Medicare Drug Benefit

New Medicare Drug Benefits Program

In January 2006, Medicare's new drug benefit will go into effect. People with Medicare will be able to join a drug plan. All the plans will be run by private companies. The first enrollment period is from November 15, 2005 to May 15, 2006. The drug benefit is voluntary. You do not have to sign up. However, there may be a penalty if you decide to sign up at a later time. The plans will vary. Some plans may offer coverage that looks like the standard benefit. Others may look different, but are worth the same. Still others will include additional drug coverage. Premiums will vary based on what each plan offers and where it is offered.

This illustration, taken from the AARP website, illustrates how the new Medicare Drug Benefit works.

2. Then you may sign up for a voluntary drug benefit private plan sponsored by Medicare. For this you can expect to pay an additional premium of approximately $32/month.

3. You are still 100% responsible for the first $250 of your drug cost as a "deductible" each year.

4. After you pay for the first $250 of drug costs each year, Medicare will pay for 75% of all approved drug costs up to a ceiling of $2250 total drug costs each year.

5. Above $2250, you are responsible for 100% drug costs until you reach the so-called "catestrophic" level of $5100.

6. Over $5100, Medicare will pay for 95% of all drug costs without a ceiling.