What You Need to Know Now
Read the important questions and answers below to find out how the new Medicare Prescription Drug Coverage can help you.
Q. When is the next open-enrollment period?
A. The next open-enrollment period is November 15 to December 31, 2006. Coverage for people who enroll or switch plans during this period will take effect January 1, 2007.
Q. Where should I go to find out about plans that will be offered in my area for 2007?
A. Plan information for 2007 is available in the
Medicare & You 2007
handbook, which is mailed in mid-October through early November. Plan information also is available on the
Web site and by calling 1-800-MEDICARE. You may also contact your local State Health Insurance Assistance Program (SHIP).
Q. I’m in a Medicare prescription drug plan now. Can I change to a different one?
A. Yes. You can switch to a different plan during the next open-enrollment period, which is November 15 through December 31, 2006. Your new plan will begin January 1, 2007, and you will be automatically switched from your current plan. Generally, enrollment in a plan remains in effect for the calendar year. However, there are certain exceptions that allow a person to switch plans during the year such as if you move, or have both Medicare and Medicaid. For more details on the exceptions, call 1-800-MEDICARE (1-800-633-4227).
Q. I’m happy with the plan that I have now, what should I do next?
A. If you like the plan that you have now and do not want to switch, you don’t have to do anything. If your plan is continuing in 2007, your plan will automatically renew.
Q. What is the Standard Level of Coverage?
A. Medicare prescription drug plans must, at a minimum, provide a standard level of coverage. According to the Centers for Medicare & Medicaid Services, for the standard level of Medicare prescription drug coverage in 2007, you pay a $265 yearly deductible, then 25% of the yearly drug costs from $265 to $2,400 (the plan pays the other 75% of these costs). Once you reach $2,400 in total drug costs (not including premiums), there is a gap in Medicare’s coverage. While you are in this coverage gap, the plan will pay nothing toward the drug costs. But you will have access to the drug plan’s discounted rate for your drugs during this time. After you reach $5,451.25 in total drug costs for the year, you will only have to pay 5% of the discounted cost of each prescription. Those who qualify for extra help due to limited income and assets receive help that pays for all or part of the monthly premiums, deductible, fills in the coverage gap and lowers the prescription co-payments.
Q. What is the coverage gap?
A. Many health insurance plans have limits on how much they will cover for prescription drugs. Medicare drug plans are no different. The good news is that Medicare drug plans provide catastrophic coverage if you have an unexpected illness or injury that results in extremely high drug costs. It assures that once your total drug costs reach $5,451.25 (in 2007) in a calendar year, 95% of your drug costs above that amount are covered. During the time between a drug plan’s standard level of coverage and the catastrophic coverage level, you pay all of the costs for your drugs. This period is called the coverage gap (sometimes called the “donut hole”). You will still benefit from discounted prices for drugs in the coverage gap because plans have negotiated substantial discounts from retail prices.
Q. How do I find a plan that covers the gap in my area?
A. Plans that cover the gap are offered in every state. You can review plans that offer gap coverage by using the “Medicare Prescription Drug Plan Finder” at
. This tool is available under the “Search Tools” by clicking on “Compare Medicare Prescription Drug Plans.” CMS has made enhancements to the tool to improve navigation and usability of the tool by reducing the number of steps leading to plan comparisons. You can also call 1-800-MEDICARE and ask about plans that offer gap coverage in your area. Also, you can call a State Health Insurance Assistance Program (SHIP), which offers free personalized health insurance counseling to people with Medicare. See the
Medicare & You
handbook or call 1-800-MEDICARE for SHIP telephone numbers.
Q. Why should I sign up for Medicare prescription drug coverage?
A. Prescription drugs are a critical part of medical treatment. As we get older, the number of drugs we need and the cost of those drugs can increase substantially. A sudden illness can result in higher drug costs that are impossible to predict. Like other forms of insurance coverage, Medicare prescription drug insurance can protect you and your family against high and unexpected costs. Medicare beneficiaries can save an average of $1,200 off of their prescription drug costs, according to CMS. In addition, you can not be turned down for Medicare prescription drug coverage. You can shop around for the best-priced Medicare drug plan in your area that meets your needs.
Q. Is there special help for me if I have a limited income and resources?
A. Yes. You may qualify for reduced premium and cost sharing if you meet certain limited income and resource guidelines. For more information about this coverage, call the Social Security Administration at 1-800-772-1213 or your local Social Security office or go to www.ssa.gov.
Q. I didn’t sign up for a Medicare prescription drug plan last spring before May 15, 2006. I want to join a plan now. When can I join and will there be a penalty?
A. You can join a plan during the next open-enrollment period, which is November 15 through December 31, 2006. Because you’re joining after the initial enrollment period that ended May 15, 2006, the cost of your premium will likely go up at least 1% per month for every month that you waited to join. However, the penalty is not applicable if you have creditable coverage (drug coverage that is, on average, at least as good as the standard Medicare prescription drug coverage).
Q. I turn 65 next year. When can I sign up for a Medicare prescription drug plan?
A. Sign up for a Medicare prescription drug plan when you sign up for Medicare, which you can do starting three months before the month in which you turn 65 and three months after. Remember, new beneficiaries must actively select a drug plan and then enroll in it.
How often will I be able to change plans?
A. If your needs change, so can your coverage. Each year, there will be an open-enrollment period (November 15 through December 31) in which you can review your plan choices for the coming year and either continue with your current Medicare drug plan or choose a new one. You may also have other opportunities during the year to switch plans under limited circumstances. For example, if you move out of the service area of your plan, you’ll have an opportunity to choose another plan that serves your new area. For more details, call 1-800-MEDICARE (1-800-633-4227).
Q. How does the plan protect people on Medicare against high out-of-pocket costs?
A. This benefit works like many insurance products in that it provides protection from catastrophic events. The Medicare prescription drug coverage recognizes the need to protect people on Medicare from high out-of-pocket drug expenses. Once an enrollee spends more than $3,850 out of pocket in 2007 for prescription medicines, Medicare and your participating drug plan will cover 95% of the costs above that level.
Q. What happens if I currently have employer-provided drug coverage?
A. Roughly a third of Medicare beneficiaries get drug coverage from their former employer.
If your employer continues to offer prescription drug coverage, you can decide whether to keep your existing coverage or switch to another plan.
Note: If you elect to drop your employer-sponsored coverage, you might not be able to re-enroll in your employer-provided drug coverage.
Q. What if I have a specific chronic or disabling condition?
A. If you have a qualifying chronic or disabling condition, in some areas
you may be able to enroll in a Specialized Medicare Advantage
Prescription Drug Plan called a Chronic Care Special Needs Plan. These
plans are able to design their benefit packages to meet the special
needs of individuals with certain chronic diseases. If you join a
Special Needs Plan, you would get all your Medicare-covered health
care through that plan, including prescription drugs. You can apply or
get more information about Chronic Care Special Needs Plans by
contacting 1-800-Medicare, or at