Navigating the New Medicare Drug Plan

Are there income limits?

No, this plan is for all seniors, regardless of income or assets. But there is a government "extra help" program that will assist low-income seniors in paying the monthly premium (see below).

If you're currently healthy, why join now?

To make this plan work, even healthy seniors have to join the program. So there's a penalty for signing up late -- after May 15, 2006, for current seniors, and for joining more than six months after reaching age 65 for future seniors. The penalty is a charge of 1% per month of the average of all monthly plan premiums. (The penalty is likely to be $2 or $3 per month for every month you delay.)

Wait, it sounds like there's more than one plan!

Right, and that's the second part of the complexity. The government laid out the basic rules -- and let private insurers design their own plans, as long as they cover the required basics of the government design and cover most of the drugs on the government's formulary (list) of most-used drugs. So there are actually several types of plans:

Basic plans stick to the government design, and cost about $25-$32 a month, depending on where you live.

Premium plans may offer extra coverage, less complexity, lower co-payments, but charge a higher monthly premium.

Medicare Advantage plans work sort of like an HMO, wrapping overall Medicare Part B (doctors visit coverage) and drug coverage into one low-cost plan. But you might be restricted to a certain network of physicians.

Is that all?

Nope, I'm just getting started. To pick the right plan for your Mom or Dad, you have to do more than compare monthly costs.

First, you have to make sure the plan you choose covers the drugs Mom currently takes. If she doesn't use prescriptions now, but does later, she can always switch to a plan that covers her drugs. In fact, seniors will be able to switch plans once a year without penalty.