Briefly Noted

    5 Things You Should Know About Medicare Part D

    On January 1, Medicare formally launched its first prescription drug coverage, known as Part D. Current Medicare recipients have until May 15, 2006, to enroll or risk a penalty. Sign-up is not mandatory, but experts advise even those who already have private drug coverage to check out Part D just to understand the proper ways to transfer to the program if they need to later on. Here’s some basic information about Part D:

    Obtaining the coverage: Part D has a “stand-alone” version of the plan that provides drug coverage alone to those who wish to stay in the traditional Medicare fee-for-service program for all their healthcare needs. There is also the managed-care alternative, Medicare Advantage, a plan that covers both medical services and prescription drugs.

    Types of coverage: This is where it gets tricky. In your state, there may be many companies providing plans, and it’s important to get advice on which plans cover the drugs you’re currently using or may use. You will have the option to change plans once a year, so if you don’t take many drugs now, go with the lowest premium plan and switch later. [For a full overview of the plans by state, go to]

    What it costs: Under the standard benefit for 2006, participants will have to pay a premium of between $20 to $40 a month with an annual deductible of $250. Afterward, participants would have to pay $500 of the next $2,000 of drug costs. After that, the next $2,850 in drug costs will be borne by the participant since Medicare requires recipients to pay $3,600 out of pocket before they’ll pay any more. This is called “the doughnut hole,” but people who also have drug coverage through a state drug plan or employer or union drug benefit might have backup coverage.

    How do you compare your private insurance vs. Plan D? Your employer or union drug plan has to inform you by mail whether your coverage is “creditable,” meaning, at least as good as Part D. If the answer is yes, stick with it. If not, then you need to decide whether to stick with it and pay a late penalty to join Part D.

    What about Medigap coverage? If your Medicare supplement insurance doesn’t pay for drug coverage, you can add Part D. If you are receiving prescription drug coverage through Medigap, then you won’t be able to join Part D, but if Part D looks better, then it’s likely you’ll be able to drop the drug coverage from your Medigap plan and lower the premium. Source: Financial Planning Association, the membership organization for the financial planning community.

    Survival of the Fittest:Top-Rated Annuity Providers

    Thinking of investing in an annuity? The U.S. annuity providers listed below received the highest rating (A+) from Weiss Ratings as of January 10, 2006.

    Company State
    Teachers Insurance & Annuity Association of America NY
    State Farm Life Insurance IL
    Country Life Insurance Co. IL
    American Family Life Insurance Co. WI
    American Fidelity Assurance Co. OK
    State Farm Life and Accident Assurance Co. IL

    Source: Weiss Ratings Inc. at

    When Disaster Strikes: Be Prepared

    Survivors of the terrible hurricanes of the past year can easily attest that disaster can have both immediate and longer-term effects on personal finances. That’s why it’s important that any disaster preparations also include a plan for your finances.

    What can be done to be financially prepared?

    1. Create an Evacuation Box
      Organize a lockable evacuation box or suitcase containing important records, legal documents and identification. It should be light, and should contain copies of such documents as your birth certificate, marriage license, Social Security card, will, insurance policies, property deed and power of attorney. (Originals of vital documents should be stored in a separate, fireproof safe or safe deposit box.) The box should also have a list of current financial accounts and contact information for your insurance agent, attorney, bank, financial advisor, family, friends and any other key people you may need to reach in an emergency. Also, include sufficient cash for two or three days in case automated teller machines are unavailable. Other items to include are photos or videos of your home and personal property, which can help in speeding up any insurance claims. Be sure that at least one person whom you trust knows where you keep the box in the event something were to happen to you. Keep in mind that an evacuation box is only good if it’s up-to-date.

    2. Set Up an Emergency Savings Fund
      Maintain an emergency savings account equal to three or more months of expenses for use if you are displaced from your home and/or work.

    3. Maintain Adequate Insurance
      Review the adequacy of insurance coverage you have for your home, vehicle and valuables and make sure you have proof to substantiate insurance claims.

    Source: Marc S. Freedman,Freedman Financial.