The ABCs and D of Medicare
By LydiaRose Proenza • Bankrate.com

The centerpiece of the act is the prescription drug benefit that doesn't take effect until January 2006.

Many seniors are skeptical that the new benefit will help them. Some feel it doesn't go far enough, while others think it's a good starting point.

And many among the 2.7 million retirees who already have prescription drug benefits from their previous employers fear that they will eventually lose their coverage.

"Am I completely satisfied with this bill? No," says Bill Novelli, executive director of AARP, which supported the legislation. "But it will make prescription drugs more affordable and provide millions of older Americans with much needed help."

Drug Discount Cards
Beginning in spring 2004, discount cards with the Medicare-approved mark will be available for purchase for about $30.

With the cards, seniors will be able to purchase prescription drugs at 10 to 25 percent off the full retail price. Seniors will have to choose among companies sanctioned by the federal government whose lists of drugs and prices will vary.

Individuals with incomes of less than $12,124 a year, or married couples with incomes of less than $16,363, will receive their cards free. They may even qualify for $600 from the federal government to help pay for prescription drugs.

Purchasing the card is voluntary, and it's an interim program that's being offered on a temporary basis only. Enrollment is scheduled to begin in May and continue through December 31, 2005.

Those whose drugs are covered by Medicaid are not eligible for the card.

The Prescription Drug Benefit
In 2006, the prescription drug benefit will kick in. Everyone covered by Medicare will have choices to make. They will be eligible to:

• Stay in traditional Medicare, a Medicare HMO or a retiree plan without signing up for the drug benefit;
• Stay in traditional Medicare and enroll in a stand-alone drug plan;
• Enroll in a private health plan that offers drug coverage and Medicare health services.

Those who choose to take advantage of the drug benefit and have incomes exceeding $12,123 will pay a monthly premium now estimated at $35. They will also pay a $250 deductible.

Medicare will cover 75 percent of drug costs between the deductible and $2,250.

There is a gap in coverage between $2,250 and $5,100; beneficiaries will have to pay all drug costs within that range. Once the costs exceed $5,100, Medicare will cover 95 percent. There will be a $2 co-pay for generic drugs and $5 for brand names, but co-pays will be waived for patients in nursing homes.

Those with incomes of less than $12,123 ($16,000 for couples) and assets under $6,000 ($9,000 for couples) will pay no premiums or deductibles, nor will they have a gap in their coverage.

They will, however, be required to pay $2 for generics and $5 for brand names, but they will have no out-of-pocket expenses once their costs pass the $5,100 catastrophic limit.

Other changes
As mentioned above, this year Medicare Advantage replaces the private HMO option now known as Medicare Plus Choice. Then in 2006, Medicare Advantage will be expanded to include preferred provider plans.

Beginning in 2005, Medicare will, for the first time, cover preventive procedures, including:

• A one-time initial preventive physical exam within six months of when a person with Medicare first becomes enrolled in Medicare Part B;
• Screening blood tests for early detection of cardiovascular diseases;
• Diabetes screening tests for people at risk of diabetes.

Becoming an informed consumer is the best way to make the right Medicare choices. Read through all the information available from the government and other nonprofit sources; discuss your health care needs with your doctor and friends who have Medicare.

You can find up-to-date information about Medicare and review many Medicare publications at Medicare's Web site.