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In 2003, Congress passed legislation that provides a prescription drug benefit to seniors – or a Medicare New Prescription Plan. Starting in the summer of 2004, Medicare recipients will have the option of receiving a prescription drug benefit under the Medicare Supplement Insurance Program. Recipients who do not enroll in the new prescription drug plan will not have their current benefits or services changed. Seniors who sign up for the new plan will receive drug discount cards, which entitles them to savings from 10 to 25%. The card will cost about $30.

Beyond the discount, the card program will provide a $600 subsidy for prescription medicines in both 2004 and 2005 for beneficiaries who are at or below 135 percent of the federal poverty level-or $12,569 for a single person in 2003 and $16,862 for a married couple. Those seniors who qualify will also not have to pay the program’s $30 annual enrollment fee.

In 2006, when the full benefits of the new plan go into effect, enrolled seniors pay a monthly premium of about $35. Recipients will have 75% of drug costs between $250 and $2,250 covered, as well as 95 percent of all out-of-pocket drug costs over $3,600 for eligible seniors.

Another key provision allows all Americans to make tax-free contributions to “Health Savings Accounts” throughout their lifetimes. Individuals, or their employers and family members, can make contributions. This legislation also marks the first time that Medicare provides a financial incentive for employers and unions not to drop coverage. Retirees whose employers continue to offer prescription drug coverage have the option of declining the new Medicare drug benefit and remaining in their employer plan.

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