I'm a senior citizen on Medicare and have heard a lot about the new prescription-drug plan. But so much of the information is confusing. Can you help me understand my options?

It shouldn't be surprising that, when we combine the topics of insurance with a new federal program, there is bound to be some confusion. Having said that, the new Medicare prescription drug program will be a big benefit to many senior citizens. It's not unusual for drug costs to run several hundred dollars per month — often nearly $10,000 per year. With most seniors on fixed incomes, that is a difficult pill to swallow. So let's review the basics of the new plan.

The plan is available to Medicare participants, but obtaining drug coverage is not automatic. You will need to enroll through an approved provider. What's the benefit? Depending on how much you spend on prescription drugs each year, the savings could easily be in the thousands of dollars. Medicare estimates that for the average participant, about half of their prescription costs would now be paid for by the program.

The actual program starts on Jan. 1, 2006, but sign-ups are under way now. If you sign up by Dec. 31, you will be able to benefit from the plan starting with the new year. You can still sign up through May 15, 2006, with no penalty, but the signup will not be retroactive. Signups after May 15, 2006, may incur a penalty.

How does the program work? Medicare is working this plan through a number of private insurance companies, so you'll need to sign up with one of these providers. The plans vary, and you'll probably have an option of several to choose from in your area. Go to the Medicare website at medicare.gov and select “Compare Medicare Prescription Drug Plans” to review your particular options.

The plans will work very similar to other medical plans. You'll pay a monthly premium and cover an annual deductible, which will be no more than $250 in 2006. The plans will typically have a co-pay component to them in addition to the deductible. One important item to note is that not all plans will cover the same medications. The list of drugs that a plan will cover is called a “formulary.” Review the list to make sure your provider will cover your most frequently used and expensive medications. You'll also want to make sure that your favorite pharmacy is part of the plan you choose.

One of the more confusing features of the plan is what is called the “coverage gap.” This means that once you have incurred $2,250 in prescription costs for 2006, you will have responsibility to pay 100% of your prescriptions until you have total out-of-pocket costs of $3,600. Then your insurance will kick back in, typically with a very modest co-pay amount.

It appears that many of the basic plans will cost in the range of $25 per month. Combining that cost with the typical deductible of $250 means that this plan will start providing benefits if your annual prescription costs exceed $500. If your costs are much higher, the savings will add up more quickly.

Many seniors will find it difficult to do the research necessary to choose the best option for them. This is a great opportunity for adult children to be a big help to their elderly parents by doing the upfront legwork for them. It's a great way to live the commandment to honor our mother and father. God love you!

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