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Colorado State Flag
Friday, August 12, 2022  

Medicare Prescription Drug Benefit PassesPublished 1/26/2004

Congress has passed a Medicare Prescription Drug benefit for seniors which will take effect in 2006. Supported by AARP, seniors will initially pay a deductible of $250. According to the Congressional Budget Office (CBO), the deductible is projected to be $445 in seven years or 2013.

In addition to the annual deductible, seniors will pay a $35 per month premium in 2006 which the CBO projects will increase to $58 per month in 2013. In 2006, the annual premium that will be deducted from an individual’s Social Security check will be $420.

Although signing up for the prescription drug benefit is voluntary, seniors who chose not to sign up at the time they are eligible will face a penalty or an additional charge if they sign up at a later date. This purpose of this provision is to ensure that "healthy people sign up for the benefit, as well as those persons who have high prescription drug costs". Individuals who do not want to sign up for a prescription drug benefit can sign up for a managed care plan (usually a health maintenance organization in Colorado).

After seniors have met the annual deductible, Medicare will pay 75% of the cost of the drugs and seniors will pay 25%.

The chart below can help to understand the benefit for 2006 if the annual cost of drugs is less than $5100. The chart does not reflect any additional costs that may be charged by the companies that would offer the program.

This chart can help you understand what Medicare beneficiaries will pay if the annual cost of drugs is over $5100 when the catastrophic coverage is available. The chart does not reflect any additional costs that may be charged by the companies that would offer the program.

Starting in June 2004, seniors will be able to purchase prescription drug discount card which will cost $30 or less. Participating pharmacies will offer between 10 and 25% discount on prescriptions. Seniors whose annual incomes are less than $12,000 will receive a $600 credit toward their medications on the discount card.

Companies who offer prescription drug plans as part of their retirement package will be given an annual subsidy from the government to continue to offer coverage.

Eileen Doherty, M.S. is the Executive Director of Senior Answers and Services and the Colorado Gerontological Society. She has more than 25 years of experience in gerontology in administration, research, training and education, and clinical practice. She can be reached at 303-333-3482 or at

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