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December, 2005


Medicare begins providing drug coverage to enrollees effective January 1, 2006. On a recent business program, I heard Health and Human Services Secretary Michael Leavitt say that all seniors, age 65 or older, should sign up for the new Medicare Part D prescription drug benefit.

Given how complicated the new Medicare drug coverage provisions are and how confused seniors have been by it, I can understand that Secretary Leavitt might be wanting to encourage older citizens to get on the bandwagon, particularly as, for many, it really would offer substantial savings.

But it may not actually be best for everyone over 65.

Examples of folks who probably should not enroll in the new program before the May, 2006, deadline include:

  • Seniors who already are enrolled in VA, Federal employees' health coverage, or Tricare, which probably offer better overall drug and other benefits, so that the extra Medicare D cost makes little or no sense;

  • Seniors who still have ongoing retirement benefits from a former employer, theirs or their spouse's, that cover pharmaceuticals at least as well as those provided in a Medicare D plan. Indeed, for some of these, enrollment in Medicare D will result in the cancellation of part or all of the employer provided plans, often a significant loss to the retiree.

Who probably should consider joining Medicare D?

  • Seniors with no plan that covers prescription drugs;

  • Seniors with Medigap supplemental health insurance but who are not in either the Tricare plan or a plan just as good as Medicare D from a former employer;

  • Seniors who have a plan that costs less but that does not provide as well for prescription drugs, even if they are now healthy or feel they are getting drugs cheaply enough through Canada, mail-order generics, etc. The Medicare D provisions can cost as little as about $10 a month with enrollment before the deadline. There will be higher rates if one puts the enrollment off till later, and of course one can never tell just when it might be needed.

Most seniors will save, sooner or later, using the Medicare D plan. Even if they do not, many may be comforted by the insurance aspect of it. It is a relatively inexpensive program that will be available in case of need. Others may find that, though the plan could cost them a bit more than using mail order drugs or buying them in another country, nonetheless being able to get their prescription medication needs met locally and through a convenient pharmacy is simply worth the extra expense.

For those concerned about the complexities of Medicare Part D enrollment and provisions, help is available:

  • Many popular financial magazines, such as "Money," have been providing articles explaining the new law;

  • AARP also has much useful Medicare D information;

  • In most locales there are many people available, through agencies dealing with the aging, civic centers, religious institutions, or pharmacies, who are trained in the new program and welcome inquiries (Be aware, though, that if the person providing counseling works for one of the plan providers, he or she may be biased in favor of signing up folks with that plan.);

  • There is a useful, informative, though not terribly user-friendly, government website: Medicare;

  • One may also call for answers to questions: 800-MEDICARE;

  • A call to Social Security (800-772-1213) can assist in determining if one is eligible for help paying for a drug plan (premium subsidies are available if funds are tight, up to annual incomes of $14,355 for individuals or $19,245 for married persons);

  • Eldercare can point to local agencies that have Medicare D volunteer counselors;

  • One's physician or pharmacist may also be able to provide assistance.

Though the many plans available may seem too complicated to weed through, remember that it is not necessary to find the very best Medicare D plan in order to save money. There are probably numerous options in one's area that provide convenient and significantly lower cost drug benefits. If the Medicare Part D program will be better than a drug plan one is already using, or one has no plan at all currently, any of these will likely be a good choice. Picking a relatively cheap plan that, even if not perfect, meets one's basic drug coverage needs, and before the end of the enrollment period, will probably be quite worthwhile.


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

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