Medicare Prescription Drug Plans Start in 2006

Armen Hareyan's picture

Medicare is an essential health care program for people age 65 and older and people with disabilities. Recently, President Bush and Congress worked together to pass a new law to bring people with Medicare more choices in health care coverage and better health care benefits.

This new law preserves and strengthens the current Medicare program, adds important new prescription drug and preventive benefits, and provides extra help to people with low incomes. You will still be able to choose doctors, hospitals and pharmacies.

If you are happy with the Medicare coverage you have, you can keep it exactly the same. Or, you can choose to enroll in new options described below. No matter what you decide, you are still in the Medicare program.

Drug Discount Cards Start in 2004

Medicare-Approved Drug Discount Cards will be available in 2004 to help you save on prescription drugs. Medicare will contract with private companies to offer new drug discount cards until a Medicare prescription drug benefit starts in 2006. A discount card with Medicare's seal of approval can help you save 10 - 25 percent on prescription drugs.

You can enroll beginning as early as May 2004 and continuing through December 31, 2005. Enrolling is your choice. Medicare will send you information soon with details about how to enroll.

People in the greatest need will have the greatest help available to them. If your income in 2003 is no more than $12,123 for a single person, or no more than $16,362 for a married couple, you might qualify for a $600 credit on your discount card to help pay for your prescription drugs. (You can't qualify for the $600 if you already have drug coverage from Medicaid, TRICARE for Life or an employer group health plan).

Also new in 2004, Medicare Advantage is the new name for Medicare + Choice plans. Medicare Advantage rules and payments are improved to give you more health plan choices and better benefits. Plan choices might have improved already in your area. To find out more, call 1-800-Medicare (1-800-633-4227).

New and Improved Preventive Benefits Start in 2005

New Preventive Benefits will be covered, including:

  • One-time initial wellness physical exam within 6 months of the day you first enroll in Medicare Part B.

  • Screening blood tests for early detection of cardiovascular (heart) diseases.

  • Diabetes screening tests for people with Medicare at risk of getting diabetes.

These benefits add to the many preventive services that Medicare already covers, such as cancer screenings, bone mass measurements and vaccinations.

Prescription Drug Plans Start in 2006

Prescription Drug Benefits will be added to Medicare in 2006. All people with Medicare will be able to enroll in plans that cover prescription drugs. Plans may vary, but in general, this is how they will work:

  • You will choose a prescription drug plan and pay a premium of about $35 a month.

  • You will pay the first $250 (called a "deductible").


  • Medicare then will pay 75% of costs between $250 and $2,250 in drug spending. You will pay only 25% of these costs.

  • You will pay 100% of the drug costs above $2,250 until you reach $3,600 in out-of-pocket spending.

  • Medicare will pay about 95% of the costs after you have spent $3,600.

Some prescription drug plans may have additional options to help you pay the out-of-pocket costs.

Extra help will be Available for people with low incomes and limited assets. Most significantly, people with Medicare in the greatest need, who have incomes below a certain limit won't have to pay the premiums or deductible for prescription drugs. The income limits will be set in 2005. If you qualify, you will only pay a small co-payment for each prescription you need.

Other people with low incomes and limited assets will get help paying the premiums and deductible. The amount they pay for each prescription will be limited.

Medicare Advantage plan choices will be expanded to include regional preferred provider organization plans (PPOs). Regional PPOs will help ensure that all people with Medicare have multiple choices for Medicare health coverage, no matter where they live. PPOs can help you save money by choosing from doctors and providers on a plan's "preferred" list, but usually don't require you to get a referral. PPOs are among the most common and popular plans right now for working Americans.

All of these options are voluntary. You can choose to remain in the traditional Medicare plan you have today.

News for all Americans
Starting immediately, Americans will be able to set aside money each year, tax free, in Health Savings Accounts. The savings accounts can be used to pay for medical expenses, and money not spent would stay in the account and gain interest tax-free, just like an Individual Retirement Account (IRA). Your health insurance deductible must be at least $1,000 for a single person and at least $2,000 for family coverage.

Questions about Medicare?
For the latest information about Medicare, visit or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

To get a copy of this information in Spanish, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Para una copia en espanol, llame gratis al 1-800-MEDICARE (1-800-633-4227). Los usuarios de TTY deben llamar al 1-877-486-2048


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