October 24 , 2005


Washington, DC – November 18 —
The Medicare Rx Education Network’s Frequently Asked Medicare Prescription Drug Coverage Questions culls from queries coming into the network and published in media reports to tap into what people want to know about the new benefit. The just released Q and A is part of a pre-enrollment education drive of the consumer-oriented network and its more than 70 national member organizations.

“We urge people to take their time and not feel rushed into making a decision about the benefit,” advises Senator Breaux, chairman of the Medicare Rx Education Network. “Medicare beneficiaries have time to ask questions and get information about this important decision. The answers to these commonly asked questions will make it a little easier for them.”

Senator Breaux explained that the network is offering the frequently asked questions to help people understand the prescription drug benefit and make a choice that fits their needs when the six-month enrollment window begins November 15. The network arrived at the 12 questions by evaluating records of phone calls and e-mails that the network received since its launch in July and by analyzing media coverage that gauged public inquiries about the new coverage. Network member organizations worked collectively to provide corresponding answers that were accurate and informative yet clear.

“Medicare beneficiaries should read through these questions, closely review all information they receive through the mail about the Medicare drug benefit and, finally, turn to the many existing reliable web, phone and community resources for further information,” notes Senator Breaux. Internet sites such as and provide further detail and serve as a link to other helpful resources.

For personalized assistance with the benefit, contact a Medicare representative by calling 1-800- MEDICARE (1-800-633-4227) or call Eldercare Locator (1-800-677-1116) and ask for the phone number of the state’s health insurance program. Communities across the country are also holding Medicare-related information events over the next month and the network urges people to check their local newspapers for details.


Q1) Who sponsors Medicare’s prescription drug benefit?

Medicare’s prescription drug benefit is sponsored by the federal government’s Centers for Medicare & Medicaid Services, which is the Medicare agency. The benefit will be administered through private plans that are approved by Medicare and that must adhere to specific Medicare regulations and guidelines.

Q2) Is the benefit voluntary?

Yes, the benefit is voluntary.

Q3) Will the benefit cover all of the prescriptions I need and will coverage include “lifestyle drugs?”

The range of drugs each plan will cover will be comprehensive. Although the drugs covered may vary from plan to plan, keep in mind that the law mandates Medicare cover at least two medicines in each therapeutic category, and “all or substantially all” antidepressants, antipsychotics, anticonvulsants, anticancer drugs, immunosuppressants and drugs that treat HIV/AIDS. The “standard” benefit does not cover benzodiazepines (medicines to control anxiety and treat insomnia), or barbiturates. Although the “standard” plan doesn’t cover benzodiazepines, a Medicare drug plan may choose to cover benzodiazepines if it offers more than standard coverage. The “standard” benefit does cover products that help smokers quit. The benefit covers both brand name and generic drugs. If you need a medically necessary drug that is not covered by your plan, you can request an exception.

Q4) Are mail-order services available with the program?

Yes, some plans will offer mail-order service. Beneficiaries can opt to receive their medications by mail.

Q5) What are the income requirements for eligibility?

There are no income requirements to join a Medicare drug plan. Anyone who is eligible for Medicare is eligible for the prescription drug benefit. However, if you are a Medicare beneficiary with limited income and resources (annual income of $14,355 or below for a single person, $19,245 or below for a couple) and you want to apply to get extra help paying for the monthly premiums, deductibles and copayments, there are income requirements for eligibility. (Complete the Application for Help with Medicare Prescription Drug Plan Costs, Form SSA-1020. You can get one by calling Social Security at 1-800-772-1213.)

Q6) How will the Medicare prescription drug coverage work with my existing health coverage on my retirement plan?

If you have prescription drug coverage through your employer or union, chances are you may want to stick with that prescription coverage. Your employer or union retiree plan will be sending you a letter between September and mid-November. It will explain if the retiree Rx coverage is comparable to, or better than what Medicare is offering. If it turns out that your retiree plan’s drug coverage is not as good as Medicare’s, you can join a Medicare prescription drug plan and you may still be able to keep your employer or union coverage for its other healthcare benefits (find out about your options from your benefits administrator). (Sign up for the Medicare drug plan by May 15, 2006, to avoid a lateenrollment penalty).

Q7) Can employers drop their prescription drug coverage because of Medicare’s new benefit?

Medicare created incentives for employers and unions to keep their retirees covered for prescription drugs by providing these plans with 28 cents on the dollar for their drug costs. Employers are likely to continue their prescription drug coverage. However, if your employer or union does stop offering prescription drug coverage, you can join a Medicare drug plan and you may be able to keep your retiree health plan for its other healthcare benefits (find out about your options from your benefits administrator). (Join within 63 days after your employer or union plan’s prescription coverage ends to avoid Medicare’s late-enrollment penalty).

Q8) How does Medicare’s drug coverage work with the Medicare-approved drug discount card?

The discount cards have always been temporary, intended to help until Medicare’s drug coverage becomes effective. You can continue to use your Medicare-approved drug discount card until you join a Medicare drug plan, or until May 15, 2006, whichever comes first: (a) If you join a Medicare drug plan between November 15 and December 31, 2005, your Medicare drug plan insurance coverage begins January 1, 2006. The last day to use your discount card is December 31, 2005; (b) If you join a Medicare drug plan between January 1, 2006, and May 15, 2006 (the last day of open enrollment) your Medicare drug coverage begins the first of the month after you join. For example, if you join in January, your coverage begins February 1, and the last day to use your discount card is January 31. Join in February and your coverage begins March 1, so the last day to use your discount card is February 28. Once you join a Medicare drug plan, you will be automatically disenrolled from your Medicare drug discount card, so you do not need to notify your discount-card company. If you decide decide not to join a Medicare drug plan, the last day you can use your discount card is May 15, 2006.

Q9) What are the costs of the program, including the deductibles?

The “standard” benefit includes a monthly average premium of $32.20 a month, a deductible of $250, and co-payments for each prescription. After the $250 deductible:

  • For the next $2,000, you pay 25 percent. Medicare pays 75 percent.
  • For the next $2,850, you pay 100 percent (this is the so-called “doughnut hole.”) *
  • For drug costs after that, you pay 5 percent. Medicare pays 95 percent.
  • Prescription drug coverage is costing less than originally expected. For example, some plans offer monthly premiums of $20 or less. Some have deductibles lower than $250 or no deductible at all.

Q10) What is meant by the “doughnut hole?”

The “doughnut hole” is the gap in coverage in Medicare’s “standard” plan. (See the asterisk above.) Some organizations are offering benefit plans that fill in the coverage gap (“doughnut hole”), either entirely or partially.

Q11) Who keeps a tally of how much I spend with the benefit?

Your prescription drug plan (or Medicare managed care plan, if it includes prescription coverage) is responsible for tracking and calculating your drug costs. From your perspective, most of the tracking will occur automatically. However, you are obligated to let your plan know if you have any supplemental coverage for prescription drug benefits, and if you have been reimbursed for anything that you have paid out of pocket for prescription drugs. Your plan is responsible for coordinating benefits with state pharmacy assistance programs and other insurers such as group health plans, the Federal Employees Health Benefits Program and military coverage (including TRICARE).

Q12) Why is there a late penalty?

Like all health insurance, healthy individuals help pay for those who are sick. And when those who are healthy get sick, they are covered in the same manner. You don’t know if you’re going to be one of the sick individuals. But you could be. So, you want the advantage of group insurance to protect you. The late penalty acts as an incentive for healthy seniors to sign up and, in this way, to ensure the stability of the coverage. The initial open enrollment period is Nov. 15, 2005, to May 15, 2006. If you enroll after May 15, 2006, you will pay a monthly penalty of one percent of the monthly premium, and the penalty will continue over the life of your coverage.


The Medicare Rx Education Network provides information and assistance with outreach and enrollment for the new Medicare Part D prescription drug benefit. The network, which includes 70 national organizations, is chaired by former U.S. Senator John Breaux. Members share an interest in educating Medicare beneficiaries about the new Medicare prescription drug benefit and will work closely with the appropriate federal agencies to obtain up-to-date information to ensure that information disseminated by the network about Medicare Part D is factual and accurately conveyed, thereby equipping beneficiaries and their caregivers to make informed choices. By sharing information with each other about member organizations’ independent efforts, collaborating on activities, and identifying ways to work together, the network aims to eliminate duplication of efforts and maximize the effectiveness of outreach efforts. The network does not engage in legislative activities or take positions on pending legislative or administrative policies related to the Part D benefit and its implementation.

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