Is Medicare Part D For You?

Medicare Part D is such a tremendously complicated program that you may feel overwhelmed just trying to understand whether it is right for you.

Just how difficult depends on certain key aspects of your situation. The best place to start is to determine which of the following categories best applies to you:

Do your income and assets meet the criteria for Extra Help (see Extra Help For People With Limited Income and Assets above):

YES a Medicare Part D plan will probably be very valuable for you, as long as you get approved for Extra Help. The Extra Help coverage is the best part of Medicare Part D.

Do you have (or expect) annual prescription drug costs substantially more than $6,000, and not have coverage?

YES a Medicare Part D plan may be valuable for you (the total drug costs amount at which a Medicare D plan will actually save you more than you could save in other ways will vary considerably from person to person based on what medicines you use and other factors). The Catastrophic coverage is the next best part of Medicare Part D.

Do you have drug coverage through the Veterans Administration, TRICARE, Federal Employee Health Benefit Plan, Railroad Retirement Board, or Indian Health Services?

NO you will most likely be better off sticking with the drug coverage you have. You should receive written notification that you have "credible" coverage (at least as valuable as Part D). That notice will ensure that you are not charged a penalty should you drop or lose your coverage in the future and want to enroll in a Part D plan at that time.

EXCEPT: if you meet the criteria for Extra Help (see above) you will probably want to sign up for Extra Help in addition to your VA benefits.

Will you have drug coverage through your (or your spouse's) employer or former employer?

NO? You should receive notice about your drug coverage for 2006, and whether it is "credible" coverage (at least as valuable as Part D). It is likely that your coverage will be better than a Part D plan would provide, and your notice that your coverage is "credible" will ensure that you can enroll in a Part D plan without penalty should you lose your coverage in the future. If you have not received a written notice from the employer, be sure to contact them to get one. If you do NOT have credible coverage, you may want to consider whether a Part D plan would beneficial. (See Everyone Else, below).

Do you have drug coverage through a Medigap policy?

????? You'll need a written notice from your insurer telling you if your drug coverage is "credible" (at least as valuable as Part D). If not, you could be subject to a penalty if you decide to enroll in a Medicare Part D policy in the future.

You should be aware that the premiums for your drug coverage will likely increase at an accelerated rate, because no new people will be offered that drug coverage. Therefore, you may want to consider whether it would be beneficial to ask your insurer to drop the drug coverage portion of your policy, or sign up for another Medigap policy without drug coverage, and instead sign up for a Stand Alone Part D policy OR go without drug coverage and use an alternative approach to saving (See Everyone Else below).

Do you have drug coverage through a Medicare HMO, PPO, or PFFS plan?

????? If you are enrolled in a Medicare HMO, PPO or Private Fee-For-Service plan (PFFS) or Medicare cost plan, you can:

• Get your drug coverage through that plan (if the company offers it);
• Choose another Medicare private health plan (HMO, PPO or PFFS) that does offer drug coverage;
• Keep the your plan (without drug coverage) and get your drug coverage through a stand-alone drug plan; or
• Drop your plan and enroll in a stand-alone drug plan and get the rest of your Medicare benefits through Original Medicare.
• Drop your plan and use an alternative approach to saving (See Everyone Else, below).

You will need to evaluate these options based on many factors, including your costs for the drugs you use under each option.

Everyone Else

????? All this rest of us, who don't have prescription drug coverage (or have coverage which is not considered "credible"), and are not eligible for Extra Help, are left with three options:

• OPTION 1: Sign up for a Medicare Part D Stand Alone Prescription Drug Policy which offers lousy coverage unless our drug expenses are more than $6-7,000 a year. As described in the Medicare Part D Basics section of this Guide, You will pay a monthly premium (averaging $32 a month) for coverage which has a huge gap of $2,850 of drug expenditures per year in which your plan pays NOTHING (while you continue to pay the premium each month).
• OPTION 2: Sign up for a Medicare Advantage Plan (HMO, PPO, or PFFS) that provides all of our Medicare coverage plus Medicare Part D prescription coverage. This choice means changing the way you get all of your medical care, so many more factors need to be considered. We'll mention a few of those in the section "Choosing A Medicare Part D Plan," page ____.
• OPTION 3: Find other ways to save on your prescription drug costs.

Let's start with OPTION 3. There are two primary strategies for lowering your prescription costs that do NOT involve signing up for a Medicare Part D plan:

1. Find ways to get your medicines at lower prices. The best way for most of us to do that is to purchase our brand name medicines from a licensed pharmacy in Canada or the European Union or another country with a regulatory system that is as effective as ours (many countries meet that criterion); and purchase our generic medicines from a licensed US discount mail order pharmacy.
   
   United Senior Action's experience is that our members have averaged a savings of 42% on their brand name drugs, and over 70% on their generic drugs by using our Rx For Savings Program. And there is NO monthly premium, and no gaps in savings. Most of our members will save considerably more by using our Rx For Savings Program than by enrolling in a Medicare Part D prescription program.
   
   You can get a quick estimate of how much you would save in a year using our Rx For Savings Program by calling our toll-free numbers and getting price quotes on your prescriptions (see our Rx For Savings Ad on page ___.
   
   Another possibility for achieving lower prices without signing up for a Medicare Part D plan may be utilizing any manufacturers discount programs you may be eligible for.
   
   
2. Look for cost-efficient alternatives to high-priced medicines you may be taking. Drug companies bombard doctors with giveaways, perks, and legions of salespersons (called "detailers"), promoting the use of the latest and most expensive medicines. The result is that often people end up taking the most expensive drug when a (much) lower priced medicine would do.

But there is a kicker:

The Late Enrollment Penalty

People who do not choose to enroll in Part D by May 15th, or within their initial enrollment period * will have to pay a higher premium if they decide to join later on. This penalty will be about 1% of the average national monthly premium for each month during which the individual could have been in Part D.

In 2006, the penalty will be 32¢ per month you were not covered, starting with June (if you were eligible for Part D). People who sign up late will have to pay this penalty unless Medicare decides they had drug coverage that was as good as Medicare's during the time they did not enroll in Part D. This is known as "credible" coverage.

* The initial enrollment period for people who are not currently in Medicare will be the month they are first eligible for Medicare and three months before and three months after.

Decide For Now Or For The Future???

So for RIGHT NOW, if your drug costs are under $6-7,000 a year, you may well decide you would save more by NOT signing up for a Medicare Part D plan.

But, what if:

• The drug companies were successful in the future in their efforts to shut off the option to import your brand name prescriptions?
• Later on, your prescription costs rise dramatically?

To protect yourself against these eventualities in the future, should you sign up for a Medicare Part D plan today, even though it's not a good deal for you today?

Will Congress change the rules in the future? (The law already calls for a review of the penalty in 2007; and there is to be a review of the whole program within two years after it exceeds its budget - which will happen very soon). You can be sure there will be changes - there always are. But we have no way of predicting what changes will be made.

How can you make a good decision in the dark?

Here are your options:

• Ignore the penalty, and do whatever will save you the most on your medicines. After all, every month you don't pay a premium, you can save that money for future needs. The average premium for 2006 is $32 a month or $386 for the whole year.
  
  The penalty if you didn't sign up through all of 2006, would $2.24 a month higher premium from then on if you signed up for a Part D plan beginning January, 2007
  
  So, let's say you don't sign up for a Medicare D plan for 5 years after the deadline of May 15, 2006: Then if you decided to sign up, you would pay a premium penalty of 60%. And you would have saved 5 years of paying a monthly premium (which will go up every year). If the premium averaged $40 a month over that 5 years, you would have saved $2,400 by NOT signing up for five years, and your penalty might be $24 a month. Obviously, with the $2,400 you saved (and interest earned) you could afford to pay that penalty for a long time.
  
  
• Sign up for the best Medicare Part D Plan you can find for you, even though you could save more another way. That way you will be protected against having to pay a premium penalty should the availability of less expensive medicines disappear or your drug costs skyrocket.
  
  
• A THIRD OPTION: Sign up for the lowest premium Part D plan, and don't use it. The lowest premium plan we know of in Indiana is offered by Humana at $12.30 a month (see page 97E of your Medicare & You 2006 Handbook). You may save more using another way, enough to cover the premium and more, and you will preserve your right to sign up for a Part D plan in the future without penalty.