May 4, 2006

Time is running out for Medicare Part D enrollment

Introductory six-month enrollment period ends on May 15

The clock is ticking for millions of eligible seniors who have not yet signed up for the Medicare Part D Prescription Drug Plan. The introductory six-month enrollment period ends on May 15, 2006, which is the last day you can enroll in a Medicare Part D prescription drug plan without the possibility of paying a late enrollment fee, reports the California Society of CPAs (www.calcpa.org).

If you don't meet the May 15 deadline, you must wait until the next open enrollment period (Nov. 15–Dec, 31, 2006) to enroll. The late enrollment fee is approximately one percent of your premium cost for each month (12 percent per year) that you delay in enrolling.

For example, if you wait until Nov. 15, 2006, the earliest you could join a plan if you miss the May 15 deadline, you would have delayed six months. That means your monthly premium will be approximately 6 percent higher than it would be if you signed up by May 15. You will pay it as long as you are enrolled in the Medicare Prescription Drug Plan.

There is one exception: If you are already enrolled in an employer, union or other type of medical plan that is certified to be as good as or better than a Medicare Part D Plan, you can choose to keep that coverage. Should you later decide to join, you may not be subject to the late enrollment penalty.

How Medicare Part D works
Part D coverage is available as a stand-alone prescription drug plan from a private insurer or as part of Medicare Advantage, the Medicare HMO program. All stand-alone plans must meet certain federal requirements, but monthly premium, covered drugs, pharmacy options and drug costs may differ. You may change plans once a year during the re-enrollment period.

How to choose a plan
The Medicare Part D covers both brand name and generic prescription drugs at participating pharmacies. Each plan has a formulary, that is, its own list of covered drugs. Since the drugs covered vary from plan to plan, it's important that you compare plans to see which one best fits your needs. You will pay the full cost of drugs that are not on your plan's formulary.

To compare plans, make a list of all your prescription medications, including dosage. Then go to the Medicare Web site (www.medicare.gov) to compare drug prices, monthly premiums and estimated total annual costs. You can also search for the names of participating pharmacies by entering your zip code. If you prefer, you may speak to an agent by calling 1-800-MEDICARE.

How much Medicare Part D costs
The exact cost of the drug benefit depends on the plan you choose. Like most insurance plans, you will pay a monthly premium, which varies by plan, and in most cases, an annual deductible (no more than $250 in 2006). After a $250 deductible, a standard Medicare plan pays 75 percent of the cost of covered drugs until your yearly out-of-pocket costs reach $2,250. At this point coverage stops and you must pay 100 percent of the cost of covered drugs—until you have paid a total of $3,600 in out-of-pocket costs. When you reach this point, Medicare pays 95 percent of your prescription drug costs, with no maximum benefit amount.

Certain plans may offer some coverage during the gap between $2,250 and $3,600. This is worth looking into if you have high prescription drug costs. Even in plans where you pay 100 percent of covered drug costs within the coverage gap, you would still pay less for your prescriptions than you would without Medicare Part D coverage, because the plans have negotiated with drug companies for lower drug costs.

Extra assistance is available to some with low income. Premiums may be reduced or eliminated, and other payments may be less as well. To better understand the rules pertaining to these plans and the options available to you, contact your CPA.