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For those with low incomes, it's time to pick a drug plan

This week, insurance and drug companies will begin to vie for your business in administering Medicare's drug coverage.

By STEPHEN NOHLGREN, Times Staff Writer
Published September 25, 2005

Scurrilous sales pitches and downright scams often arrive in the mail in official-looking envelopes, adorned with eagles and stars. So perhaps it came as no surprise that an official mailing this summer by the Social Security Administration largely ended up in trash cans.

Too bad. The letters tried to inform people with limited means that they stand to save thousands of dollars when Medicare starts covering prescription drugs in 2006.

Tampa Bay area advocates have tried to spread the same message, with spotty results. Though everyone on Medicare will qualify for some drug coverage next year, people with lower incomes can receive special subsidies that can greatly reduce their costs.

To get the new drug coverage, or Medicare Part D, most Medicare recipients will pay an extra monthly premium and various copayments and deductibles. Medicare beneficiaries in Florida will be able to chose from 18 stand-alone prescription plans that complement traditional Medicare coverage, and 28 Medicare Advantage plans that include everything from doctors' visits to pills.

People who are eligible for the subsidy may sign up for either of these options.

The subsidy program is not welfare. People with yearly incomes up to $14,355 can qualify ($19,245 for a couple). Roughly one-third of the Tampa Bay area's 500,000 Medicare beneficiaries probably fall below those income levels.

But first, many people will have to fill out a four-page application - and time is running short.

"Everyone is kind of dragging their feet on this," said Charmaine Andrews, who oversees an insurance assistance program called SHINE in Hillsborough County. "People are throwing away forms being sent to their homes. We're afraid they're going to walk into a pharmacy on Jan. 1 and won't be able to get prescriptions."

Until now, Medicare has never cared about income or wealth. Anyone over 65 or any disabled person has been eligible for doctor and hospital care through the government program. Rich, poor, it doesn't matter.

The new drug benefit, however, varies according to people's means. That will complicate an already confusing array of choices that people on Medicare are about to face.

Beginning Saturday, insurance companies and drug brokers can start advertising private plans that will administer Medicare's drug coverage. Each plan will have its own drug list, prices, copays and premiums.

Stiff competition to sign people up is expected to generate a glut of mail, TV commercials and brochures stacked in doctor offices and on pharmacy counters.

"It can be very confusing," said Nancy de la Fuente, a retired nurse who lives in St. Petersburg with her husband, Armando.

Nancy, 73, can't afford the monthly $300 to $400 her respiratory and cholesterol drugs would cost on the open market. She belongs to a Medicare PPO because it pays her doctors at Suncoast Medical Clinic without charging a premium.

The plan's drug coverage is incomplete and confusing, she said. Sometimes, the plan quotes one price for a drug, the pharmacy another. The plan won't cover a brand-name drug she needs, so she gets samples from her doctor. Even a Canadian mail-order pharmacy proved too costly.

Armando, an 82-year-old retired waiter from Pepin's restaurant, belongs to a Medicare HMO. They live modestly in federally subsidized housing. With Medicare's new low-income subsidy, they are thinking about returning to traditional, fee-for-service Medicare once the drug benefit kicks in.

The de la Fuentes heard about Medicare's low-income subsidies from a volunteer from SHINE, a state-financed program that advises older people on insurance matters.

"I don't know whether I am better off to go with (traditional) Medicare alone, or stay where I am," Nancy de la Fuente said. But she is grateful for the advice: "On your own, you just can't do it."

For months, government officials and advocates from Washington to Valrico have beat the bushes trying to identify and educate low-income people who might qualify for the special subsidies. They stand to save an average of $1,477 a year on drug costs, according to a PriceWaterhouseCoopers study.

Low-income people fall into two groups:

People on Medicare who are poor enough to also receive drug coverage from Medicaid. On Dec. 31, their Medicaid drug coverage will shift to Medicare. If they fail to pick a private drug plan, the government will assign them to one.

People like Nancy and Armando de la Fuente, whose incomes or resources are too high for Medicaid but low enough to qualify for Medicare's drug subsidies. These are the people who must fill out applications because, right now, the government has no idea who they are, what their income is or how much savings or stocks they might have squirreled away.

So far, this second group has been reluctant to respond.

"The Social Security Administration mailed out 19-million pieces of mail, but senior citizens say, "What is this all about?' " said Bob Archer, head of the SHINE program from Pinellas and Pasco counties. "I talked to people and they said, "I don't want to tell these people about my income.'

"They don't want to do anything that they think could change their check that comes in every month. They say if they give information to the Social Security Administration, they are afraid something bad is going to happen."

It didn't help that the Social Security mailing asked people to send their applications to a data processing center in Wilkes Barre, Pa.

"One lady said the letter was a scam because the return envelope goes to Pennsylvania," said Jim Demer, public affairs specialist in SSA's St. Petersburg office. "She said, "Everyone knows that Social Security is in Washington,' although it is actually in Baltimore. There's a lot of skepticism and these kind of mailings don't get a big response."

Robert Hayes, who runs the Medicare Rights Center in New York City, is no fan of the new drug benefit. It forbids Medicare from negotiating direct price cuts from manufacturers, and Hayes worries that very poor and sick people now getting drugs through Medicaid will fall through the cracks when the government tries to shift them to Medicare.

But Hayes likes the special subsidies for the second group of low-income beneficiaries - those who are a bit too well-off for Medicaid. Most have no drug coverage at all right now, he said, and "should run, don't walk, to sign up."

One roadblock is the asset limit that the Medicare subsidy imposes. To qualify, a single person can't have more than $11,500 in liquid assets like bank accounts or stocks. Couples' assets can't exceed $23,000, although houses, cars and personal effects are excluded from this count.

Even when people fall under these asset thresholds, Hayes said, they may be reluctant to apply if they think the program smacks of welfare.

"Asset tests are a killer," Hayes said. Statistics show that many of the people who would meet an asset test won't bother to go through the process, he said.

Recognizing this phenomenon, Medicare officials field-tested various words to ferret out terms that people might associate with welfare. Medicare literature avoids the word "assets," speaking instead of "resources."

And it's not a drug "subsidy," it's "extra help."

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