover your prescription drugs instead of Medicaid.
Important Dates
• November 15 through December 31 of Each Year
If you wish to switch your current drug plan, this is the time period, each year, in which you can do it. Your Coverage will be changed as of January 1 of the following year.
Do You Have Elderly Pharmaceutical Insurance Coverage Program (EPIC)?
Many seniors enrolled in EPIC will be able to save more money by joining a Medicare drug plan. EPIC can be used to supplement their Medicare coverage and increase their savings.
Do You Benefit By Having Medicare Part D and EPIC Together?
If your income is less than $12, 920 for an individual or $17,321 for a couple and if you have assets below $7,500 for an individual or $12,000 for a couple, then
• People in this group will have their EPIC annual fee waived
• No Part D monthly premium, no deductible
• All co-payments are $5 or less
Therefore, costs may be less by enrolling in both.
If your income is less than $14,356 for an individual or $19,245 for a couple and if you have assets below $11,500 for an individual or $23,000 for a couple, then
• EPIC will not waiver their annual fee
• People in this group will have a $50 Medicare D deductible and a reduced monthly premium
• But will pay the lower of the Part D co-payment of the EPIC co-payment for the first $5100 in covered drugs in the year. Then, co-payments go down to $5 or less.
Therefore, it may not be worth the extra cost to join both unless your drug costs are above $5100 a year.
This Memorandum is based on current law and is for informational purposes only. It is important that you discuss all legal options and consequences with a qualified elder law attorney prior to any action. Should you wish to discuss your situation with us, please call (631) 424-2800 for a consultation. For additional Memoranda, please call or visit our website at www.elderlaw.pro.
