Medicare drug program mindbogglingly complex

There’s a new government benefit available for senior and disabled citizens who are eligible for Medicare — subsidized prescription drug coverage.

That’s the good news. The bad news is: The program is insanely mindbogglingly complex.

In a nutshell, here’s how the new program works, from the beneficiaries’ standpoint: Senior and disabled citizens who are eligible for Medicare — and who don’t have existing drug coverage — have until May 15 to sign up for a Medicare-approved private insurance plan.

Participation is voluntary, but if they don’t sign up by May 15 and later want to join, they face a late penalty of higher premiums. The penalty is 1 percent each month.

Medicare says the new drug coverage will pay about half the cost of drugs for the typical senior. Though some plans are more generous than others (and may have higher premiums) plans have to offer at least a basic minimum benefit. The minimum benefit looks like this: Beneficiaries pay the first $250 (a deductible). From $250 to $2,250 they pay 25 percent of drug costs (a co-pay). From $2,250 to $5,000 they pay 100 percent of the drug costs (this is termed a coverage gap or “donut hole”). And for costs above $5,000 a year, they pay 5 percent.

Formularies — lists of covered drugs — also differ among plans and can change at any time. But the plans are required to offer at least two drugs in each of 43 therapeutic categories.

In Oregon, there are 71 Medicare-approved private prescription drug insurance plans to choose from; in Washington, 73. Each plan is different, with different monthly premiums, deductibles, co-pays, different drugs covered, and different pharmacies participating. Some plans are “stand-alone” plans that go with traditional Medicare. Others are “Medicare Advantage” plans that have added a drug benefit to a set of other benefits. Medicare Advantage plans are like government subsidized HMOs. But they replace “traditional Medicare” so you can’t have both at the same time.

In the Northwest, the average premium cost of a new Medicare stand-alone drug plan is $32 a month. That would be in addition to the $88.50 monthly premium for basic Medicare.

By visiting the Medicare Web site and plugging in preferred pharmacy and the list of prescription drugs currently taken, seniors can narrow the list of choices down to just 6 or 10.

But then, a 2005 poll by the Kaiser Family Foundation found that 73 percent of seniors had never gone online at all. So they’ll need someone else to do it for them — relative, friend, co-worker, neighbor, or government-provided volunteer.

Or they can call a toll-free number 1-800-MEDICARE (1-800-633-4227) and wait on hold, to have someone do it for them. Reports are there can be a long wait time.

One in four Medicare beneficiaries — 10 million Americans — had no prescription drug insurance previously. But only about 1 million of these had signed up by mid-December.

That’s partly because many seniors are overwhelmed at the complexity of the choices. Even though benefits began Jan. 1, they haven’t signed up. Bill Vaughan of Consumers Union calls it a “deer in the headlights” effect: Unfamiliarity and confusion can lead to inaction.

Of course, inaction may be the best course for those who already have employer- or union-sponsored prescription drug insurance that’s as good or better as the new benefit. Seniors who did have such coverage should have received a letter telling them whether their coverage will continue for the next year. Most union and employer retiree drug plans had more generous coverage than the new government-subsidized plans, and most aren’t dropping coverage yet. Retirees who are in these plans WON’T face the late penalty if they are later dropped and have to sign up for a private plan.

Here is some advice on the new drug choices for Medicare enrollees, based on conversations with a number of experts on the new program:

• If your employer or union is still providing you coverage as good or better than the new Medicare benefit, save the letter they sent you about it. That can be used as proof later on that you were advised not to sign up for the private plans, and you won’t face the higher premium penalty if your employer or union later drops the coverage.

• If you are currently enrolled in a “Medicare Advantage” plan, a kind of government-subsidized private health plan, you may want to consider staying with it and accepting the new drug benefit that the plan will automatically provide. If you sign up for a separate, stand-alone drug benefit, you will be dropped from the Medicare Advantage plan and enrolled in basic, traditional Medicare. Basically you can’t be in both the stand-alone plan and the Medicare Advantage plan.

• If you don’t currently have drug coverage of any kind but take few or no prescription drugs and don’t currently need the drug benefit, you may want to choose the plan with the lowest premium. You’ll have an opportunity to switch to a better plan in the last six weeks of each calendar year. You may end up taking expensive prescription drugs in the future and want to sign up for a drug plan. If that happens, the late enrollment penalty will make premiums more expensive.

• Use the Web site or the hotline to narrow down your choices by providing your preferred pharmacy and the list of drugs you take. Most people end up with 6 to 10 choices at this point. You can request information from each, spend time studying them, and choose whichever one seems like the best deal for you. Just as it’s hard to know whether you’re truly getting the best deal on auto insurance or home insurance, you may just have to live with a little uncertainty about whether you’re getting the very best deal in prescription drug coverage. There’s nothing wrong with deciding you’re not willing to spend unlimited hours reading the fine print of every plan. On balance, any plan will be of some help to you, because the government subsidy will be helping you pay your prescription drug bill.

• Don’t be shy about asking for help. Many elected officials, including members of Congress and state legislators, have assigned staff to help constituents. Some work with other agencies to set up meetings to answer questions and help seniors enroll. Some of these meetings even have computers onsite and volunteers to help. Contact your representative for help with questions. Also, there are state and county agencies working to help seniors with the new program.

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