Monday, May 24, 2004

Rules, benefits of drug plan

By Tim Bonfield
The Cincinnati Enquirer


Americans who live into their 80s or 90s could face massive costs for health insurance and uncovered services during their retirement years. Places that might help:

• For more information on how to calculate your potential retirement health expenses, go to or call the Employee Benefit Research Institute at (202) 659-0670.

• Government sources of retiree health planning information include the U.S. Department of Labor at 800-998-7542and the Medicare program at or 1-800-Medicare.

• Also, check out the Kaiser Family Foundation's state health facts online at;;;; or  

The nation's first Medicare prescription drug benefit will take effect in 2006 - with new rules, regulations and benefits.

Government officials say the program will help millions of low-income seniors who are struggling without drug benefits. While nearly all commercial health plans for younger adults offer prescription drug coverage, Medicare hasn't covered drugs since the 1960s, when the health-care program for the nation's elderly was launched.

"This is something Medicare has needed for a very long time," says Leslie Norwalk, acting deputy administrator for the Centers for Medicare & Medicaid Services.

Families USA, Consumers Union and other consumer groups have been sharply critical, however. While the new drug plan appears to offer real help for many older Americans, critics say the benefits aren't strong enough to relieve the pinch caused by rapidly rising medication prices.

The voluntary program isn't for everyone, either.


Special section
Costs pound retirees

Most people who like the drug coverage they already pay for, or have drug coverage through an employer-sponsored plan, will be better off keeping their coverage.

Low-income seniors get the best deal: No premiums. No deductibles. They will pay flat fees of a few dollars per medication, which can vary slightly according to income.

For example, seniors earning less than 135 percent of the federal poverty level will pay up to $2 per generic drug and up to $5 per brand name drug. In 2004, 135 percent of poverty is $12,569 for an individual or $16,862 for a couple - a figure expected to rise by 2006.

The Medicare drug plan has other requirements, too:

• To qualify as low-income, seniors also must pass an assets test. That means a senior cannot have more than $6,000 in personal assets, or $9,000 for a couple. A car and a home would not count against seniors, but life insurance policies, savings and other valuables would.

• Seniors who want this coverage must sign up during the initial enrollment period, from Nov. 1, 2005, through May 15, 2006. Healthy seniors who try to wait until they get sick to sign up will face sharply higher fees. However, seniors will not face penalties if they sign up after being dropped from an employer-sponsored plan. People who reach 65 after May 2006 will decide whether to take the drug coverage when they sign up for Medicare.

• Not every drug will be covered by every plan in the new system. Seniors who know they need certain drugs should make sure their medications are covered.

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