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Prescription Drug Coverage: Common Situations

To help you get started thinking about Medicare drug coverage, find the situation that describes you and learn what you need to do.

“I have Original Medicare only, or Original Medicare and a Medigap (‘Supplement’) Policy without drug coverage.”

If you use an average amount of prescription drugs, Medicare’s prescription drug coverage could pay over half of your drug costs.If you have very high unexpected drug costs, Medicare will pay up to 95% of these costs after you spend $4,350 out-of-pocket in a year.

What you need to do:
To get this prescription drug coverage, you can join a Medicare Prescription Drug Plan that covers prescription drugs only and keep your Original Medicare coverage the way it is. Or you can join a Medicare Advantage Plan or other Medicare Health Plan that covers doctor and hospital care as well as prescriptions.

Medicare Advantage Plans usually give you extra benefits and/or lower costs, but only if you use the doctors and hospitals that participate in the plan’s “network.” If you do not opt for prescription drug coverage when you are first eligible, you may have to pay a late enrollment penalty to get drug coverage later.

“I have Original Medicare and a Medigap (‘Supplement’) Policy with drug coverage.”

Medicare prescription drug coverage will generally provide significant savings compared to what you are paying in copayments for drugs under your Medigap plan, and will generally provide much better protection against unexpected drug expenses as well.

What you need to do:
Decide between keeping your Medigap policy with prescription drug coverage and joining a Medicare plan that offers prescription drug coverage. You have probably received information in the mail for plans in your area offering coverage. Compare your current coverage to Medicare prescription drug coverage.

Unlike Medigap, most of the cost of Medicare prescription drug coverage is paid by Medicare, and will never run out if you have unexpected drug costs. Also, if you do not join a Medicare Prescription Drug Plan or a Medicare Advantage Plan that offers prescription drug coverage when you are first eligible, you may have to pay a late enrollment penalty to get drug coverage later. If you opt for Medicare prescription drug coverage, tell your insurer, and the drug portion of your Medigap policy will be removed.

“I am a retiree and I have drug coverage through my (or my spouse’s) former employer or union.”

Medicare will help employers or unions continue to provide retiree drug coverage that meets Medicare’s standard. Your former employer or union has choices about how they will work with Medicare.

What you need to do:
Your former employer or union probably mails a letter each year to its members with Medicare. This information explains how they will work with Medicare on prescription drug coverage and what decisions you will have to make. If you do not hear from them, visit their website or call your benefits administrator.

“I have a Medicare Advantage Plan (like an HMO or PPO) or other Medicare Health Plan.”

Medicare is working with Medicare Advantage and other Medicare Health Plans to help them provide even more coverage and/or lower costs. Your plan will let you know about the prescription drug options they will offer. You can also choose to switch to another Medicare Advantage Plan or Medicare Health Plan. Or you could choose the Original Medicare Plan and join a Medicare Prescription Drug Plan.

What you need to do:
Read the information you received in the mail explaining any additional prescription drug coverage your plan will offer.
Talk to an agent about changing your plan.
Option to change Nov 15th – Dec 31st, or Jan 1 – March 31st

“I have Medicare and Medicaid, and I get my drug coverage from Medicaid.”

As of January 1, 2006, Medicare covers your prescription drugs. The prescription drug coverage from Medicare has no premiums, no deductibles, and no gaps, and you will pay very little or nothing for almost all prescriptions. Once you are enrolled in a Medicare Prescription Drug Plan, you usually will remain in that plan if you don’t take any action to change plans. If Medicare must assign you to a different prescription drug plan at any time, they will mail you a letter explaining the change and your options.

What you need to do:
You should review your drug plan coverage regularly to make sure your current plan is meeting your needs. Each year, you should review your coverage and compare it to any new plans that might be available for the coming year. Decide which Medicare plan offers the prescription drug coverage you would like. When you are new to Medicare, if you do not sign up for a plan, Medicare will sign you up for one to make sure you do not miss a day of coverage. Medicare will send you a letter to let you know which plan you are in. You can switch to a different plan if you choose.

“I have limited resources and live on limited income.”

What you need to do:
If your resources are less than $12,510 (single) or $25,010 (married) and your income is limited, you may qualify for extra help paying for Medicare Prescription Drug Coverage. These resource limits are for 2009 and may increase each year. The resource limits include $1,500 per person for burial expenses. Resources include your savings and stock, but not your home or car. If you haven’t received an application or information about the extra help, and you think you may qualify, you should apply. You can apply online by visiting the Help With Medicare Prescription Drug Plan Costs section on the Social Security Administration website.