Medicare: Common Situations

To help you get started thinking about Medicare drug coverage, find the situation that describes you and learn what you need to do.

“I have Original Medicare only, or Original Medicare and a Medigap (‘Supplement’) Policy without drug coverage.”If you use an average amount of prescription drugs, Medicare’s new prescription drug coverage could pay over half of your drug costs next year. If you have very high unexpected drug costs, Medicare will pay up to 95% of these costs after you spend $3,600 out-of- pocket in a year.

What you need to do:
To get this drug coverage, you can join a Medicare Prescription Drug Plan that covers prescription drugs only and keep your Original Medicare coverage the way it is. Or you can join a Medicare Advantage Plan or other Medicare Health Plan that covers doctor and hospital care as well as prescriptions.

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Medicare Advantage Plans usually give you extra benefits and/or lower costs, but only if you use the doctors and hospitals that participate in the plan’s “network.” If you do not opt for prescription drug coverage by May 15, 2006, you will have to pay a late enrollment penalty to get drug coverage later.

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“I have Original Medicare and a Medigap (‘Supplement’) Policy with drug coverage.”Medicare prescription drug coverage will generally provide significant savings compared to what you are paying in copayments for drugs under your Medigap plan, and will generally provide much better protection against unexpected drug expenses as well.

What you need to do:
Decide between keeping your Medigap policy with drug coverage or joining a Medicare plan that offers prescription coverage. You have probably received information in the mail for plans in your area offering coverage. Compare your current coverage to the new Medicare coverage.

Unlike Medigap, most of the cost of Medicare drug coverage is paid by Medicare, and will never run out if you have unexpected drug costs. Also, if you do not join a Medicare Drug Plan or a Medicare Advantage Plan that offers prescription drug coverage by May 15, 2006, you will have to pay a late enrollment penalty to get drug coverage later. If you opt for Medicare prescription drug coverage, tell your insurer, and the drug portion of your Medigap policy will be removed.

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“I am a retiree and I have drug coverage through my (or my spouse’s) former employer or union.”Medicare will help employers or unions continue to provide retiree drug coverage that meets Medicare’s standard. Your former employer or union has choices about how they will work with Medicare.

What you need to do:
Your former employer or union probably mailed you a letter already. This information will explain how they will work with Medicare on prescription drug coverage and what decisions you will have to make. If you do not hear from them, visit their website or call your benefits administrator.

“I have a Medicare Advantage Plan (like an HMO or PPO) or other Medicare Health Plan.”
Medicare is working with Medicare Advantage and other Medicare Health Plans to help them provide even more coverage and/or lower costs. Your plan will let you know about the prescription drug options they will offer. You can also choose to switch to another Medicare Advantage Plan or Medicare Health Plan. Or you could choose the Original Medicare Plan and join a Medicare Prescription Drug Plan.What you need to do:
Read the information you got in the mail explaining any additional prescription drug coverage your plan will offer.

“I have Medicare and Medicaid, and I get my drug coverage from Medicaid.”
Starting January 1, 2006, you will get your prescription drug coverage from Medicare instead of Medicaid. The prescription drug coverage from Medicare has no premiums, no deductibles, and no gaps, and you will pay very little or nothing for almost all prescriptions.What you need to do:
Starting in the fall, you will need to decide which Medicare plan that offers prescription drug coverage you would like. If you do not sign up for a plan, Medicare will sign you up for one to make sure you do not miss a day of coverage. Medicare will send you a letter to let you know which plan you are in. You can switch to a different plan if you choose.

“I have limited resources and live on limited income.”What you need to do:
If your resources are less than $11,500 (single) or $23,000 (married), you may qualify for extra help paying for Medicare Prescription Drug Coverage. If you haven’t received an application or information about the extra help, and you think you may be eligible, you should apply. Remember, as Department of Health and Human Services Secretary Leavitt says, “If in doubt, fill it out!” You can apply Online by visiting the Help With Medicare Prescription Drug Plan Costs section on the Social Security Administration website.