A Step-by-Step Guide to Medicare Part D’s Prescription Drug Plan

Medicare Part D is nothing short of confusing. If you did not sign up for the program by May 15th of this year, you could end up without drug coverage, or have to pay the penalty for applying after the deadline. The penalty is a 1% increase in your premium for each month after May 2006 in which you don’t enroll.

The following is a step-by-step guide designed to get down to the basics of Medicare Part D, cut through the jargon, and tells you exactly what you need to know.

Step #1: Eligibility. Are you eligible for Medicare’s new prescription drug plan? Simply put, if you are eligible for Medicare Part A or Part B, you are eligible for Part D.

Step #2: Cost. What will Medicare Part D cost you? For drug expenses in the range of $0-$250, you pay 100% of the cost. When and if your costs fall between $250-$2,250, the plan pays for 75%, and you pay for 25%.

At this point, the infamous coverage gap, often referred to as the “donut hole,” comes into play. Essentially, if your total drug costs, which include what you and the plan pay for prescriptions, exceed $2,250 per year, you pay 100% of your drug costs after that point until you reach $3,600 in out-of-pocket expenses (total $5,100 in drug costs). But after you escape from the “donut hole,” you only have to pay for 5% of your drug costs.

What you pay also includes the usual insurance costs associated with a drug plan. If you do not qualify for extra help, you will pay: monthly premiums, a yearly deductible, and co-pay or co-insurance for each prescription.

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Medicare Part D is not easy to understand at first glance, but with a little math, you will find that it is an excellent opportunity for seniors. If you just take a quick look at the information, it looks like the savings for Medicare Part D is about 75%. But, looks can be deceiving when in fact that is only a portion of the overall savings offered by their formula. Here is a simple way to calculate how to take advantage of the new prescription drug plan if expenses are over $2250 per year.

Medicare Part D - What You Should Consider

1. Prescription Drug Expenses: Start with your annual prescription drug expenses. Figure out how much would be spent on prescriptions without insurance at all. You will need to use the full amount to get the most accurate results. Calculate which month of the year your "retail" costs for prescription drugs will be $2250 (This amount maximizes your benefits). Anything after $2250, then Medicare Part D stops and full retail costs apply for the rest of your prescriptions.

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Posted on May 14, 2006 in Medicare Articles , Medicare Part D | Permalink




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by Darwin Corby

Try to imagine the new medical insurance plan from a detached position. There is an excellent opportunity for seniors sharp enough to see it, and it is available to anyone willing to do a little math. The savings presented in Medicare part d are a little deceiving because at first glance it looks like 75%, when in fact that is only a portion of the overall savings in the formula. Here is a simple way to calculate how to take advantage of the new government medical insurance IF EXPENSES ARE OVER $2250 PER YEAR.

Four things need to be considered

Start with annual prescription expenses. Figure out how much would be spent on prescriptions if there was no insurance at all. The full retail amount is important for this calculation. Calculate which month of the year full retail costs reach the "Magic Mark" of $2250. This will expose when the medical insurance stops and full retail costs apply.

For plan costs, add up how much will be spent on the annual deductible and monthly premiums. (in the chosen medical insurance plan) Add $500 to this amount for the 25% not covered by Medicare part d. Now add the full retail amount that will be spent for the remainder of the year to find the real expenses. Subtract savings ($1500) from expenses to calculate the real percentage of savings. Understand that 75% savings is impossible to reach.

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Posted on March 19, 2006 in Medicare Articles | Permalink

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