Few Americans - and few seniors - understand Medicare and what benefits they are lawfully entitled to receive. The Medicare Modernization Act expanded the opportunities for beneficiaries to make their own decisions; however, the added decisions have made the program even more confusing. This article will focus on prescription drug coverage or Medicare Part D, as the prescription drug deadline is approaching. If you have a loved one or know any older Americans who are or might benefit from prescription drug coverage, I urge you to forward this article to them.Medicare now provides all Medicare beneficiaries with prescription drug coverage regardless of their income or medical history. To qualify for this coverage Medicare beneficiaries must enroll in a Medicare-approved drug plan. There are a great number of drug plan providers. Beneficiaries can use the Medicare drug plan finder, which is located on the government’s Medicare website.

May 15, 2006 is the deadline for beneficiaries to enroll by if the Medicare beneficiary is not already in a Medicare drug plan and does not have coverage equal to or better than Medicare’s prescription drug coverage. If the beneficiary misses this deadline, there is a 1% penalty (of bas premium) added for each month that the beneficiary did not have prescription drug coverage. For example, a beneficiary that waits until the next enrollment period (November 15 through December 31) will have a permanent 7% penalty added to his or her premium when their coverage begins.

People with limited income and resources may also qualify for the Low Income Subsidy (LIS), which can pay for up to 95% of the beneficiary’s entire drug costs. To qualify for the LIS individuals must have resources below $11,500 and income below $14,700 and married couples that are living together must have resources below $23,000 and income below $19,800. The LIS is not subject to the May 15th deadline, so beneficiaries who qualify may apply at any time throughout the year. Those who were not qualified but now are have the one-time opportunity to enroll in a Medicare drug plan (although a penalty may still apply for the months without drug coverage).

Also, Medicare beneficiaries may change drug plans one time prior to the May 15th deadline. After May 15th Medicare beneficiaries cannot switch plans until November 15th through December 31st. Of course, there are some exceptions to these rules.

There is a June 30th deadline that also comes into play with Medicare Advantage (MA) plans. A MA plan is just one of the ways to receive Medicare benefits. Basically MA plans provide comprehensive Medicare benefits - not just drug plan coverage. MA plans operate much like HMO or PPO health insurance coverage in that they provide more benefits at a cheaper cost, but limit they limit the time and types of services provided. Medicare beneficiaries have until June 30th to enroll or un-enroll from a MA plan; otherwise, they are generally limited to making changes from November 15th through December 31st of each year.

The costs for missing these deadlines can have serious and long lasting financial impact on older American’s ability to purchase medications. If you have a loved one or know any older Americans who are or might benefit from prescription drug coverage, I urge you to forward this article to them and follow up to make sure that they have considered all of their options.

By: Robert Klein
Klein & Klien Insurance Consultants
1811 Santa Fe
Houston, Texas 77703