Expert's View

It wasn’t all that long ago that those of us who are Medicare-covered were scratching our heads and trying to decide whether to sign up for the new Medicare prescription drug discount cards. Turned out that for most of us enrolled in an FEHB plan, there was little to be gained. Now here comes the second part of the program, called Medicare Part D. The enrollment period for that plan begins on November 15 and runs until May 15, 2006. Here’s the big question: Is Medicare Part D for you?

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Let me give you quick once over of the rules. If you enroll in Medicare Part D, you’ll pay a monthly premium of about $32 for the standard Medicare plan. Premiums will vary up or down depending on the prescription drug plan you choose. With one exception, those who don’t enroll during the initial enrollment period will pay 1 percent more for each and every month they delayed, and that increase would be permanent. Here’s the exception: the premium penalty doesn’t apply to anyone who has comparable coverage from another source. To avoid that penalty, you’ll need a certification in writing that your prescription drug coverage is “as good as Medicare.” Fortunately, if you’re enrolled in an FEHB plan, OPM has already done that for you. Just look at the fifth full paragraph on page one of the FEHB Open Season letter you recently received in the mail. Here’s what it says:

“OPM has determined that all FEHB plans offer prescription drug coverage that is equivalent to Medicare Part D’s coverage, so FEHB members are being advised that they do not need to purchase Part D as long as they keep their FEHB coverage. However, if at a later time they decide to enroll in Part D (and they have not gone 63 days without FEHB coverage), they will not have to pay the penalty for not enrolling in Part D.”

Before you finally make up your mind, check the chart below to see what additional costs there would be for Medicare Part D beyond the monthly premiums.

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 If your annual drug costs are between… You pay… Up to a maximum of… Your total non-premium costs are…
$0-250 100% $250 $250
$251-$2,250 25% $500 $750
$2,251-$5,100 100% $2,850 maximum of $3,600
Over $5,100 5% No limit $2 for generic, $5 for brand name drugs. Or 5% of the cost,
whichever is greater

So, is Medicare Part D for you? You’ll have to review your own prescription drug out-of-pocket expenses to see if there would be any advantage to your enrolling, either now or in the future. However, I think that most of you will discover that this benefit isn’t for you. Not by a long shot.