Medicare's Drug Program: Should You Enroll?

Before you begin sifting through the various Medicare prescription drug plans on the market, ask yourself whether you ought to enroll.

Medicare Part D is a federal program designed to absorb some of the high costs of prescription drugs. Since January 2006 many seniors have enrolled voluntarily, but depending on your particular circumstances, it may or may not be in your best interest to sign up for Part D.

But for most seniors, the first decision to make is whether to enroll. Below, are some key points to consider as you try to determine whether Medicare Part D is right for you:

• If you already have decent insurance that covers prescription drugs, say, through a retiree health plan or the Veterans Administration (VA), you may not want to enroll in Part D. Typically, employer- or union-sponsored health benefit plans have drug coverage that is more generous than what is available through a standard Medicare drug plan. Likewise, VA drug coverage is more comprehensive than Medicare, and your out-of-pocket costs may be less.

• If you have drug coverage through a retiree health plan, don't enroll in a Medicare drug plan without weighing the long-term implications. Some firms will discontinue your employer-sponsored medical and prescription drug coverage if you sign up for Part D. In addition, some companies will not allow retirees to re-enroll in the employer-sponsored plan once they've enrolled in Medicare.

• Even if you have good drug coverage, there may be specific reasons to enroll in Medicare Part D. For example, if you're a veteran who lives in a nursing home that doesn't allow you to use your VA drug benefits, it may make sense to enroll. Part D may be also a good choice for the veteran who lives far away from a VA medical facility and would prefer to get medical care and fill prescriptions closer to home. Veterans are allowed to retain VA drug coverage and enroll in Medicare Part D; they just can't have a single prescription covered by both programs.

• If you are currently enrolled in Medigap H, I or J, you may keep your coverage. But you probably don't want to do that. The drug coverage offered under most of these policies, on average, is not as good as Medicare Part D. And because you cannot keep your Medigap policy and enroll in Part D, you may want to consider switching Medigap plans and signing up for Part D.

• If you currently get prescription drug coverage through a Medicare Advantage plan, such as an HMO, PPO or private fee-for-service plan, find out if your plan will offer drug coverage after 2006. Many Medicare Advantage plans will automatically enroll you in a Medicare Part D plan. If you want a different drug plan than the one that is offered, you'll have to switch Medicare Advantage plans or go back into original Medicare and enroll in Part D.

• If your Medicare Advantage plan doesn't offer a prescription drug benefit, you may choose a plan that does or switch to original Medicare and sign up for Part D.

• If you currently get help paying for your drugs through a State Pharmacy Assistance Program, find out whether that program will continue. Some states plan to drop coverage and many will cover gaps in Medicare Part D.

• If you are a person of modest means, you may be able to get help paying for your Medicare drugs costs. For you, Medicare Part D may be a terrific deal. Generally speaking, your income must be below 150 percent of the federal poverty level- in 2005, that's $14,355 a year for an individual and $19,245 a year for a couple-and your assets cannot exceed certain limits to quality for this assistance.