Medicare Part D Prescription Drug Plans

You must have heard about the new Medicare D prescription drug program; most people have already received information from Medicare. In northeastern Ohio there are 60 private companies providing their own plans.

The most common question is: "Should I sign up?" There is no simple answer. Some folks are already covered by a retiree program, some don't spend much on prescription drugs, and others buy drugs through the VA. How do these compare?

If you are currently covered by a retiree plan, you should have already received a letter from your former company telling you how your coverage compares to the Medicare options; if not, call the company. You probably should continue with your current plan and not sign up for a new plan, if your current drug coverage is at least as good or better than Medicare's (called "creditable coverage"). If your company drug plan is more expensive than the coverage you can get from Medicare, you may wish to drop the company benefit and go with Medicare. But check with your company to make sure you can drop the drug coverage without losing the rest of your health care benefits.

If you don't take too many prescription drugs, it may cost more to enroll in the program than you'll receive. The break-even point is about $1,450 of prescription drug expenditures in a year. On average, most people will pay about $30 per month premiums, $250 annual deductible, and 25 percent of their prescription costs after that (up to $2,250). Low income individuals may qualify for "extra help" with these costs.

Even if your current medication costs are minimal, they may skyrocket in the future. Can you sign up for a Medicare Part D plan only when you actually need the benefits? Yes, but there is a penalty. If you enroll after the initial enrollment period which continues through May 15, 2006, your premium at that time will be increased by 1% for each month you've delayed—for the rest of your life. For example, if you're eligible this year, but don't sign up for three years, you may have saved close to $1,000 up to that point, but you'll pay approximately $10 more per month ($120 per year) as a penalty for as long as you live.

If you currently obtain prescription drugs from the VA, you are probably better off not changing to a new Medicare plan. If you stay with VA benefits, you can switch to Medicare in the future with no premium penalty.

It is very difficult to accurately compare plans. Each plan has it own "formulary" or list of prescription drugs it provides. You need to list the drugs you take and compare the plan formularies to choose the plan that covers most of your drugs; it is unlikely that one plan will cover every drug you take. You doctor may have to switch you to a different drug, or appeal to the plan to cover a drug you specifically need.