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Highlights of the New Medicare Prescription Drug Program |
By: Lawrence N. Berwitz, Esq. & Maureen Rothschild DiTata, Esq.
Berwitz & DiTata LLP
Garden City, New York |
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Beginning in 2006, under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Medicare beneficiaries will have the option of enrolling in a discount drug plan or joining a private health plan that offers drug coverage. The premium for the Medicare plan will be $35 per person per month, $420 per year. The plan affords coverage as follows: 75% of the first $2, 250 of annual drug costs, subject to a $250 deductible, and 95% of the annual drug costs exceeding $3,600. Said another way, in addition to the $420 annual premium, the beneficiary will pay the first $250 of annual drug costs, 25% of costs between $251 and 2,250, all costs between $2,251 and 3,600, and 5% of the costs exceeding $3,600. For low-income beneficiaries an annual subsidy of up to $600 will be available.
Until the effective date in 2006, the bill creates an interim prescription drug discount program as a temporary measure until the new Medicare drug benefit goes into effect. For the period from June 2004 through December 31, 2005, Medicare has contracted with private companies (sponsors) to offer new, voluntary drug discount cards. A Medicare-approved drug discount card offers a discount off the full retail price of prescriptions. The prescriptions covered and the prices charged will vary depending on the card, and are subject to change. Enrollment began in May 2004. The fee is $30.
Because each company participating in the program (sponsor) controls which drugs will be discounted and at what price, it is imperative that participants carefully evaluate the competing sponsor programs. Among the items to consider is whether the prescribed drugs are being offered at a discount, the amount of the discount, the convenience of the pharmacies that participate in the particular sponsors program, enrollment or dispensing fees and other services that the particular pharmacist at which the card is accepted will offer, i.e. allergy alerts. Moreover, a sponsor can, at any time, unilaterally change its discounting policy by adding or removing discounted drugs from its list or altering its pricing.
To be eligible, an applicant must have coverage under Medicare Part A and/or Part B and may not be receiving out-patient prescription drug benefits through Medicaid. Participation in New Yorks Elderly Pharmaceutical Insurance Coverage program (EPIC) does not preclude enrollment in the discount program. Low income participants could be entitled to a credit if all of the following apply: 1) they have coverage under Medicare Part A and /or Part B; 2) they have no other health insurance that provides outpatient prescription drug coverage (except a Medicare + Choice plan or a Medigap health insurance policy); and 3) they have annual income of less than $12,569 for single and $16,862 for married enrollees. The applicable credit is determined by the date of the submission of the application: $600 for applications submitted between January 1 and March 31, 2005, $450 if submitted between April 1 and June 30, 2005, $300 if submitted between July 1 and September 30, 2005, and $150 for applications submitted between October 1 and December 31, 2005.
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