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 plans.

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 drug benefits.
  • 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 example:

  • 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 Medicare 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 year.
  • 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.