Sizing up Medicare's drug-discount card

Seniors expecting big savings on a new Medicare drug-discount card shouldn't get their hopes up.

Although many questions remain about how the new Medicare bill ultimately will affect seniors juggling high prescription-drug costs, many experts agree it appears to do very little for most people in the short term.

The new cards, which like existing discount cards may carry an annual fee of up to $30, are designed to provide seniors relief from drug costs until the larger Medicare benefits begin in 2006. But most seniors probably already can save more than that promised by the cards by using available discount cards, online pharmacies or mail-order services.

Here are some answers to questions about the new discount card as well as the coming broader benefits.

How much will I save using the Medicare drug card?

The new drug cards, expected to be available in June, should offer savings of 10 percent to 15 percent off branded drugs with bigger savings for generics, although estimates vary widely. Some experts predict savings of as much as 25 percent on individual drugs or 40 percent or more on generics, depending on what prices the card sponsors can negotiate with drug companies.

While that may sound good, you can probably already save that much or more if you're willing to shop around. For instance, someone buying 100 tablets of the indigestion drug Prevacid would spend $517.19 at an Eckerd pharmacy in southern New Jersey. The average 10 percent to 15 percent savings promised by the Medicare card would be $52 to $78 -- or as much as $129 if the card manages to get a Prevacid discount of 25 percent.

But seniors today can shop at the online pharmacy Rxusa.com and save $135.70 on the same prescription. Those willing to shop in Canada, which isn't legal, would save $301.38 at hometownmeds.com.

Will the card have any benefits over existing discount cards?

Cards that qualify to carry the Medicare name might attract large numbers of users, giving the card the power to negotiate a steeper discount with drug companies. In addition, about 4.7 million very low-income seniors are expected to receive a $600 annual allowance with the cards to cover drug costs.

And some experts speculate that a Medicare card may do a better job backing up its discount promises compared with existing discount cards, which sometimes have been shown to offer far lower savings than they promise.

But for the average senior who doesn't qualify for low-income drug benefits, the card simply may add to their frustrations.

When the health-care think tank Kaiser Family Foundation talked to focus groups about prescription-drug benefits, seniors were frustrated by the notion of another discount card, which generally don't offer discounts on enough of the drugs that seniors must take.

"Lots of people around the table said, 'We already have these cards, and if these cards were good enough, we wouldn't need a benefit,' " said Tricia Neuman, Kaiser's vice president.

But won't it be simpler to use just one Medicare card rather than a patchwork of cards and Web sites?

Just as with existing drug-discount cards and online pharmacies, seniors still will need to shop around to find the best Medicare discount card for their needs. Various companies will offer Medicare drug cards, but the benefits and discounts they offer won't be the same. The new law says seniors can have only one Medicare-endorsed card at a time, and they can change it only once during the 18 months before the larger benefits kick in.

"The consumer really needs to develop a list of the drugs they take and compare the different programs to see which program provides the biggest discount," Neuman said.

Will the new Medicare benefit offered in 2006 provide bigger savings on prescription-drug costs?

If you now spend more than $810 a year on prescription drugs, the new legislation should help you save money. But the savings offered by Canadian drugstores are so high, the new benefit may not do much for seniors with moderate drug bills who now illegally buy their drugs in Canada.

People who spend $2,250 to $5,100 on drugs annually -- about 30 percent of Medicare recipients -- will see a maximum savings of $1,080. Once your drug bill exceeds $5,100 annually -- about 20 percent of Medicare recipients -- the potential savings offered by the Medicare benefit drastically are better.

You still, however, must pay $4,020-plus -- an average of at least $335 a month -- out of pocket. And many seniors simply don't have that kind of money.

If I don't get a Medicare drug card, am I still eligible for the 2006 Medicare drug benefit?

Yes. Open enrollment for the Medicare drug benefit begins Nov. 15, 2005, and continues through May 15, 2006.

However, it's important to know that, just as with other parts of Medicare, there is a late-enrollment penalty. For every month an eligible senior delays enrollment for the drug benefit, he or she will pay a 1 percent higher premium for life. So someone with a drug bill of less than $810 a year must decide whether they want to pay a roughly $35 monthly premium for a service they likely won't use for a while.

But if their drug costs skyrocket and they want to sign up two years later, their premiums will be 24 percent higher for the rest of their life.

Copyright © 2014, Los Angeles Times
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