Medicare Drug Deadline Draws Near

The deadline for Medicare beneficiaries to sign up for the new prescription drug plan is drawing near. To avoid penalties, seniors who are in Medicare must sign up for a plan under Part D of Medicare by May 15, 2006. The penalty, if you sign up for a plan later, is an increase in the monthly premiums by 1% for each month sign up is delayed.

It seems that more beneficiaries are getting the message and deciding to sign up for a plan. Over seven million voluntarily signed up for a plan, many of them in the last few months. It also seems that many seniors took the time to study the available plans or let friends study them. Another 20 million low income individuals automatically were moved into a plan. Medicare officials believe that most of those who have not signed up are low income seniors.

Avoiding the penalty is not the only reason to sign up for a plan by May 15. The catastrophic drug coverage under the plan is good. Even if you do not use many drugs today or a plan would not save you money, a plan could trigger significant savings if your drug needs change.

If you are using your current drug needs to choose a plan, there are some key steps to take.

Start with the Medicare web site and with web sites for the different plans you are considering. These will give you the basic features and an estimate of your out-of-pocket costs. But don’t stop there. That is the starting point.

The next step is to verify the plan’s approved drug list, or formulary. Some plans negotiated better prices for specific drugs and require special authorization to use competing brands for treating the same condition. Or a plan might require a generic when available. If you are taking certain drugs now and want to continue them, verify a plan’s formulary. You do this by contacting the plan.

Finally, verify all key terms of the plan you are considering. Do not rely on either Medicare’s or the plan’s web site to be 100% accurate and current. Verify premiums, deductibles, and other key terms with the plan before signing up.

While Medicare and the media are emphasizing the money Part D might save you today, stay focused on the future. Unless you have strong drug coverage, the $5,000 annual out-of-pocket limit of Part D could save you a bundle if your medical situation should change.