NEW YORK (CNN/Money) -
Complex. Confusing. Even crazy. That's how experts describe the new Medicare Modernization Act.
So it should come as no surprise if you're having a hard time understanding it.
President Bush signed into law the Medicare Modernization Act Monday -- overhauling Medicare for the first time in 38 years and adding a prescription drug benefit.
Price tag? 400 billion dollars.
But passing the bill is turning out to be far easier than understanding it. Details of the changes are slowly emerging -- here's a first look at the new plan, and what seniors need to know.
Tip 1: Pace yourself
Big and complicated changes are in store for Medicare but they don't go into effect until 2006. That gives you two years to figure out exactly what it means to you.
Want to know how much you'll spend out of your own pocket? Check out the Kaiser Foundation's calculator at www.kff.org. Other places to go for details include: your state's senior health insurance program. (It has different names in different states; in California, for example, it's HICAP (health insurance counseling and advocacy programs).
A complete list can be found at Medicare's website, on the helpful contacts page. Some state insurance departments can also provide state contacts. Medicare can also be contacted at 1-800-MEDICARE.
Still, lots of decisions about implementation have yet to be made, and you can expect the ground to continually shift as we get closer to 2006.
Tip 2: First things first -- discount drug cards
The new law allows companies such as insurers and pharmacy benefit managers to start offering drug discount cards in June.
We don't yet have details about what sorts of discounts might be offered or which drugs might be covered. However, you may get solicitations for these "Medicare endorsed" drug cards in coming months.
Don't confuse these with the new Medicare drug benefit. The discount drug card is not insurance -- it is simply an interim program in place until the entire bill goes into effect in 2006.
These cards will provide a 10 percent to 25 percent discount on drugs in 2004 and 2005 and will cost roughly $30 a month. As you get these offers, evaluate whether they offer discounts for the drugs you need.
In the meantime, you can continue using discount drug cards you already have.
Tip 3: Check out the low-income benefits
If your income is roughly $13,000 or less a year, you may be eligible for a $600 a year subsidy for drug costs for this year and next.
Regulations are expected to be issued soon on how you can apply. Check the Medicare Web site or your state senior counseling agencies for details as they emerge.
Tip 4: Canadian drug buyers beware
The bill doesn't make it easier to buy Canadian drugs -- the cheaper alternatives to drugs produced in the United States -- as many had hoped.
The federal government has not prosecuted individuals buying the drugs, but has focused its efforts on online pharmacies. Keep an eye on the Food and Drug Administration Web site to stay informed.
Tip 5: Don't drop any coverage - yet
If you have employer-sponsored health care coverage, hold onto it. This is the gold standard of coverage for seniors. However,the Congressional Budget Office has estimated that as many as 2.7 million people may lose their employer health care coverage as employers could opt to discontinue coverage as the Medicare program expands.
Gerri Willis is the personal finance editor for CNN Business News. Willis also is co-host of CNNfn's The FlipSide, weekdays from 11 a.m. to 12:30 p.m. (ET). E-mail comments to 5tips@cnnfn.com.
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