Important note: Information in this article was accurate in 2006. The state of the art may have changed since the publication date.
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Wall Street Journal - July 9, 2006
Kelly Greene
benefit are starting to fall into a gap in coverage. Here's how to find some relief.
Overall, 8% of the 43 million people enrolled in Medicare, or 3.4 million beneficiaries, are expected to feel the pinch this year, according to an analysis released in June by consultant PricewaterhouseCoopers LLP for the nonprofit Healthcare Leadership Council in Washington, D.C.
These individuals generally signed up for standard drug plans, under which they pay a $250 deductible and then pay 25% of the next $2,000 in costs, or $500. That's when the coverage gap, sometimes referred to as the "doughnut hole," kicks in. Once beneficiaries pass the $2,000 mark, they are responsible for 100% of their drug costs, until their out-of-pocket expenses reach $3,600. At that point, "catastrophic coverage" starts, and a person pays 5% of drug costs.
An additional 6% of Medicare beneficiaries, or about 2.4 million people, are estimated to be in Medicare managed-care programs or other enhanced drug plans. These programs offer partial coverage in the gap -- but generally also leave enrollees paying a variable part of the costs.
How do you figure out if you're nearing the $2,250 cutoff? You should be getting a statement from your Medicare drug plan each month that shows your spending, says Peter Ashkenaz, a spokesman for the Centers for Medicare and Medicaid Services in Washington, the federal agency in charge of the drug program. But the Medicare Rights Center, a New York nonprofit, is hearing from beneficiaries who say their statements have fallen behind, sometimes because beneficiaries have switched plans.
"Definitely hold onto your receipts, and keep your own tally of what you have spent," says Deane Beebe, the Medicare Rights Center's spokesman.
If the gap looms for you or a family member, make sure you're minimizing the bills with these measures:
* If you haven't done so already, switch to generic drugs or lower-cost drugs that treat the same condition, and ask your doctor if it's possible to split higher-dosage pills to save money.
"You're on Lipitor [for high cholesterol], and now there's a generic Zocor. If your physician says that will work, you could save significant dollars," Mr. Ashkenaz says.
* Apply for the U.S. government's "Extra Help" subsidy if your income is too high to qualify for Medicaid, but still small: about $1,225 a month for individuals.
The BenefitsCheckUp Web site (benefitscheckup.org) can help you figure out if you qualify for that program -- or if your state has a pharmaceutical assistance program. To get help with the BenefitsCheckUp tool, call 800-424-9046 or go to www.accesstobenefits.org to find a local group involved in the Access to Benefits Coalition, which provides help with the screening tool.
* Don't overlook state assistance. More than one-third of the states are offering help for older people, and sometimes for younger, disabled people. Some states provide "wraparound" help and pay out-of-pocket expenses. Others help pay premiums or offer rebates.
Figure out if there's a charity or drug-company program that would help pay your out-of-pocket costs. These are most common for expensive drugs used to treat cancer and AIDS.
* Even if your former employer hasn't offered equivalent, or "creditable," drug coverage, find out if it's offering wraparound coverage that might pick up costs Medicare won't.
Whatever you do to get through the gap, try to keep paying your drug-plan premiums. It's insurance, after all, and will provide a lot of help if you're struck by a serious disease or condition treated with high-priced drugs. Plus, it's likely you're still getting better prices through a Medicare drug plan that has negotiated discounts than you could get on your own.
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Kelly Greene writes for "Encore," the Wall Street Journal's guide to retirement. Write to her at encore@wsj.com.
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