Medicare drug coverage
begins in January

About 40,000 eligible Hawaii
residents need the new
benefit, an official estimates

Prescription drugs will be covered by Medicare for the first time starting Jan. 1 in a program officials acknowledge can be confusing.

"We don't know how many (drug insurance) plans will be in Hawaii at this point," said Pamela Cunningham, coordinator of Sage PLUS, the free State Health Insurance Assistance Program in the Executive Office on Aging.

"We won't know until October and we will have about six weeks to look at the plans and compare and start signing up Nov. 15," Cunningham said.

"It's a very short time frame," said Mary Rydell, federal Health Care Financing Administration regional administrator in Hawaii. "My fear is they're (beneficiaries) going to throw up their hands and say it's too much."

Insurance companies and other private companies will negotiate discounts on drug plans and offer plans through Medicare. They may differ in prescriptions covered, beneficiary payments and participating pharmacies.

Beneficiaries must know the names of the drugs they are taking and whether they want to get them by mail order or go to a certain pharmacy, Rydell said.

They will have to look at pharmacies participating in the different plans, she said. "They won't be able to go into every pharmacy. People will have to decide. It will be a challenge for them.

"Don't just throw up your hands and be so frustrated you're not going to take advantage of the benefit," she advised, pointing out, "Medicare covers zilch in prescription drugs now."

The drug plans will be different from the drug discount cards approved by Medicare last year, Rydell pointed out. Those cards will phase out by May 15 or when enrollment takes effect in the Medicare prescription drug plan, if that is sooner.

Rydell said about 120,000 of Hawaii's 186,000 Medicare beneficiaries have generous health coverage, including for prescriptions, through former employers or unions and they won't need Medicare Part D.

Another 25,000 have both Medicare and Medicaid coverage and the state is trying to make sure people have transition plans, she said.

That leaves about 30,000 to 40,000 beneficiaries who will need the new drug coverage offered by Medicare, the federal health insurance program for people 65 and older and people who are disabled.

"On the mainland, retiree coverage is not as rich. Maybe 30 percent have retiree drug coverage, so we are really lucky in Hawaii."

Six or seven prescription drug plans will be available to Hawaii beneficiaries, Rydell said. They must offer a standard level of benefits but may offer enhanced benefits to be competitive, she said. They could offer more coverage and additional drugs for a higher monthly premium.

People enrolled in Kaiser Permanente's medical plan will have to enroll in its drug plan, she said. Those who are Hawaii Medical Service Association members can enroll in the HMSA drug plan or some other plan, she said.

Congress designed the Medicare Part D prescription drug program for two groups of Medicare beneficiaries -- those with very high drug costs and those with limited income and assets, Rydell explained.

"For those two groups, this is a great benefit. For someone in between, it probably is not such a great benefit."

Recipients must pay a $37 monthly premium and have a yearly deductible of $250 for the standard benefit.

They will pay 25 percent or $500 for drug costs between $250 and $2,250, with Medicare paying 75 percent or $1,500, Rydell said.

After $2,250 in drug costs, what's called the "doughnut hole" occurs, she said. The beneficiary then pays 100 percent of drug costs up to $5,100. After that, the person only pays 5 percent, she said.

"For someone with over $5,100 in drug costs, this is going to be a great benefit," she said. "Instead of paying $28,000 a year out of pocket, they will spend about $3,600 out of pocket."

Seniors who spend little on prescription drugs may ask why they should buy a drug plan, Rydell said.

She said she tells them it's like insurance. "At some point, you may need to spend more in prescription drug costs," she said. "You have to buy it before you need it. If you buy it later, you may have to pay more and coverage is not as great."

Coverage will begin Jan. 1 for those who sign up by Dec. 31. After that, it will begin the first day of the month after the month a person joins.

About 95,000 forms are being mailed out to people from Medicare to determine if they qualify for low-income assistance, Rydell said.

Co-payments for drugs will range from $1 to $5 for low-income beneficiaries. Depending on their income and assets, they may have no monthly premium or deductible or the premium and deductible may be reduced.

People will be able to get help from Sage PLUS figuring out which plan is best for them and whether they qualify for low-income assistance.

Cunningham said Sage PLUS, which means "People Learning and Understanding the System," is educating community advocates to help explain the benefits. The organization in July will focus on outreach and community presentations.

For more information about the prescription drug program, call Sage PLUS at 586-7299 on Oahu or 1-888-875-9229 toll-free from the neighbor islands or the mainland, or 1-800-MEDICARE (633-4227).

People with limited income and assets may get applications by calling Sage PLUS or Social Security, 1-800-772-1213.