Medicare Prescription Drug Plan

The new Medicare Prescription Drug Plan due to take effect in 2006 will provide a much needed prescription plan for seniors. That's what the Administration says, but what exactly is this new benefit?

The Facts:

• You will choose a prescription drug plan and pay a premium of about $35.00 a month. (that's $420.00 a year)
• You will pay the first $250.00 in drug costs. (called a deductible)
• Medicare then will pay 75% of drug costs between $250.00 and $2,250.00 annually. You will only pay 25% of these costs. (If you spend up to $2,250 or more – You pay $500.00)
• If you spend over $2,250.00 but less than $3,600.00, you pay 100% of the costs. (That's an additional $1,350.00)
• If you spend over $3,600.00 Medicare will pay about 95% of the costs over the $3,600.00 threshold.

Example of a typical senior with $100.00 per month or $1,200.00 per year in prescription drug spending:

Example of a senior with $250.00 per month or $3,000.00 per year in prescription drug spending:

Example of a senior with $500.00 per month or $6,000.00 per year in prescription drug spending:

As one can see, the more you spend on prescription drugs, the less your cost share is on a percentage basis. The people with greatest need, who have incomes below a certain limit won't have to pay the premiums or deductible for prescription drugs. The income limits will be set in 2005. If you qualify, you will only pay a small co-payment for each prescription you need. To learn more about Medicare, visit www.medicare.gov.