This is a summary of changes made to Medicare in November, 2003 by Congress. As more information becomes available we'll add to, clarify, or correct what's here.

1. PRESCRIPTION MEDICATIONS(beginning in 2006)

A. Premiums
Those beneficiaries who elect to have this benefit will pay a monthly premium of about
$ 35.00 a month.

B. Deductible
This will cost $ 250.00 a year. After the deductible is paid, 75% of medication costs
will be covered up to $ 2,250.00 a year.

C. Coverage Gap(or the "Donut")

After $ 2,250.00 has been paid the beneficiary pays the full cost of all medications
until a total of $ 5,100.00 has been spent(an additional $ 2,850.00 by the beneficiary.

D After the Gap

After the $ 5,100.00 limit has been reached 95% of medication costs will be covered for that year.

E. Low Income Support

Those whose income is under $ 12,123.00 per year will not pay the premium or the
deductible but will have a $ 1 or $ 5 co-pay for each prescription.

F Medigap Insurance /Supplemental Insurance

These policies will not be allowed to provide medication coverage.

G Employer Incentives
Employers who provide medication coverage for their retirees will be paid subsidies
as an incentive to maintain this coverage.

H. Administration
Medication plans will be administrated by private companies. They can provide a
medication plan alone or also health insurance for seniors which includes pre-
scription medication coverage. In any area of the country where there is insufficient
coverage Medicare will provide it.

I. Drug Card
In 2004 and 2005 a card may be purchased to buy medications at a discount(a-
round 10-15% off). It will cost about $ 30.00 a year to buy the card.

J. Medications From Canada
This will continue( legally)if the Secretry of Health and Human Services permits the
practice(the current Secretary has not allowed this practice in the past and so it is
likely to go without legal support).

K. Lower Medication Prices

The Federal Government is prohibited from negotiating with the pharmaceutical in-
dustry for lower medication prices.

Some parts of this law impact other aspects of Medicare.


For the first time there will be a means test. Those with higher incomes(over $ 80,000)
will pay higher Part B premiums.


Payments to home health agencies will be reduced but there will be no co-pay by
beneficiaries(as had been threatened earlier).


This will be provided for those with a chronic illness(ex.- Alzheimers Disease, etc.).
It will be a demonstration project in four cities around the Country and will be
managed by physicians.


There will be a demonstration project in six cities beginning in 2010 for six years.
Medicare will face competition from private plans in those areas. Money has been
put aside to attract private plans.


For information about prescription medication benefits in various states: