I found a USA Today article with a concise description of the new medicare prescription drug benefits. Here is a basic overview:

Seniors will have to choose from an array of insurance plans that do not yet exist. Initially, premiums will be about $37 per month. There will be a $250 deductible, followed by a series of coinsurance payments: Seniors will be responsible for 25% of the next $2,000 in drug costs, 100% of the following $1,350, and 5% of everything above $3,600.

This means that in a year’s time, a senior enrolled in one of these programs will spend $444 in premiums. The total out-of-pocket expenses for a senior citizen with $3600 per year in prescription drug costs would be $2,544. (This includes $444 of premiums, the $250 deductible, $500 in copays on the next $2,000, and the entire $1,350 not covered.) This already provides a net savings of over $1000, and the senior would continue to save $950 on every $1,000 in prescription drug expenses after hitting the $3,600 threshold.

All in all, this program does seem like a great improvement to the medicare program. Due to the benefit’s complexities, however, it is going to take quite some time to inform everyone just how much they stand to benefit from signing up. Taking into account the intimidating formula, the complicated application for government subsidy (mentioned in the post below), and a general mistrust for the government, a lot of seniors are not too exited about the changes.

Browneller uses three different inhalers that cost $421 per month, as well as medicine for her heart and diabetes. A rough calculation shows the plan could cut the cost of her inhalers almost in half, even if she did not qualify for the more generous low-income benefit. But like many seniors, she is wary of the plan’s premiums and its complex deductibles, and she worries that she won’t come out ahead.

“Everything with the government — they give you something in this hand, and what do they do with that hand?” she said. “They take it out.”

Stay tuned for more information on Medicare Part D (the prescription drug benefit) as details surface.

This entry was posted on Monday, July 25th, 2005 at 10:29 am and is filed under Medicare Supplement Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.