## Worksheet to Calculate Approximate Drug

**Costs Under Medicare Reform Plan**

Congress recently passed a complex bill to reform Medicare. Congressman
Solomon Ortiz created the following formula for individual seniors to
approximate how the bill will affect them, given their specific
financial profile. This formula is as specific as the information
available. The calculations in this worksheet are based on how the plan
will likely affect seniors beginning in 2006.

This worksheet is based on 2003 prices; we do not account for inflation,
price increases, or other factors. So whatever out-of-pocket costs the
formulas here estimate for seniors, the actual cost will likely be much
higher. Those who now qualify for Medicaid, but not Medicare, will not
be affected by this plan. Those who currently qualify for Medicaid AND
Medicare will simply go straight to Formula A, B or C, depending on
annual income.

**SENIOR PROFILE:**

(Seniors need the following information in order to perform later
calculations):

#### Income and total drug costs 

  ------------------------------------------------------- ---------------
  Annual income---either for single individual or for     
  couple                                                  

  Annual drug costs---not amount seniors pay out of their 
  own pockets, but the actual total costs of all their    
  drugs                                                   
  ------------------------------------------------------- ---------------

If annual income is below \$13,470 for a single, or \$18,180 for a
couple, seniors will need the following information:

Assets Value

  ------------------------------------------------------- ---------------
  Value of all financial accounts, including checking,    
  savings, certificates of deposits (CDs), and stocks     

  Value of household items, including, furniture,         
  clothing, jewelry, books, exercise equipment (*not      
  including wedding rings, engagement rings or medical    
  equipment*)                                             

  Values of all cars, trucks, tractors, RVs, boats (not   
  including specialized handicap vehicles)                

  Value of life insurance policies, both face value and   
  cash surrender value                                    

  Amount set aside for burial expenses                    

  Value of any real estate that is not used for primary   
  residence                                               
  ------------------------------------------------------- ---------------

#### Rx Drugs: Number

  ------------------------------------------------------- ---------------
  Number of ***generic*** drug prescriptions used each    
  year                                                    

  Number of ***brand name*** prescriptions used each year 
  ------------------------------------------------------- ---------------

**Instructions:**

+-----------------------------------------------------------------------+
| -   **Singles**                                                       |
+-----------------------------------------------------------------------+

If annual income is less than \$13,470, go to the Assets Test on p.3 -
if total income is above \$13,470; proceed to the Rx Drug Formula chart
on this page.

+-----------------------------------------------------------------------+
| -   **Couples**                                                       |
+-----------------------------------------------------------------------+

If annual income is less than \$18,180, then turn to the Assets Test on
p.3 - if total income is above \$18,180, proceed to the Rx Drug Formula
on this page.

  -----------------------------------------------------------------------
  **Rx Drug Formula Chart:**

  -----------------------------------------------------------------------

#### Singles Couples

  ----------------------------------- -----------------------------------
  If annual income is **less than     If annual income is **less than
  \$8,980** and **assets are less     \$12,120** and **assets are less
  than \$6,000**, then go to Formula  than \$9,000**, then go to Formula
  A on p.4                            A on p.4

  If annual income is **between       If annual income is **between
  \$8,980 and \$12,123** and **assets \$12,120 and \$16,362**, and
  are less than \$6,000** then go to  **assets are less than \$9,000**,
  Formula B on p.4                    then go to Formula B on p.4

  If annual income is **between       If annual income is **between
  \$12,123 and \$13,470** and         \$16,362 and \$18,180** and
  **assets are less than \$10,000**,  **assets are less than \$20,000**,
  then go to Formula C on p.4         then go to Formula C on p.4

  If annual income is **above         If annual income is **above
  \$13,470**, then go to Formula D on \$18,180**, then go to Formula D on
  p.4                                 p.4
  ----------------------------------- -----------------------------------

# **ASSETS TEST**

(Estimation - All amounts should be approximate)

**Add the following**:

+---------------------------------------------------+------------------+
| **[Financial Accounts]{.underline}**: *Includes*: | \$               |
| checking, savings, stocks, CDs (held solely or    |                  |
| jointly)                                          |                  |
+---------------------------------------------------+------------------+
| **[Household Items]{.underline}**: *Includes*:    | \+ \$ -\$2,000   |
| furniture, clothing, jewelry, books etc.          |                  |
| *Exclude*s: wedding ring, engagement ring,        | (if amount is    |
| medical equipment -- also excludes \$2,000 of     | positive)        |
| total value                                       |                  |
+---------------------------------------------------+------------------+
| **[Vehicles]{.underline}**: *Includes*: cars,     | \+ \$ -\$4,500   |
| trucks, boats, RVs, tractors. *Excludes* \$4,500  |                  |
| of value of main vehicle and total value of       | (if amount is    |
| specialized handicap vehicles                     | positive)        |
+---------------------------------------------------+------------------+
| **[Life Insurance]{.underline}**: If face value   | \+ \$            |
| if above \$1,500, then count the cash surrender   |                  |
| value                                             |                  |
+---------------------------------------------------+------------------+
| **[Burial Expenses]{.underline}**: *Includes*     | \+ \$ -\$1,500   |
| funds set aside for purposes of burial,           |                  |
| e*xcludes* the first \$1,500 of this amount       | (if amount is    |
|                                                   | positive)        |
+---------------------------------------------------+------------------+
| **[Real Estate]{.underline}**: *Includes* any     | \+ \$            |
| real estate that is not primary residence         |                  |
+---------------------------------------------------+------------------+
| #####                                             | \$               |
|                                                   |                  |
| ##### TOTAL ASSETS: =                             |                  |
+---------------------------------------------------+------------------+

DETERMINING WHICH FORMULA TO USE:

###### Singles Couples 

  ----------------------------------- -----------------------------------
  If income is **below \$12,123 and   If income is **below \$16,362 and
  assets are less than \$6,000**,     assets are less than \$9,000**,
  then go to Rx Drug Formula Chart on then go to Rx Drug Formula Chart on
  p.2                                 p.2

  If income is **below \$12,123 and   If income is **below \$16,362 and
  assets are above \$6,000**, then go assets are above \$9,000**, then go
  to Formula D on p.4                 to Formula D on p. 4

  If income is **between \$12,123 and If income is **between \$16,362 and
  \$13,470 and assets are less than   \$18,180 and assets are less than
  \$10,000**, then go to Rx Drug      \$20,000**, then go to Rx Drug
  Formula Chart on p.2                Formula Chart on p.2

  If income is **between \$12,123 and If income is **between \$16,362 and
  \$13,470 and assets are above       \$18,180 and assets are above
  \$10,000** then go to Formula D on  \$20,000**, then go to Formula D on
  p.4                                 p.4
  ----------------------------------- -----------------------------------

**FORMULAS TO DETERMINE OUT-OF-POCKET Rx DRUG COSTS TO SENIORS:**

+-----------------------------------------------------------------------+
| # **FORMULA A:**                                                      |
|                                                                       |
| #  NEED FOLLOWING INFORMATION:                                        |
|                                                                       |
| -   Number of generic drug prescriptions used each year               |
|                                                                       |
| -   Number of brand name prescriptions used each year                 |
|                                                                       |
| **(# of generic drugs X \$1) + (# of brand name drugs X \$3) = ANNUAL |
| COSTS**                                                               |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| # **FORMULA B:**                                                      |
|                                                                       |
| # NEED FOLLOWING INFORMATION:                                         |
|                                                                       |
| -   Number of generic drug prescriptions used each year               |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   Number of brand name prescriptions used each year                 |
|                                                                       |
| **(# of generic drugs X \$2) + (# of brand name drugs X \$5) = ANNUAL |
| COSTS**                                                               |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **[FORMULA C]{.underline}:**                                          |
|                                                                       |
| NEED FOLLOWING INFORMATION:                                           |
|                                                                       |
| -   Annual cost of all prescription drugs ([total drug                |
|     costs]{.underline}, not seniors' out-of-pocket costs)             |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   If total annual drug costs are *less than \$5,100* per year,      |
|                                                                       |
| **\[(Drug Costs - \$50) X (0.15)\] + \$470 = ANNUAL COSTS**           |
|                                                                       |
| -   If total annual drug costs are *more than \$5,100* per year,      |
|                                                                       |
| **\$1,227 + (# of generic drugs X \$2) + (# of brand name drugs X     |
| \$5) = ANNUAL COSTS**                                                 |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **[FORMULA D]{.underline}:**                                          |
|                                                                       |
| NEED FOLLOWING INFORMATION:                                           |
|                                                                       |
| -   Annual cost of all prescription drugs ([total drug                |
|     costs]{.underline}, not seniors' out-of-pocket costs)             |
|                                                                       |
| -   If total annual drug costs are *less than \$2,250* per year,      |
|                                                                       |
| **\[(Drug Costs - \$250) X (0.25)\] + \$670 = ANNUAL COSTS**          |
|                                                                       |
| -   If total annual drug costs are *between \$2,250 and \$5,100* per  |
|     year,                                                             |
|                                                                       |
| > **(Drug Costs - \$2,250) + \$1,170 = ANNUAL COSTS**                 |
|                                                                       |
| -   If total annual drug costs are *more than \$5,100* per year,      |
|                                                                       |
| **\[(Drug Costs - \$5,100) X (0.05)\] + \$4,020 = ANNUAL COSTS**      |
+-----------------------------------------------------------------------+