Educate yourself before choosing Medicare drug plan

By Stephen W. Schondelmeyer, Pharm.D., Ph.D.

February 8, 2006

If you're eligible for the new Medicare prescription drug plan but haven't yet enrolled, you might have good reason, but you should consider signing up. For many, if you don¿t sign up by the deadline, May 15, 2006, it could cost you later in penalties that will result in higher premiums.

Some of the 43 million eligible Americans already have a drug benefit plan outside of Medicare--perhaps through their current or former employer. If so, it's critical to know whether the plan qualifies as equivalent to the Medicare plan. If not, you'll end up paying higher premiums later if you want to switch to the Medicare plan, also called Medicare Part D, after the May 15 deadline.

Others may delay signing up because they're not currently using any prescription drugs. For these people, I suggest choosing a low-cost Medicare drug plan now; otherwise, you too will pay penalties and higher premiums if you delay joining the program.

The reason is that, for currently eligible people, Medicare will assign a 1 percent penalty to your premiums for each month you delay registering after the May 15, 2006 deadline. If you wait three years to sign up for the Medicare drug plan, for example, you'll pay 36 percent more in premiums--and you'll pay that penalty each month for the rest of your life. One exception is being enrolled in a qualifying plan equivalent to Medicare.

The Medicare prescription drug plan covers most brand-name and generic prescription drugs at participating pharmacies and is available to all Medicare enrollees, regardless of income and resources, health status, or current prescription expenses.

So, what do you do next? If you have a drug benefit plan but don't know whether it is considered a "qualifying" plan under Medicare guidelines, contact your employer or the health plan to find out. If you don't have any plan, or you have a plan that doesn't meet Medicare guidelines, choose a Medicare plan before May 15. Even if you don't use any prescription drugs, it might save you later to choose a low-cost plan now. Some of these plans have premiums as low as $2 to $5 a month.

If you need more information, go to the http://www.medicare.gov Web site. If you don't have access to a computer, or need additional help, contact groups like the Minnesota Senior Federation at 1-800-365-8765 or call the state of Minnesota¿s Medicare Part D hot line at 1-800-333-2433. Also, be sure to talk with your pharmacist and your physician and ask their advice.

The bottom line? Don't panic, but do make a choice before May 15, 2006. It's also important to note that if you've already signed up for a plan, but find another that better meets your needs, you can change plans once before May 15. You'll have another opportunity to change in November or December each year. So, as a consumer, you have the opportunity to change your Medicare drug plan on an annual basis if you think you need to or if you think there¿s a better plan available.

Stephen W. Schondelmeyer, Pharm.D., Ph.D., is the director of the PRIME Institute, which studies economic and public policy issues related to pharmaceutical products and services, at the University of Minnesota College of Pharmacy. This column is an educational service of the University of Minnesota. Advice presented should not take the place of an examination by a health-care professional. For more health-related information, go to http://www.healthtalk.umn.edu.