Changes in Medicare
Medicare often changes. Late in 2003, Congress approved perhaps the most dramatic change since Medicare began in the early 1960s. This change is called the Medicare Prescription Drug, Improvement, and Modernization Act. This act adds prescription drug coverage, to be called Medicare Part D, to Medicare's benefits. The new benefit does not begin until January 1, 2006, and changes may be made before then. It is voluntary. That is, people have to sign up for it (enroll). For this benefit, a person pays a premium each month, probably $35 in 2006.
Each year, before receiving any reimbursement, the person must pay the first $250 of drug costs (the deductible). Then, Medicare pays 75% of costs up to a total of $2,250. The person must pay the other 25% of costs (the copayment) for each prescription out of pocket. After the total of $2,250 is reached, the person must pay for all drug costs until the total reaches $5,100. Then, Medicare pays 95% of any additional drug costs for the rest of the year. Each year, the process starts over, with the person having to pay another deductible.
People will continue to have a choice between the original Medicare plan (Parts A and B) or Medicare + Choice (to be called Medicare Advantage). Under Medicare + Choice, an HMO may manage care. Under an HMO, the premiums, deductibles, and copayments for the drug benefit may vary somewhat from those under original Medicare. Insurance companies will not be allowed to sell Medigap plans that pay all or part of drug costs not covered by the new Medicare plan.
The premiums, deductibles, and copayments vary depending on income level. For people with a very low annual income and few assets, these costs may be lower or be nothing. Premiums for all types of Medicare plans will increase for people with an annual income of more than $80,000.
During 2004 and 2005, Medicare recipients will have the option of purchasing a drug discount card, which may reduce their cost for prescriptions, typically by 10 to 15%.
The new drug benefit will not remain the same from year to year. Premiums, deductibles, and copayments are expected to increase annually through at least 2013.
