Making Sense of the New Medicare Drug Plan

Nov 14, 2005 — -- Prescription drug insurance may change significantly for 43 million senior citizens on Tuesday, and many people are befuddled by the new benefits of Medicare Part D.

There is no federal standard for Medicare Part D coverage. Each insurance company can offer different programs and those programs can vary from state to state. In some states, there are more than 50 insurance plans available.

Critics of Part D say the government has essentially forced seniors to get private drug coverage. And with all the options, some experts say the plan is too complicated for the average person to understand.

"Because of my professional background, I'm more left with 'I can't believe this is what this looks like,'" said Jan Blustein, M.D., Ph.D. of Public Administration, who is an associate professor of medicine at New York University. "The set of choices and circumstances you can have is really bewildering."

In order to find the best plan, one has to examine each plan one by one. But choosing based on the lowest premium is not always the wisest choice, said "Good Morning America" financial contributor, Mellody Hobson.

"If there is a certain medication you know you use all the time, you really want to make sure the plan you pick covers that drug, otherwise you will be paying the whole amount when you refill a prescription, and that could cost you thousands of dollars," she said.

Aside from that, the new Medicare part D prescription plans are just like regular insurance plans: each customer pays a monthly premium and then pays a deductible -- usually up to $250 -- when he or she buys drugs. After the deductible is paid, Medicare will pay three-quarters of the price for drugs. Hobson said the government estimates that the average American will pay about $32 a month.

The effects of this plan are far-reaching. Forty-three million Americans are eligible for Medicare and 29 million are expected to sign up for the new plan.

The choices may be daunting, but many experts say that the new plan will save many people money. There is extra help for those with limited resources and income, and according to the Kaiser Family Foundation, beneficiaries without other drug coverage who opt for Part D next year will see their drug costs reduced by an average of 23 percent.