Prescription Drug Benefits: Year 2006
WebMD Medical Reference
On January 1, 2006, the new
Medicare prescription drug plan -- also called Medicare Part D -- will be
available to people with Medicare. This will give you some insurance coverage
for brand name and generic
prescription drugs. Medicare will work with insurers and
other private companies to offer a number of different
You'll have quite a few options. You will be able to:
- Buy a plan that offers the drug benefit alone.
- Choose a Medicare Advantage plan that has prescription
- Keep an existing Medigap plan (H, I, or J) that covers
prescription drugs, as long
as you don't sign up for the new drug benefit.
- Keep the prescription drug benefits you get from your
employer or other health plan (instead of getting drug benefits from Medicare).
The 2006 drug benefit will replace the temporary
drug discount cards issued in 2004.
How does it work?
There are many different plans, and the specifics vary. But here's one
- Each month, you pay a monthly fee -- or premium -- to
stay in the program. The fee will vary by plan and
region. In 2006, this fee will be about $32 a month.
- You also pay a deductible of $250. This means that
you have to pay the first $250 of
medication fees out of
your own pocket. Once you've paid $250, your
prescription drug plan kicks in.
- Then, when you buy medications, your plan will cover some
of the costs. But there is a gap in coverage. Once you've spent $2,250 on
prescription drugs, Medicare stops paying a share of the cost. You have to pay
the next $2,850 on your own. After that point -- when you have spent a total of
$3,600 in out of pocket costs -- the plan kicks in again and pays 95% for the
rest of the
- You have to pay whatever is left over. The exact costs vary,
depending on which drugs you need, and how much you spend on them each
year. However, some Medicare drug plans might offer some assistance in
this coverage gap.
But keep in mind that your plan may not be like this. Plans vary in
terms of their deductibles, co-payments, and coverage in the "doughnut
hole." Plans also differ in which drugs are covered, how much you pay,
and which pharmacies you can use.
How much will it cost?
Certain people with Medicare automatically qualify
for extra help and will pay no premiums, no deductibles,
and little to no co payments ($0-$5) for prescription
- People with Medicare AND Medicaid (full benefit
- People who get help from Medicaid paying their Medicare
premiums (in a Medicare Savings Program)
- People with Medicare who get Supplemental Security
- Other people with limited income and resources (including their savings and stocks, but not counting their homes) can apply and qualify for extra help.
# 1 (Basic Benefit)
- You pay an average $32 premium each month.
- For drug costs up to the first $250, you pay100% (this
is the deductible.)
- For drug costs between $250 to $2,250, you pay 25% and
Medicare pays 75%
- For drug costs above $2,251 and until you pay $3600 out
of your own pocket, you pay 100% and Medicare pays nothing. This is a $3,600
gap in coverage that you pay for out of your own pocket.
- After you have paid $3600 out of your own pocket, you
pay 5% of your drug costs (or a small co-payment.) Medicare pays the rest for
the remainder of the year.
- If you have low income and limited assets, you may quality for waived fees and have to pay only a small co-payment for each prescription.
Yearly Out-of-Pocket Costs
|Annual Drug Expenses
* Figures rounded
to the nearest dollar amount.
- You pay a monthly premium based on a sliding scale --
up to $37 maximum.
- You pay up to $50 before the plan begins to pay.
- You pay 15% of your drug costs over $50.
- Once your total drug costs reaches $5,100(about $800
out of your pocket), you begin to pay a co-payment $2 per generic prescription and $5
per brand-name drug after drug expenses reach $3,600 in a year.
- The co-payment amount will rise annually after2006.