What Are Medicare Drug Plans and How Do They Work?
To get Medicare drug coverage, you must enroll in one of the private plans that Medicare has approved. A wide range of plans will be offered. Some will operate nationally, others only in certain regions of the country. You will be able to compare details of each plan available in your area, starting October 13, 2005.
Broadly, there are two kinds of Medicare plans offering drug coverage:
- A “stand-alone” plan that offers only prescription drug coverage. This type may suit people who wish to stay in (or change to) the traditional Medicare fee-for-service program for their other health care coverage.
- A Medicare Health Plan that offers comprehensive coverage for medical care, plus coverage for prescription drugs. This type may suit people who prefer managed care.
Medicare Health Plans are alternatives to the traditional Medicare program. They have been in Medicare for several years and used to be known as Medicare+Choice plans (or Part C of the Medicare program). Now they are known as Medicare Advantage plans or just Medicare Health Plans.
Among the different kinds of health plans are: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point of Service (POS), and private fee-for-service (PFFS) plans. Most are variations of managed care. In some, you may use doctors only from the plan’s network—that is, doctors who have a contract with the plan. In others, you can also choose doctors from outside the network, but you’ll likely pay more to do so.
Starting January 1, 2006, all Medicare Health Plans (except PFFSs) must offer at least one option that includes prescription drug coverage. If you select a PFFS Plan that does not include drug coverage, you can choose to get drug coverage separately from a stand-alone Medicare drug plan.
There will be a lot of variations among the plans in the drug coverage they offer. By law, it must be at least as good as the standard Medicare coverage in overall value. But there will be differences in the premiums and copayments they charge, which drugs they cover, what prices they charge for drugs, and which pharmacies they use. Those differences are important to know when you want to choose a plan.
If you sign up for a plan, you’ll receive its prescription drug card. When you need to fill a prescription, you will show the card at the pharmacy (or send its number to a mail order pharmacy service). The pharmacist will use the card to access your information electronically. That’s how the pharmacist will know what to charge you—whether you still have part of your deductible to pay, whether or not you have extra coverage that affects what you will pay, what your copayment should be, and, finally, whether you are in Medicare’s coverage gap.
Now that you know how the new drug coverage works, you need to make a decision—sign up for it or not? Only you can make this decision, but you need to think it through carefully. These are things to consider.
