Sorting Out New Medicare Prescription Options

RALEIGH -- In a month, the 1.2 million people in North Carolina who receive health insurance through Medicare can begin signing up for long-promised prescription drug coverage. They must make up their minds: Do they want to sign up for the optional coverage available Jan. 1? If so, which of the private companies authorized to offer it can best meet their needs?

Answers will be difficult for many.

People can sign up for coverage between Nov. 15 and May 15. But as the beginning of that window draws near, Medicare beneficiaries still lack key information.

Companies offering the drug coverage haven't completed all of their contracts with pharmacies, so it may not yet be possible to find out which drug plans your local drugstore will accept. And drug formularies, which list the specific medications each plan will cover, aren't yet widely available.

The agency that runs Medicare, the Centers for Medicare and Medicaid Services, had planned to provide the ability to compare formularies and other information online at www.medicare.gov but didn't have its plan evaluator ready by Thursday as originally planned. Medicare administrators say it will be ready Monday.

Pharmacist Mike James, who owns Person Street Pharmacy in Raleigh, said it's critical for people to understand which plans cover their medications before they sign up for anything. They should also know what they will pay for drugs that aren't on the formulary.

"My advice to people is, 'don't do anything hastily,' " James said.

Complicating matters further, some of the information Medicare members have received from the government is just plain wrong.

This year's edition of the official Medicare handbook, which beneficiaries nationwide started receiving last week, incorrectly states that Medicare members who qualify for free or reduced premiums may sign up for any drug plan offered in their area. In fact, they must choose coverage that costs no more than the average "standard" plan marketed in their state -- $36.30 or less in North Carolina -- or they will be responsible for the additional cost.

Some Medicare enrollees may feel overwhelmed by the volume of different companies offering drug coverage.

It's the first time ever that a benefit paid for by the government is being administered exclusively by private companies.

The hope is that competition will provide consumers with choices while keeping costs down. In North Carolina, 16 carriers are offering a total of 38 different plans. Medicare members may choose just one.

"I had no idea there were so many," said Maria Comas, 65, of Raleigh, who recently started investigating the coverage. "I am just picturing myself going to 16 different Web sites."

Comas and her husband Henry, 75, don't have any drug coverage now and aren't sure they need it. Right now, the Comases each take just one prescription drug, and one of them costs less than $50 a year. There's a good chance they'd end up paying more in premiums than they'd reap in benefits.

"Do we sign up now or do we wait?" asked Maria Comas.

Most eligible Medicare members who don't sign up by May 15 will be penalized with higher premiums, so that's something else Maria Comas is factoring into her decision.

Pauline Rosato, 79, of Wake Forest has already decided she'll sign up for coverage to help pay for her cholesterol medicine and water pill, which together cost her about $1,100 a year. She is concerned about finding an affordable plan.

"I don't think I'll be able to afford more than $35 a month," Rosato said.

More than a dozen plan choices will fall below her price limit.

The cheapest will cost just over $13 a month, and the most expensive will run about $65 a month. Some senior advocates are pleased to see a wide range of prices available to people.

Paying a higher premium may be worth it to someone who takes a lot of medicines if the more-expensive plan allows them to pay less at the pharmacy, said Carla Obiol, director of the Senior's Health Insurance Information Program, or SHIIP, a division of the state Department of Insurance that provides free counseling to Medicare beneficiaries.

On the other hand, a person who takes few prescription drugs may choose to spend less on monthly premiums and pay more to receive their medicines. Lower-priced plans tend to have higher co-payments and many require enrollees to pay out of pocket for the first $250 worth of drugs.

"This is going to be helpful to a great deal of folks," Obiol said. "Overall, we're very excited."

Groups that help senior citizens are staging educational forums on the new drug coverage. And some insurance carriers offering the benefit have teamed up with drug stores to answer Medicare members' questions about coverage. Here are some common questions people have about the new prescription benefit and the answers:

What is the 'standard' benefit?

Medicare requires companies to provide a minimum level of coverage, known as the standard or basic benefit. A standard plan has a $250 deductible. Insurance will pay 75 percent of the annual drug costs between $251 and $2,250. There's no drug coverage between $2,251 and $5,100 -- the coverage gap. Pay more than $5,100 a year for drugs, and Medicare will cover 95 percent of the charges. Individual plans will vary in terms of the co-payments.

Some have a deductible less than $250, and others have none at all.

How much will coverage cost?

It will depend on which drug plan you choose and your financial situation. The lowest priced plan offered in North Carolina will cost $13.27 a month, and the most expensive plan will be offered at a premium of $65.03 a month. Higher-priced plans have more generous benefits than cheaper ones. Individuals with annual income of $14,355 or less and couples with annual income of $19,245 or less may qualify for financial assistance, including a reduced or waived premium. To apply for financial help, call Social Security at (800) 772-1213, or go to www.socialsecurity.gov.

Will I be automatically enrolled?

Not unless you are eligible for both Medicare and Medicaid and already receive drug coverage through Medicaid. About 217,000 North Carolinians fit that description. They will have an opportunity, however, to select the plan of their choice. If they do not select a plan, Medicare will randomly assign them to one. All other Medicare enrollees, including those who are eligible for financial assistance, must sign up on their own to receive coverage.

When do I sign up?

The earliest anyone may enroll in a Medicare drug plan is Nov.

15. To have coverage take effect Jan. 1, be sure to sign up by Dec.

31. If you join after that, coverage will be effective the first day of the month after the month you enroll. The deadline to enroll without penalty is May 15.

What if I miss the May 15 deadline?

You may still enroll, but most people will pay more: Your premium will be 1 percentage point higher per month for every month you wait to sign up. For example, an eligible person who waits 10 months past the May 15 deadline to join will pay 10 percent more for their drug plan for as long as they keep the coverage. If the plan they choose normally has a premium of $30, they would pay $33.

What if I'm not eligible for Medicare until after May 15?

You must enroll in drug coverage within 63 days of the day you become eligible to avoid a penalty.

Will my medications be covered?

Each plan will have a list of all the medications it covers, and that list may vary from plan to plan. You will want to check to see if your prescriptions are covered before signing anything. However, carriers may change what drugs they cover at any time, as long as they give 60 days notice to Medicare. Coverage information will be available online at www.medicare.gov. Or call the Senior's Health Insurance Information Program (open-bracket)733-0111 in the Triangle or toll-free at (800) 443-9354(closed-bracket) for help.

If you'd prefer a paper copy, companies that are providing Medicare drug coverage are required to provide their list.

I already have drug coverage through my former employer. Do I have to switch to a Medicare prescription plan?

No. Employers that provide prescription drug coverage are required to notify retirees by Nov. 15 whether their current drug plan is as good as or better than the standard benefit available under a Medicare prescription drug plan. Retirees who stick with their employer's coverage will not pay a penalty to join a Medicare drug plan if their company plan is discontinued.

I don't take a lot of prescription drugs. Should I sign up for the drug coverage?

The main reason to do so is to avoid the late-enrollment penalty and to plan for the future in case your health needs change.

Will my pharmacy accept the Medicare drug plan I choose?

Medicare drug plans must contract with pharmacies, so you will need to use a network pharmacy. Your insurer can provide you with a list of participating pharmacies. Or ask the pharmacy you use which drug plans they are going to accept.

Suppose I sign up for a Medicare drug plan and don't like it.

Can I switch?

Yes, but most people will be locked into the plan they choose for a full year. After the initial enrollment period, most people won't be able to switch until Nov. 15, 2006.

How can I be sure I'm dealing with a legitimate carrier?

A complete list of plans approved for North Carolina is in the 2006 edition of "Medicare & You," the official government-issued Medicare handbook that started arriving in mailboxes this week.