The standard Medicare drug benefit offers insurance that will pay some of your drug expenses and will protect you against very high costs. If you have additional drug coverage from an employer or a state pharmacy assistance program, for example, this will reduce your out-of-pocket expenses more.

During a calendar year, here's how the standard plan works:

The premium is the amount you pay each month to a Medicare drug plan sponsor to purchase drug coverage. The actual amount will depend on which plan sponsor you choose. The average premium for standard drug coverage in 2006 is expected to be about $32. But some plans will charge more and some less.

This premium will be in addition to your monthly premium for Medicare Part B. You can choose to have the drug premium taken out of your Social Security check or pay it directly to your Medicare drug plan sponsor. Each person must pay a premium as an individual. There are no discounts for married couples.

The deductible is the amount you have to spend on drugs at the beginning of the calendar year before your coverage kicks in. In 2006, the deductible can be no higher than $250, though some plans may set a lower limit.

In 2006, if you have signed up for Medicare's prescription drug coverage, you will pay a $250 deductible toward the cost of your drugs.

After you have paid this deductible, the plan will cover 75% of the next $2,000 of your drug costs, and you will pay the remaining 25%. In other words, the plan will cover $1,500 toward this amount, and you will pay $500. At this point, you will have paid a total of $750, your $250 deductible, plus the $500 just explained.

After the initial coverage limit described above, there is a gap in Medicare's coverage (also known as the "donut hole"). This means that in 2006 you could pay up to an additional $2,850 before Medicare's coverage continues. While you are in this coverage gap, the plan will pay nothing toward your drug costs.

However, if you have extra coverage from a state program or elsewhere that adds to Medicare's, this may narrow or eliminate the gap. Some drug plans may offer similar extra coverage, probably for a higher premium. If you have limited income and qualify for Extra Help, you will not be affected by the coverage gap.

If you have drug expenses that go above the coverage gap, the plan covers up to 95% of the rest of your prescription costs until the end of the calendar year. There is no limit to this coverage in any one year. It is called "catastrophic" because it is intended to protect you against very high drug bills. Under the standard drug benefit for 2006, catastrophic coverage begins after you've spent $3,600 on drugs out-of-pocket over the course of the year, not including premiums. ($3,600 = $250 deductible + $500 in copayments + $2,850 in the coverage gap.) At this level, you will pay only $2 a prescription for generic drugs and $5 a prescription for brand-name drugs, or 5% of the cost of each prescription - whichever is higher.

• Who tracks my out-of-pocket expenses in the Medicare coverage gap?
  If you continue to get drugs through your Medicare drug plan during the gap, the plan will keep track. If you buy any from elsewhere, you must send the receipts to your plan. But only drugs that are covered by your plan will count toward the $3,600 out-of-pocket maximum (unless your plan has allowed you an exception for a drug it doesn't usually cover). Also, any drugs bought from Canada or other foreign countries do not count. Once the maximum is reached, your plan automatically starts your catastrophic coverage.


• What if another plan pays for my drugs in the coverage gap?
  Whoever provides your other drug insurance will work with your Medicare drug plan to ensure that you receive the correct coverage. However, not all kinds of extra coverage count towards the out-of-pocket maximum. If they don't, it means it will take longer to qualify for catastrophic coverage. Drug costs that do count toward the out-of-pocket maximum include those that are paid for by a family member and some state pharmacy assistance programs. Those that do not count include costs paid by other insurance, including from employers, unions, workers compensation or any government programs such as veterans and military retiree benefits.


• Can I delay reaching the Medicare coverage gap?
  Yes. Using lower-cost drugs will stretch your $2,000 initial coverage. Ask your doctor if a generic drug or lower-cost brand name drug would work just as well for you as the one you now take. Using these kinds of drugs could also reduce your copayments.