Senior Solutions: Simplifying upcoming changes to Medicare

Q. I am so confused with the upcoming changes to Medicare. When do the changes to prescription drugs take affect?—Unice F.

A. The initial change is to take place in the spring of 2004. This will include a temporary Medicare Discount Drug Card. It will cost $30 per year. Its purpose is to provide a 15 to 25 percent savings on certain drugs at designated participating network drug stores. Most insurance companies already offer such a card, some at no charge.

In December of 2005 all Medicare Discount Cards issued in the spring of 2004 will be discontinued, and a new voluntary Part D plan will become available for any Medicare participant to purchase. The monthly premium for this plan is anticipated to be $35 per month, with an annual deductible to $250.

Q. How will the new Plan D work, and what is the “doughnut hole” I keep hearing about?—Francis U.

A. Briefly, after an initial $250 deductible, the plan will pay 75 percent of drug cost up to $2,250. The policyholder must then pay the entire next $2,580 of drug cost (the so-called doughnut hole). Once the prescription cost exceeds $5,100, Plan D then pays 95 percent of any additional drug expenses.

Q. Do I have to change my Medicare policy to take advantage of the new drug coverage?—Peter M. A. If you are currently covered under a Plan H, I, or J you will be required to change plans to take advantage of the new Plan D. However, you may elect to keep your existing coverage and not partake of the new drug coverage.

Q. I notice the reference to HMOs again under the proposed changes of Medicare. Do we have to join an HMO to become eligible for the new drug program?—Frank S.

A. No. You can keep your current carrier if you desire. The new law does make it more advantages for HMOs to re-enter the market place. However, if you are concerned about your freedom of choice, standard plans will still be available. In fact, there will be two new plans introduced in 2006 that will offer higher deductibles, and will compete more closely on initial out of pocket cost with managed care plans.

Peter Gulatto has been associated with the insurance industry for more the 30 years. He has held a Certified Insurance Counselors (CIC) designation since 1983. His responsibilities have included those of an insurance agent, risk manager, consultant and insurance educator. His interest now is focused on providing answers to the insurance challenges facing our senior population.

Submit your questions to Peter J. Gulatto c/o The Centurion Group Inc., P.O. Box 3333, Rockford, IL 61106, or call at 815-229-0994.

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