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 Home > News & Policies > August 2004

For Immediate Release
Office of the Press Secretary
August 11, 2004

Fact Sheet: Medicare Drug Discount Cards Help Seniors Save on Prescription Drug Costs

  • More than 4.1 million seniors are already using their cards to save money on their medicines. More than 100,000 beneficiaries are signing up every week. Studies conducted by the Center for Medicare and Medicaid Services (CMS) and the Kaiser Family Foundation have shown that these cards are delivering real savings to Medicare beneficiaries.
  • About one million low-income seniors have qualified for extra assistance. In addition to these savings, low-income seniors struggling with high drug costs are getting a $600 a year credit -- a total of $1,200 through the end of 2005 - to help pay for prescriptions. And most major pharmaceutical companies have agreed to make their drugs available for nominal fees once a beneficiary has spent his or her entire subsidy.
  • Signing up for the new cards is easy. While millions of seniors already are saving on their prescriptions, millions more are eligible. Beneficiaries can call 1-800-MEDICARE, visit, or call their state's Health Insurance Assistance Program (SHIP) to sign up for real savings.
Real Savings for Seniors
  • Seniors often have had to pay full price for drugs. Through the Medicare-approved drug discount program, the purchasing power of seniors is finally being pooled to provide real savings on prescriptions. And the drug card program also gives seniors unprecedented information on drug prices to comparison shop.
  • Seniors can use the card to save 15 to 30 percent off the usual retail price of most brand name drugs and more on generics at neighborhood pharmacies. These discounted prices at neighborhood drug stores are lower than those offered by popular mail order pharmacies. For Medicare beneficiaries who are comfortable with mail-order, a recent study found savings of 7 to 24 percent or more on mail-order prices for brand name drugs through Medicare-approved cards in comparison to some Internet sources.
  • Potential savings from the cards are even greater when seniors choose generics. A CMS study shows that savings on generic drugs range from 37 to 65 percent below the average generic prices paid by all Americans. Generic drugs are just as safe and effective as brand-name drugs in the United States, and generally cost about 70 percent less.
  • Low-income seniors can get these savings and an additional $600 a year -- $1,200 through the end of next year. The $600 credit is available only through cards with the Medicare-approved seal. There is no enrollment fee on any card for people who qualify for the $600 low-income credit. This subsidy, combined with discounts available through the card, can save eligible seniors 32 to 86 percent off what they are now paying for their medicines.
  • Beneficiaries who qualify for the low-income credit will receive the entire $600 amount no matter when they sign up in 2004, and a pro-rated amount depending on when they sign up in 2005. Any of the $600 credit not used in 2004 will be carried over in their account for use in 2005.
    • Beneficiaries who exhaust the $600 subsidy may get additional savings. A growing list of drug manufacturers has agreed to make many of their products available at a nominal price to beneficiaries who have used up their $600 subsidy on prescription medicines. These seniors will benefit in three important ways from the cards: 1) lower prices on their medicines; 2) a $600 subsidy to help them buy these medicines at the discounted prices; and 3) availability of drugs at a nominal price through manufacturers once they've spent the subsidy.
    • The new drug card will not affect benefits under other Federal programs. The Medicare law stipulates that the discounts and subsidies available through the cards will not result in a reduction or loss of benefits under any other federal program, including the food stamp program.

Information to Help Seniors Choose a Card

  • Seniors can learn how to sign up for the card and find the best card for them by calling 1-800-MEDICARE, by visiting, or by calling their state's Health Insurance Assistance Program (SHIP).
  • Medicare customer service representatives will review the caller's drug needs and help them select the card that best meets their needs. The average wait time to speak with a customer service representative is less than 2 minutes, and the average call time with a customer representative is about 9 minutes. So it takes on average less than 12 minutes to sign up for savings.
  • Beneficiaries can make it even easier to choose a card by having the following information ready when contacting 1-800-MEDICARE: zip code; list of prescription drugs, including dosage; income to determine if they are eligible for the $600 credit; and any special preferences, such as a particular pharmacy they like.
  • The web site, has price comparison tools that seniors can use themselves. For the first time, seniors can get information on actual drug prices so they can comparison shop.
  • The Department of Health and Human Services (HHS) has made an additional $4.6 million available to organize and fund community-based organizations to help low-income beneficiaries enroll in the program. This is in addition to the $21 million previously made available to the State Health Insurance Assistance Programs (SHIPs), and HHS's enrollment efforts with the Access to Benefits Coalition, a new group of 75 organizations.
Just the Beginning of Savings for Seniors
  • The Medicare-approved drug discount cards are just the beginning of savings for seniors. In 2006, seniors without coverage will be able to join a Medicare-approved plan that will cut their yearly drug costs roughly in half, in exchange for a monthly premium of about $35. In many cases, the savings will be even greater. For example:
    • Seniors with no drug coverage and monthly drug costs of $200 will save more than $1,700 on drug costs each year.
    • Seniors with no drug coverage and monthly drug costs of $800 will save nearly $5,900 on drug costs each year.
    • Seniors will be protected against high out-of-pocket costs with Medicare covering 95% of drug costs over $3,600 per year.
    • The new law will help make employer-subsidized retirement benefits more secure by providing Federal subsidies to employers that continue to provide this coverage.
  • Low-income seniors will receive additional help paying for their medicines.
    • There will be no additional premium, no deductible and low co-payments ($2 for generic or $5 for brand-name drugs) for seniors with limited savings and incomes at or below 135% of poverty (individuals with yearly incomes under $12,568 and senior couples under $16,862).
    • There will be a reduced premium, a $50 deductible, and a 15% co-insurance (85% of their drug costs will be covered) for seniors with limited savings and incomes between 135% and 150% of the Federal poverty level (individuals with yearly incomes under $13,965 and senior couples under $18,735).
  • Under a modernized Medicare, private health plans will compete for seniors' business by providing better coverage at affordable prices-helping to control the costs of Medicare by using market-place competition, not government price-setting. And seniors will be able to choose the health care plan that best fits their needs-instead of having that choice made by the government.