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New law affects seniors' drug costs

The Medicare Prescription Drug, Improvement and Modernization Act was signed into law on Dec. 8, 2003. This law provides for a voluntary prescription drug discount-card program for persons entitled to Medicare benefits or enrolled under Medicare Part A or Part B. This discount card program offers temporary financial assistance to seniors for the cost of prescription drugs until the comprehensive Medicare prescription drug benefit program begins in 2006.

It is anticipated that the Medicare-sponsored drug discount cards will be available by May and could save seniors approximately 10 to 15 percent on total drug costs. People enrolled in Medicaid or a Medicaid waiver program who are already entitled to medical assistance for outpatient prescription drugs are not entitled to the discount card.

A prescription drug sponsor may charge each eligible person an annual enrollment fee that does not exceed $30. The sponsor must charge the same enrollment fee to all enrollees in the same state.

A Medicare beneficiary with an annual income below 135 percent of the official poverty level, currently $12,123 ($16,362 for a married couple), is entitled to have the enrollment fee paid by this Medicare program. The Medicare beneficiary with a low annual income is also entitled to payment for up to 90 percent of the prescription costs incurred each year, up to $600 for covered drugs obtained through the program after taking into account the negotiated price of the prescription drugs.

Beginning Jan. 1, 2006, persons entitled to benefits under Medicare Part A or enrolled in Medicare Part B will be eligible to enroll in a voluntary prescription drug coverage program under Medicare Part D. The enrollment period for people who are eligible for Medicare Part D is expected to begin on Nov. 15, 2005.

The monthly beneficiary premium for this drug benefit program is estimated to be $35 a month or $420 a year. A Medicare beneficiary who elects to pay this premium will then pay an annual deductible. The annual deductible for 2006 will be the first $250 of any prescription drug expense incurred during 2006. This deductible will increase each year. The beneficiary will also pay a coinsurance amount equal to 25 percent of prescription costs in excess of the annual deductible, up to the initial coverage limit of $2,250.

The Medicare beneficiary's prescription drug plan sponsor will pay the remaining 75 percent until that person's drug expenses reach $2,250. The beneficiary will then pay the next $2,850 in prescription expenses before receiving additional financial assistance. The Medicare beneficiary's additional drug costs are referred to as the "doughnut" hole, because the plan will pay nothing toward the added prescription drug expense.

No further drug assistance occurs until a beneficiary's annual prescription drug expense exceeds $5,100. This means that a Medicare beneficiary who elects the new drug benefit will have paid $3,600 for prescription drugs during the year plus the additional $420 premium. The annual premium and deductibles are expected to increase each year as the cost of this Medicare benefit increases.

A person with prescription drug expenses exceeding $5,100 in a year will then pay a copayment of $2 for each generic drug or preferred drug and $5 for any other drug prescription, or 5 percent of the cost of the prescription drug, whichever is greater.

Prescription costs will be considered as incurred by the beneficiary only if they are paid by the beneficiary or by another person on behalf of the beneficiary. If the eligible person is reimbursed for such costs through insurance, a group health plan, or other third-party payment arrangement, the prescription cost may not count toward the eligible beneficiary's incurred costs.

_ Gregory G. Gay is a lawyer who specializes in elder law in Pasco, Hernando and Citrus counties. Write him in care of Seniority, St. Petersburg Times, P.O. Box 1121, St. Petersburg, FL 33731.

On the Web

Further information about this new law may be obtained on the Internet at www.medicare.org.

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