Medicare Drug Benefit Calculator

Beneficiary Out of Pocket Costs
Important Note To Users: this tool was developed prior to implementation of the Medicare drug benefit and has not been updated to reflect accurate out-of-pocket costs for the standard drug benefit in 2007 or future years. Please refer to the "Medicare Prescription Drug Plan Finder" available at www.medicare.gov to find and compare available plans. The tool provides users with personalized information about the annual cost of enrolling in different plans based on their current drug regimen.

This calculator allows users to enter their prescription drug costs to help determine their out-of-pocket costs under the standard Medicare prescription drug benefit in 2006. The standard benefit in 2006 has a $250 deductible, coinsurance of 25 percent in the initial benefit period, followed by a $2,850 coverage gap, and 5 percent coinsurance for catastrophic coverage after $3,600 in true out-of-pocket drug expenses (or total drug expenses of $5,100). A given individual's out-of-pocket drug expenses may vary from the estimate produced by the calculator for many reasons. Most Medicare drug plans have a benefit design that differs from the standard benefit. There is wide variation across plans in both the list of covered drugs and the amount they charge for covered drugs.

These numbers do not include the effects of having other sources of coverage to supplement Medicare, such as employer-sponsored retiree health benefits, nor do they include the effect of subsidies that may apply for low-income beneficiaries.

Low-income Medicare beneficiaries - with incomes less than 150% of the federal poverty level, including those who receive Medicaid coverage in addition to Medicare, are eligible for varying levels of premium and cost-sharing assistance depending on their incomes and assets. Click here for information about additional benefits available to low-income Medicare beneficiaries.

Enter annual drug costs below and click on the "Calculate" button.

Enter your annual drug costs:

Beneficiary Out of Pocket Costs for the Standard Benefit in 2006:
Beneficiary Out of Pocket Costs For the 2006 Standard Benefit	Beneficiary Costs Including Estimated Average Premium of $386.40 Per Year in 2006	Share of Drug Expenses Paid Out of Pocket by Beneficiary Under the 2006 Standard Benefit (Not Including Premium)

Notes and Resources

The Medicare Modernization Act of 2003 (MMA) created a federally subsidized prescription drug benefit available to all Medicare beneficiaries. The drug benefit is available through private stand-alone prescription drug plans (PDPs) or through integrated health plans like HMOs and PPOs that provide all Medicare-covered services, including prescription drugs (known as Medicare Advantage prescription drug (MA-PD) plans. The law provides a basic outline of "standard drug coverage," but plans can structure their benefit differently as long as the overall value is at least as generous as the standard Medicare plan.

For a drug plan offering the standard benefit, beneficiaries are required to pay a deductible, and then 25 percent coinsurance for their total drug costs until they reach an initial benefit limit. Once they reach the benefit limit, they face a gap in coverage (the so-called “doughnut hole”) in which they pay 100 percent of their total drug costs up to a catastrophic coverage threshold. Medicare then pays 95 percent of total drug costs above that amount. Dollar amounts associated with the standard benefit, including the deductible, initial benefit limit, and catastrophic coverage threshold, are updated annually. Beneficiaries who choose to sign up for the drug benefit also generally pay a monthly premium, which can vary across plans.

Additional Kaiser Family Foundation resources available here.

Revised November 2006

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