With good reason, much confusion has arisen regarding the Medicare Part D drug program. This article attempts to clarify and condense many provisions of Part D.
All Medicare beneficiaries are eligible for Part D, irrespective of income. It is not necessarily true that the cost of enrolling in a Medicare HMO with drug coverage is less than the cost of Medigap plus a prescription drug plan. Some HMO costs are more than traditional Medicare costs. Also, if you are receiving health benefits from your former employer, be sure to inquire whether you will lose all of your insurance benefits by enrolling in Part D.
Individuals with low incomes are qualified for cost sharing. If you do not enroll by May 15, 2006, you must wait until the next annual enrollment period, which runs from November 15 to December 31, 2006. A late penalty of 1% per month on the premium will be incurred unless you had other “creditable” coverage.
The enrollment period began on November 15, 2005 and ends May 15, 2006. If you enrolled by December 31, 2005, your coverage started on January 1, 2006. For those who have not yet enrolled, coverage begins the month after enrollment.
Dual eligible individuals, or those individuals who are covered by both Medicare and Medicaid, were automatically enrolled in 2005. Low income individuals who do not enroll in a plan by May 2006 will be automatically enrolled.
The standard Medicare Part D plan provides for a monthly premium of approximately $32 and a yearly deductible of $250 in 2006. The beneficiary pays 25% of the cost of covered Part D prescription drugs (called the “formulary”) up to an initial coverage limit of $2,250. Once the initial coverage limit is reached, the beneficiary is subject to another deductible, the so-called “doughnut hole.” When the total out of pocket cost on covered drugs for the year, including the deductible ($250) and initial coinsurance (25% co-pay of $2,000 = $500) plus $2,850 doughnut hole – reach $3,600, you pay $2 for a generic or preferred drug and $5 for other drugs, or 5% co-insurance, whichever is greater. In other words, you have to incur out of pocket costs of $3,600 before Medicare will start to pay 95% of your prescription drug bills covered by your plan.
Every plan has its own formulary, or list of covered medications. Medicare beneficiaries must carefully review the formulary of the various plans that are offered to ensure that the plan they choose will cover the drugs that they require.
In order to figure out whether it is more cost effective to enroll in a plan with 25% co-insurance or a plan with set tiered co-payments, you will have to know the cost of each of your drugs. In other words, the set co-payment charged by the plan may be more than the 25% co-pay for particular drugs, depending on the cost of the drug.
It is also important to confirm whether the plan you choose will remain in your area/community in the future.
Overall, you must determine how much you can afford, what your medication needs are, where you are likely to be residing, what pharmacies you use, whether prior authorization would be required for certain medications, what kinds of co-payments or tiers are used by the plan, whether the number of prescriptions/pills are limited, among other factors.
To help you investigate what is best for your specific needs, contact representatives of the individual plans by phone or go to Medicare’s website at “medicare.org.”
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts and wills. The firm has offices in Forest Hills, Great Neck, and Brooklyn, NY. Mr. Fatoullah has been named a “fellow” of the National Academy of Elder Law Attorneys and is a former member of its Board of Directors. He also serves on the Executive Committee of the Elder Law Section of the New York State Bar Association. Mr. Fatoullah has been certified as an Elder Law Attorney by the National Elder Law Foundation. Mr. Fatoullah is a co-founder of Senior Umbrella Network of Queens. This article was written with the assistance of Stacey Meshnick, Esq., who supervises the Medicaid Department at the firm. The firm can be reached by calling (718) 261-1700, (516) 466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES.
