Medicare's new drug plan: the right choice for you?(Medigap policy)

On Jan. 1, Medicare beneficiaries can begin using the new drug benefit Congress authorized in 2003. Doing so might sound like a no-brainer. It's not.

Coverage won't be provided by the federal government but by hundreds of private insurers selling it as part of a Medicare HMO or PPO or as stand-alone insurance to augment a traditional non-drug Medigap policy or other coverage. Each plan will have its own list of covered drugs. Current Medicare recipients may begin signing up for the coverage, called Part D, on Nov. 15, but they must enroll by May 15, 2006, to avoid a penalty.

WHAT TO DO

Those with lower incomes. Sign up now to begin saving in January. If you meet eligibility guidelines (for an individual, an income below about $15,000 and assets less than $10,000; for a couple, income and assets each below $20,000, excluding house and car), you pay little or no premium or deductible and make co-pays of $1 to $5 for each prescription. Check with your state Medicaid office, call Social Security (800-772-1213), or apply at www .ssa.gov. If you're on Medicaid, the government will have assigned you to a plan in October, but you can switch to another. Some plans, however, may have a higher premium than the government will pay.

Those with higher incomes and no drug coverage. Compare your current drug expenditures with the cost of the new coverage. The average premium nationally is $32 per person a month (no discounts for couples), though one plan in every state except Alaska has a premium under $20. Plans will have a deductible of zero to $250, and most will have co-payments of 25 percent for every prescription up to a total expenditure of $2,250. After that, most recipients pay 100 percent of drug costs until they spend $3,600 out of pocket for drugs per year. Then the government picks up about 95 ...