Presc. Drugs - Summary of Major Provisions of Prescription Drug Plan (Copyright 2003, Center for Medicare Advocacy, Inc.)

A SUMMARY OF THE MAJOR PROVISIONS
OF THE MEDICARE PRESCRIPTION DRUG PLAN

Below are the major provisions of the prescription drug benefits included in the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Public Law 108-173). A more thorough examination of the law is available for a small fee, by clicking HERE.

1. Discount Drug Cards (click HERE for more on Discount Drug Cards)

Effective 2004.
Annual enrollment fee cannot exceed $30.
Access to negotiated prices at convenient pharmacies.
$600 in assistance to qualified low-income individuals.
Eligible individuals are those entitled to benefits under or enrolled in Medicare Part A, or enrolled in Medicare part B, and who are not entitled to prescription drug assistance under Title XIX (Medicaid).

2. New Prescription Drug Coverage

Effective 2006.
Estimated $35 per month premium.
$250 annual deductible in 2006 (indexed to increases in expenditure, as determined by HHS Secretary, for future years).
In 2006, 25% co-insurance up to $2250 per year in out-of-pocket expenses ($2250 figure is indexed for future years).
Donut hole starting at $2250 in incurred expenses. From this point, beneficiary is responsible for full cost of prescriptions until the $3600 out-of-pocket spending cap is reached. $3600 out-of-pocket does include already-paid deductible ($250 in 2006) and co-insurance ($500 in 2006), leaving beneficiary responsible for $2850 in the doughnut hole in 2006. Only deductibles and co-pays toward drugs on a plan's formulary count toward the out-of-pocket limit. Beneficiaries would have to incur a total of $5100 in such expenses to reach the out-of-pocket cap.
In 2006, "catastrophic coverage" from $5100 in expenses with 5% co-payment. ($3600 out-of-pocket indexed for future years).
Individuals "dually eligible for Medicare and full Medicaid benefits with incomes below 100% of poverty pay no premium and no deductible and have no gap in coverage. They pay $1 co-payment for generic drugs and $3 co-payment for brand-name drugs. There is no co-payment after they spend $3600 out-of-pocket.
"Dually eligible" individuals with incomes below 135% of poverty pay no premium and no deductible and have no gap in coverage. They pay $2 co-payment for generic drugs and $5 co-payment for brand-name drugs. There is no co-payment after they spend $3600 out-of-pocket.
Individuals with incomes below 135% of poverty who are not eligible for Medicaid must satisfy an asset test of $6,000/individual or $9,000/couple. They pay no premium and no deductible and have no gap in coverage. They pay $2 co-payment for generic drugs and $5 co-payment for brand-name drugs. There is no co-payment after they spend $3600 out-of-pocket.
Individuals with incomes below 150% of poverty who are not eligible under other low-income categories must satisfy an asset test of $10,000/individual or $20,000/couple. They pay a premium of $0-$420 and a $50 deductible. There is no gap in coverage. They pay a 15% co-payment (instead of the regular 25%) for all drugs up to the $3600 spending limit. After that, they pay $2 co-payment for generic drugs and $5 co-payment for brand-name drugs, both co-payments indexed to the increase in price of Part D covered drugs.