Starting January 1, 2006, new Medicare prescription drug coverage will be available to everyone with Medicare. Everyone with Medicare can get this coverage that may help lower prescription drug costs and help protect against higher costs in the future. Medicare Prescription Drug Coverage is insurance. You choose the drug plan and pay a monthly premium.

There are two types of Medicare plans that provide insurance coverage for prescription drugs. There will be prescription drug coverage that is a part of Medicare Advantage Plans and other Medicare Health Plans. You would get all of your Medicare health care through these plans. There will also be Medicare prescription drug coverage that adds coverage to the Original Medicare Plan, and some Medicare Cost Plans and Medicare Private Fee-for-Service Plans. These plans will be offered by insurance companies and other private companies approved by Medicare.

Like other insurance, if you join a plan offering Medicare drug coverage there is a monthly premium. If you have limited income and resources, you may get extra help to cover prescription drugs for little or no cost. The amount of the monthly premium is not affected by your health status or how many prescriptions you need. You will also pay a share of the cost of your prescriptions. All drug plans will have to provide coverage at least as good as the standard coverage, which Medicare has set. However, some plans might also offer more coverage and additional drugs for a higher monthly premium.

If you have limited income and resources, you may be able to get help with drug plan costs.

How Much Will the Plans Cost?

When you get Medicare prescription drug coverage, you pay part of the costs, and Medicare pays part of the costs. You pay a premium each month to join the drug plan (generally around $37 in 2006 for standard coverage). If you have Medicare Part B, you also pay your monthly Part B premium. If you belong to a Medicare Advantage Plan or a Medicare Cost Plan, the monthly premium you pay to the plan may increase if you add prescription drug coverage.

Your costs will vary depending on which plan you choose. Your plan must, at a minimum, provide you with a standard level of coverage as shown below. Some plans offer more coverage or lower premiums.

Standard Coverage (the minimum coverage drug plans must provide):

If you join in 2006, for covered drugs you will pay

a monthly premium (varies depending on the plan you choose, but estimated at about $37).
the first $250 per year for your prescriptions. This is called your "deductible."

After you pay the $250 deductible, here's how the costs work:

You pay 25% of your yearly drug costs from $250 to $2,250, and your plan pays the other 75% of these costs, then
You pay 100% of your $2,580 in drug costs, then
You pay 5% of your drug costs (or a small copayment) for the rest of the calendar year after you have spent $3,600 out-of-pocket. Your plan pays the rest.