September 18, 2005
Don’t miss Medicare enrollment deadlines
By Paul M. Krawzak
Copley News Service
WASHINGTON — People on Medicare who miss enrollment deadlines for the new prescription drug benefit will, in most cases, face permanently higher costs for drugs.
The benefit, which begins Jan. 1, will help seniors and disabled people pay for prescriptions.
To be covered by the plan, Medicare beneficiaries must first enroll. If they don’t by May 15 — at the latest — they will likely have to pay a permanent penalty of at least 12 percent of their premium costs.
Federal officials are encouraging Medicare recipients to enroll in the prescription benefit, even if they currently have little use for it.
“For most people, joining when you are first eligible means you will pay a lower monthly premium than if you wait to join until later,” a Medicare publication warns.
The enrollment period begins Nov. 15, and continues through May 15.
But for now, only basic information is available on the prescription benefit.
• Most people will have to choose among competing plans offered by private health-care entities.
• Every plan must provide minimal coverage required by Medicare.
• Some will offer more for higher monthly premiums.
• Each company offering a plan must sign a contract with the federal government and make prescriptions available at participating pharmacies.
• Beneficiaries will pay some costs. Monthly premiums are expected to average $32 nationwide and $33 in Ohio, and people will have to pay a $250 annual deductible and co-payments after meeting the deductible. In the standard plan, they also pay 25 percent of their prescription costs from $250 to $2,250, 100 percent of the next $2,850 in drug costs, and 5 percent of any remaining costs for the calendar year.
No one plan
There will be variations.
The Bush administration announced Monday, for example, that some plans will have premiums below $30 or even $20. According to preliminary figures from Medicare, Ohio will offer three plans with premiums below $20 and 11 with premiums of $20 to $30. Some plans will have lower deductibles or no deductibles. Others will feature coverage within the $2,850 gap.
Centers for Medicare & Medicaid Services Administrator Mark McClellan said the agency is working to make specific plan information available by late September.
The agency plans to send information to all 38 million Medicare beneficiaries in October, and detailed information on specific plans will be available from the companies that provide them Oct. 1. Medicare will start providing the information directly in mid-October.
To take advantage of the earliest possible prescription coverage on Jan. 1, people must sign up before the end of the year, but they won’t face a penalty until May 15.
Those who are eligible but delay past May 15 face a stiff penalty, with one exception. The penalty won’t apply to people who already have equivalent prescription coverage through their own or their spouse’s plan offered by a former employer or union.
In health insurance lingo, they have what is known as “creditable” prescription drug coverage. But they have to join a Medicare plan within 63 days after their previous coverage ends.
How penalties work
As for the rest, here’s how the penalty applies:
Say you’re eligible for Medicare on or before Jan. 1 but you don’t enroll between Nov. 15 and May 15. Your next chance to enroll would be Nov. 15, 2006, through Dec. 31, 2006, with your benefit beginning Jan. 1, 2007.
If you were to enroll in the later period, you would pay a 12 percent annual penalty added to your premium. If you waited until 2007 to enroll, your annual penalty would double to 24 percent of the premium, with another 12 percent added each successive year of delay.
Other prescription coverage changes that are coming:
• Beginning Jan. 1, the Medicare drug benefit will pay for prescriptions for poor people, a responsibility now borne by the federal-state Medicaid program.
Medicaid recipients will be notified in October which Medicare drug plan has been selected for them. Recipients of Medicaid, the medical program for the poor, can compare plans and enroll in a different plan from the one chosen for them without penalty.
• Up to 19 million Medicare beneficiaries may be eligible for federal aid in paying for a prescription plan even though they do not qualify for welfare benefits.
People with incomes below $14,355 or a married couple with income below $19,245 may qualify if their financial resources are limited to $10,000 for an individual or $20,000 for a couple, according to the Social Security Administration. Others with higher incomes also may qualify — if, for example, they support other family members living with them.
More information is available from Social Security.
Medicare beneficiaries who now get prescription coverage from a former employer, union or other supplemental plan should check with their insurer to see if their coverage is changing or if their plan may offer its own Medicare prescription coverage.