Medicare: Things to Consider
To get Medicare coverage for your prescription drugs, you must choose and join a Medicare drug plan. Regardless of how a Medicare drug plan decides to offer this coverage, there are some key factors that may vary. Some of these factors might be more important to you than others, depending on your situation and drug needs. These factors are:
- Peace of mind now and in the future
This is the monthly cost you pay to join a
Medicare drug plan. Premiums vary by plan.
This is the amount you pay for your
prescriptions before your plan starts to share in the costs. Deductibles vary by
plans. No plan may have a deductible more than $250 in 2006.
This is the amount you pay for
your prescriptions after you have paid the deductible. In some plans, you pay
the same copayment (a set amount) or coinsurance (a percentage of the cost) for
any prescription. In other plans, there might be different levels or “tiers,”
with different costs. (For example, you might have to pay less for generic drugs
than brand names. Or, some brand names might have a lower copayment than other
brand names.) Also, in some plans your share of the cost can increase when your
prescription drug costs reach a certain limit.
A list of drugs that a Medicare drug plan
covers is called a formulary. Formularies include generic drugs and brand-name
drugs. Most prescription drugs used by people with Medicare will be on a plan’s
formulary. The formulary must include at least two drugs in categories and
classes of most commonly prescribed drugs to people with Medicare. This makes
sure that people with different medical conditions can get the treatment they
Some drugs are more expensive
than others even though some less expensive drugs work just as well. Other drugs
may have more side effects, or have restrictions on how long they can be taken.
To be sure certain drugs are used correctly and only when truly necessary, plans
may require a “prior authorization.” This means before the plan will cover these
prescriptions, your doctor must first contact the plan and show there is a
medically-necessary reason why you must use that particular drug for it to be
covered. Plans might have other rules like this to ensure that your drug use is
If you have high drug costs, you
may consider which plans offer additional coverage until you spend $3,600
out-of-pocket. In some plans, if your costs reach an initial coverage limit,
then you pay 100% of your prescription costs. This is called the coverage gap.
This “gap” in coverage is generally above $2,250 in total drug costs until you
spend $3,600 out-of-pocket. Some plans might offer some coverage during the gap.
Even in plans where you pay 100% of covered drug costs after a certain limit,
you would still pay less for your prescriptions than you would without this drug
Drug plans must contract with pharmacies in your
area. Check with the plan to make sure your pharmacy or a pharmacy in the plan
is convenient to you. Also, some plans may offer a mail-order program that will
allow you to have drugs sent directly to your home. You should consider all of
your options in determining what is the most cost-effective and convenient way
to have your prescriptions filled.
Peace of Mind Now and in the Future
Even if you don’t take a lot of prescription drugs now, you
still should consider joining a drug plan in 2006. As we age, most people need
prescription drugs to stay healthy. For most people, joining now means you will
pay a lower monthly premium in the future since you may have to pay a penalty if
you choose to join later. You will have to pay this penalty as long as you have
a Medicare drug plan. If you reach the point where you have spent $3,600
out-of-pocket for drug costs during the year, the plan will pay most of your
remaining drug costs. This protection could start even sooner in some plans.