Advantage Plans and Prescription Drugs


Image courtesy
U.S. Administration on Aging

Medicare also offers Advantage Plans (formerly known as Medicare Part C, or Medicare + Choice). Recently Medicare expanded to include a prescription drug plan, or Medicare Part D.

Advantage Plans
Advantage Plans allow Medicare users to customize their plan to more closely fit their medical needs, but they are not available in all areas. Some of these plans offer prescription drug programs, and private insurance companies provide some of the coverage in these programs. Details depend on the specific program and the eligibility of the patient.

The plans come in several forms:

  • Medicare Health Maintenance Organization (HMOs) Plans -
    These plans emphasize preventive health care. Only doctors that are within the HMO network are be used. An appointment with a specialist requires a referral from a primary care physician.

  • Medicare Preferred Provider Organization (PPOs) Plans - PPOs are similar to HMOs, except users have the option of seeing a doctor that is not in the plan network if they are willing to pay more. A referral from a primary care physician is also required for specialist appointments.

  • Medicare Special Needs Plans - Special Needs Plans are for specific groups of people, and include access to doctors who specialize in that area. For example, people with diabetes might be eligible for a Special Needs Plan.

Prescription Drug Plan
The Medicare Prescription Drug Plan was created to help people pay for their prescription drugs. A private insurance company administers each plan (there are more than 20), although it has to meet Medicare guidelines. The plans have varying costs and formularies (the list of drugs covered under the plan). Anyone who wants to sign up for Medicare Prescription Drug coverage must compare the plans and find one that covers the drugs they need, or will need in the future. You can change plans during the open enrollment period at the end of each calendar year.

Although the premiums for the different plans vary, Medicare estimates an average of $32 per month. There is a $250 deductible, meaning that the first $250 you spend on prescription drugs each year is not covered. Medicare will pay 75 percent of any prescription drugs you purchase from $250 up to $2,250. Then the next $2,850 you spend on drugs is not covered at all -- you have to pay the entire amount. If you reach that point, you'll have spent $3,600 of your own money on prescription drugs. Then, Medicare kicks in again, paying 95 percent of your drug costs for the rest of the year.

Anyone eligible or currently receiving Medicare can sign up for a prescription drug plan between Nov. 15, 2005 and May 15, 2006. For every month that you delay enrollment in a prescription drug plan when you are eligible, you will incur a permanent penalty of one percent of your monthly premium per month that you delay enrollment. This penalty does not apply to anyone who has prescription drug coverage through a job or a spouse. More information on the different plans is available at Medicare.gov.

We'll find out how to sign up for Medicare in the next section.

Prescription Drug Discount Cards
When Congress passed the law that created Part D, they wanted to do something to help seniors pay for their medications before the law went into effect in 2006. They created Medicare Prescription Drug Discount Cards. There were 73 different cards to choose from, each with had different plans and formularies. The cards were issued by different private companies or HMOs, and were valid in different parts of the country, creating a confusing decision for many Medicare recipients. The cards cost less than $30 and provided a discount of 10 to 25 percent [Ref]. You can still use your card until May 15, 2006 or until you sign up for a Part D plan.