How much of my bill will Medicare Part B pay?

When all of your medical bills are added up, you will see that Medicare pays, on average, only about half the total. There are three major reasons why it pays so little.

First, Medicare does not cover a number of major medical expenses, such as routine physical examinations, medications, glasses, hearing aids, dentures, and a number of other costly medical services.

Second, Medicare pays only a portion of what it decides is the proper amount -- called the approved charges -- for medical services. When Medicare decides that a particular service is covered, it determines the approved charges for it. Part B medical insurance then usually pays only 80% of those approved charges; you are responsible for the remaining 20%.

Note, however, that there are now several types of treatments and medical providers for which Medicare Part B pays 100% of the approved charges rather than the usual 80%. These categories of care include home health care, clinical laboratory services, and flu and pneumonia vaccines.

Finally, the approved amount may seem reasonable to Medicare, but it is often considerably less than what doctors actually charge. If your doctor or other medical provider does not accept assignment of the Medicare charges, you are personally responsible for the difference.

Who is eligible for Medicare Part D coverage?

Anyone entitled to Medicare Part A (whether actually enrolled or not) or who is currently enrolled in Medicare Part B may join Medicare Part D to get help paying prescription drug costs. Enrollment is voluntary except for people who also receive benefits from Medicaid (Medi-Cal in California). If you qualify for Medicaid, the government automatically enrolls you in a Medicare Part D plan through which you will receive your prescription drug coverage.

How much does Medicare Part D cost?

There are four types of costs associated with Medicare Part D prescription drug coverage: premiums, deductibles, copayments, and a coverage gap during which period you must pay the full cost of your medications. People with low incomes may apply for a subsidy from the Social Security Administration to reduce these costs.

In 2006, Part D premiums average $32 per month; the range is $0-$75. The deductible -- the amount you must pay out-of-pocket before Medicare will contribute to your prescription costs -- for most plans in 2006 is $250. After you meet the deductible, Medicare will pay 75% of your prescription costs. However, after you and your plan together pay a certain amount for covered prescription drugs ($2,250 in 2006), your plan stops paying anything and you must pay the full cost of the prescription. The plan begins to pay again -- and pays more of the cost than before you fell into the coverage gap -- when total expenditures reach a "catastrophic" level ($5,100 in 2006).

Can I get any of Medicare Part D's costs waived?

Low-income Medicare beneficiaries may qualify for a subsidy to help pay costs associated with Part D plans. Also, under certain circumstances, the copayment for prescriptions may be waived or reduced.

You may qualify for a low-income Part D subsidy (about $2,100 of assistance) if:

• your income is no more than 135%-149% of the federal poverty level (see "2006 HHS Poverty Guidelines" at U.S. Department of Health and Human Services at http://aspe.hhs.gov/poverty/index.shtml), and
• your assets, not including your own home, are less than $11,500 ($23,000 for a married couple).

You can learn more about eligibility requirements and apply for a subsidy at the Social Security Administration office online at http://www.ssa.gov.

In addition to low-income subsidies, circumstances exist in which a Part D plan enrollee may not have to pay the normal copayment for a covered drug. These include:

• People who live in a long-term care nursing facility, and who are enrolled in both Medicare Part D and Medicaid, have no copayments.
• Some plans waive or reduce copayments for certain drugs, particularly generic versions, to coax people to join that particular plan. But the plan can change this copayment waiver at any time.
• Pharmacies may waive copayments for any enrollee with a low-income subsidy, for any drug. But the waiver is not automatic; you have to ask for it.