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Elder Law Center One Essex Street Saugus, Massachusetts 01906 Telephone 781.233.4444 Fax 781.231.2222
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Saugus Advertiser January 8, 2004 Medicare Prescription Drug Legislation
On December 8, 2003 President Bush signed into law the Medicare Prescription Drug Improvement and Modernization Act of 2003. There has been much controversy about this law and it’s affect upon the stability of the Medicare system as a whole. There are two parts to the new law. The first is a discount card system that will be starting later this Spring and the more substantial part which begins on January 1, 2006. These discount cards will be available in 2004 to help you save on prescription drugs. They will cost you $30 per year. Medicare will contract with private companies to offer new drug discount cards, until a Medicare prescription drug benefit starts in 2006. Companies who sponsor a discount card and meet Medicare’s standards will have a “Medicare-approved” seal on their discount card. Medicare is saying that these discount cards could save you from 10%-25% on your prescription costs. If your income is less than $12,124 as a single person or less than $16,363 for a married couple, you might qualify for $600 to help pay for your prescription drugs. If you qualify, Medicare will put a $600 credit on your Medicare-approved prescription drug discount card that you can use when you get your prescriptions. You won’t have to pay the annual enrollment fee for the discount card if you qualify for the $600. You can't qualify for the $600 if you already have drug coverage from Medicaid, TRICARE for Life, or an employer group health plan. Although this discount plan might help some people, there are other ways to save on prescription drug costs. Your current options include mail-order pharmacies, drug manufacturer assistance programs and state drug assistance (MassHealth) programs. Many people get big discounts by buying their drugs from Canada. These options could save you more money than a Medicare-endorsed drug card would. Now, about the new Medicare prescription drug benefit that will not start until January 1, 2006. This new plan will help only those with very low income and those with extremely high prescription costs. Certain people will actually end up paying more for prescriptions if they join the plan. All people with Medicare will be able to enroll in plans that cover prescription drugs. Plans might vary, but in general, this is how they will work: · You will choose a prescription drug plan and pay a premium of about $35 a month. You will pay the first $250 (called a “deductible"). This means you are paying $420 ($35x12=$420) for the monthly premium plus the first $250 of drug costs for a total outlay of $670 before receiving any benefits. · Medicare will pay 75% of drug costs up to $2,250. You will pay 25% of these costs. · You will pay 100% of drug costs between $2,250 and $3,600. · Medicare will pay 95% of drug costs, after you have spent $3,600. Because of the monthly premium and deductible, if you have less than $900 per year of prescription expenses, you end up paying more under the new plan than private paying. The other problem of this new plan is the “donut hole” or the fact that there is no coverage for drug costs between $2,250 and $3,600. We have a couple of years before this law goes into affect and we hope that in that time these problems can be resolved. We would also like to see Congress make it legal to import prescription drugs from Canada or even better, make it so US citizens can buy US drugs in the United States at the same price that they are available to Canadian citizens. If any of you are aware of other legal savings opportunities, I’d like to know about them to share them with our readers. Have a great New Year! This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different). Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Ma. He also holds a masters in accounting and a masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys.
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