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About Us

 

Winter 2005/2006

Navigating Medicare's New Prescription Drug Benefit

Medicare Part D, a government-sponsored prescription drug benefit taking effect in January 2006 will provide limited prescription drug benefits to Medicare Part A and B participants. The following chart outlines what Medicare Part D coverage provides:

 Coverage Range From To Percent Covered
Annual Deductible $0 $250 0%
Basic Benefit
$250 $2,250 75%
Coverage Gap
$2,250 $5,100 0%
Catastrophic coverage
$5,100 No Max 95%

Medicare prescription drug plans will vary, but in general you will pay a monthly premium of about $37 (some plans may offer more coverage for a higher monthly premium) in addition to any premiums for Medicare Part A and/or Part B. You will pay the first $250 per year for your prescriptions.
After you pay the $250 yearly deductible, you will also pay:

  • 25% of your yearly drug costs from $250 to $2,250, and your plan pays the other 75% of these costs, then
  • 100% of your drug costs from $2,251 until your out-of-pocket costs reach $3,600, then
  • 5% of your drug costs (or a small co-payment) for the rest of the calendar year after you have spent $3,600 out-of-pocket and your plan pays the rest.

To enroll in Part D, you must have Medicare Part A or Part B. You can first enroll from November 15, 2005 through May 15, 2006. This is called the "initial open enrollment period." Enrolling is your choice. After the initial open enrollment period, you can change your plan during the open enrollment period, which will be from November 15 through December 31 each year. Your Medicare prescription drug plan will begin January 1 of the following year. To join, you will need to decide how you want to get your prescriptions. You can:

  • get all your health care benefits and prescriptions through a Medicare Advantage Managed Care Plan that offers optional coverage for prescription drugs,
  • get your health care benefits through the Original Medicare Plan and choose a Medicare prescription drug plan, or
  • get your health care benefits through another type of Medicare Advantage health plan or a Medicare Managed Care Plan that isn't a Medicare Advantage Plan. In these kinds of plans, you may be able to choose a Medicare prescription drug plan.

Medicare prescription drug plans can offer coverage like this or more generous coverage for higher premiums. Joining is your choice. However, if you don't join when you are first eligible, you may have to pay a higher premium if you choose to join later. You will have to pay this higher premium for as long as you have a Medicare prescription drug plan. If you have prescription drug coverage provided by your Local Union health and welfare trust fund or IHF, you will be receiving a notice of Creditable Coverage, which will explain whether or not your prescription drug benefits are the same or better than what Medicare Part D is providing. This will help you make an informed decision. If you decide to enroll in the Medicare prescription drug plan and drop your Local Union or IHF health and welfare benefits, be aware that you may not be able to get this coverage back. If you decide not to enroll in Medicare Part D and wish to at a later date you can do so without penalty if you enroll within 63 days of terminating your Local plan.

More detailed information about Medicare plans that offer prescription drug coverage were mailed in October 2005 in the “Medicare & You 2006” handbook.

Look for more information on Medicare Part D in upcoming issues of the
IPF Retirement Blueprint.