Medicare Prescription Drug Plan
Cost Estimator
Information about "medicare prescription drug plan" &
"no deductible" "prescription drug benefits"
Private companies will offer Medicare prescription drug
coverage starting January 1, 2006. The decisions you make depend on
what kind of health care coverage you have now. To find out more about
what Medicare drug coverage means to you, read our publication, "A
Guide to Getting Started."
Key factors to consider in comparing your drug plan options
are: Coverage, cost, convenience and peace of mind now and in the future.
To find out more about these factors, read "Things to Think about
when You Compare Plans."
The cost estimator assumes that you have no current drug
coverage or receive any type of discounts, such as from a drug discount
card, on your prescription drug cost. If you know what you spend monthly
on prescription drugs you can use the cost estimator to see what your
potential savings will be by joining a Medicare prescription drug plan.
It will also provide you with information on the lowest premium available
in your State.
The cost estimator is a quick tool to give you a sense
of the savings you can anticipate with Medicare Prescription Drug coverage.
This tool is not able to take into account any insurance you may have
now for drugs. Therefore, if you currently have insurance for drugs,
the tool will not be able to compare current costs to those you may
have in the future if you switch to Medicare drug coverage.
Medicare Prescription Drug Plan
Cost Estimator Tool Methodology
The calculations for the Cost Estimator tool on medicare website are
based on the standard benefit Medicare Prescription Drug Plan. The calculation
includes the four levels of coverage, including:
-
$250 deductible (beneficiary pays full discounted
drug cost based on plan negotiated prices)
-
25% drug cost share to the beneficiary during the
initial coverage period ($250 - $2250)
-
100% drug cost share during the coverage gap period
(total drug cost from the initial coverage limit ($2250 to beneficiary
total out of pocket cost of $3600)
-
5% drug cost share once beneficiary's total out
of pocket drug cost reaches $3600
The cost estimates are annualized and include the lowest
annual premium offered by a Medicare Prescription Drug Plan for a particular
state. In addition, a 5% discount (See Note 1) was added to the monthly
drug cost entered by the user to reflect additional plan negotiated discounts.
For example: Beneficiary in Minnesota with monthly drug
spending of $200.00 ($2400.00
annualized). The amounts in the boxes indicate beneficiary's responsibility.
a. Annual Premium for drug plan: $1.87 X 12 months = $22.44
b. Annual drug spending after 5% discount: $2400.00 x 0.95 = $2280.00
c. $250.00 deductible: $2280.00 - $250.00 = $2030.00
d. 25% drug cost share during initial coverage level ($250.00 - $2250.00):
0.25 x 2000.00 = $500.00
e. 100% drug cost share during the coverage gap period:
$2030.00 (item c) - $2000.00 = $30.00
Estimated total annual Medicare drug spend including premium:
$22.44 +
$250.00 +
$500.00 + $30.00 = $802.44
Estimated annual savings: $2400.00 - $802.44 = $1597.56
Cost Share after Deductible: $500.00 + $30.00 = $530.00
Note 1: Based on preliminary
Medicare Prescription Drug Plan pricing data and CMS analysis1, the national
average discount of AWP (Average Wholesale Price) minus 15% for brand
name drugs was used to derive the 5% discount amount. To recognize that
those persons paying retail pricing (with no insurance) rarely pay the
full AWP price, we assumed a non-insured person could obtain drugs in
a retail setting at a price of ~AWP-10%. This figure is based on commercial
drug plan data licensed through a vendor. By enrolling in a Medicare Prescription
Drug Plan, beneficiaries can obtain an additional 5% discount (i.e. AWP-15%
versus AWP-10%) even when paying the full amount for a drug (i.e. during
the deductible and coverage gap period). We believe that final pricing
data for Medicare Prescription Drug plans will result in a discount greater
than AWP-15% but we chose to be conservative in our projected savings.
In addition, we chose to use the national average discount for brand name
drugs although we recognize that generic drugs would have a much larger
discount.
1. Federal Register/Vol. 70, No.18/ Friday, January 28,
2005, page 4466
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