If you’re older than 65 and spend more than $5,000 a year on prescription drugs, you’ll probably like the Medicare drug bill signed by President Bush last month.

But if your medications cost less than, say, $100 or $200 a month, you’ll soon be hearing about a “doughnut hole” that’s likely to increase your costs.

“That’s what it looks like now — if your drug bills are high, it’s a better deal. But if you’re more in the middle of the road, I’m not so sure how good it’ll be. You might end up paying more,” said George Kinnard, Medicare benefits counselor at Douglas County Senior Center, 745 Vt.

The new Medicare drug benefit won’t be available until 2006. Here’s how it is expected to work:

• Beneficiaries will pay $35-a-month premiums as well as the first $250 in annual drug costs.
• Medicare will cover three-fourths of the costs between $251 and $2,250.
• Coverage then stops until a beneficiary spends $3,600 out of pocket, after which Medicare will pay 95 percent of the costs.

The gap in coverage is often called a “doughnut hole.”

George Kinnard counsels people about Medicare benefits at the Douglas County Senior Center, 745 Vt. The recent Medicare reform bill contains doughnut

Today, thousands of Kansas retirees supplement their Medicare with Medigap policies that include prescription drug coverage.

These policies aren’t great. Most have a $250 deductible and a 50-percent co-pay up to a maximum of $1,250 or $3,000 a year.

After 2006, most Medigap-type policies will be prohibited from covering prescription drugs, forcing customers to turn to one of the new policies to be offered by private insurance companies under contract with Medicare.

Medigap policies don’t have a “doughnut hole,” though coverage ends at either $1,250 or $3,000, depending on the policy.

After 2006, the “doughnut hole” will kick in after $2,250. That won’t make much difference for those whose Medigap policies end at $1,250.

But those with Medigap policies that end at $3,000 would have to spend $375 more to equal the coverage they have now, and an additional $2,100 to get past the “doughnut hole.”

“This is one of the things we didn’t like about the legislation, and we’ve pledged to do what we can to close this gap,” said Mary Tritsch, spokeswoman for Kansas AARP.

AARP played a key role in getting the Medicare bill through Congress.

Kansas Insurance Commissioner Sandy Praeger said her office was sorting through conflicting interpretations of the bill.

“We’ve had several discussions on this topic — it’s confusing,” Praeger said. “On one hand, we’re being told those who have Medigap drug coverage now will be allowed to keep their policies; they’ll be grandfathered in.

“But when you read the bill, that’s not what it says,” she said. “So a lot is going to depend on how (the U.S. Department of Health and Human Services) interprets the bill and how the regulations are written.”

Praeger said her office was encouraging retirees to hold on to their Medigap policies.

“Until all this is sorted out, I’d wait,” she said. “You certainly wouldn’t want to drop (Medigap) and then not be able to get it back.”