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Doughnuts, Anyone?

Understanding Medicare's new enrollment policies, deductibles, and "doughnut holes."

WebMD Magazine - Feature

The new Medicare drug benefit -- called Part D -- begins Jan. 1, 2006, but the enrollment period starts soon. With hundreds of plans offering different types of coverage, now is the time to do your homework.

1. Getting Started. If you're currently on Medicare, then you should receive an enrollment form in the mail. It will contain information to guide you through the selection process. Some low-income beneficiaries -- those who now have Medicaid -- will automatically be enrolled in a plan and don't need to sign up. However, most Medicare recipients must enroll to participate in the program.For more information, call (800) MEDICARE.

2. Drug Coverage. This new benefit will replace the Medicare drug discount card, which will be phased out in 2006. However, many of the same companies that offered the discount cards will offer plans in the new program. You'll probably see advertisements for their plans at your drugstore and in magazines.

3. The "Doughnut Hole." Medicare's basic Part D benefit pays 75% of the cost of your prescriptions, up to $2,250 per year. Benefits then stop until your costs reach $3,600, after which Medicare pays 95% of your costs. This gap is Part D's "doughnut hole" and can be critical in choosing the right plan.

4. Out of Pocket. The above benefits don't kick in until you've paid $250 in drug costs -- your annual deductible. You must also pay about $37 a month in premiums, and there is generally a co-pay or shared cost for each prescription.

5. Compare Coverage. If your employer, union, or Medigap policy covers your prescription costs, you should do a careful comparison before you make decisions. Your provider will give you a detailed notice telling you whether your policy covers as much as -- or more than -- the Medicare drug plan.

6. Know Your Drugs. The Medicare drug plans are required to provide drugs in each treatment class (such as cholesterol drugs), but plans have the flexibility to establish preferred drug lists. Every list is bound to be different, so know which drugs are covered before you choose your plan.

7. Low-Income Benefits. Part D is an especially good deal for individuals living on less than $14,355 -- and couples living on less than $19,245 -- per year.

8. Know the Dates. Part D enrollment starts Nov. 15, 2005, and runs through May 15, 2006. Benefits start Jan. 1, but you'll pay a penalty if you don't sign up by May. Call (800) MEDICARE if you have questions.

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