Senate Democrats have introduced legislation to overhaul Medicare and add to the program a prescription drug benefit. The Medicare Reform Act of 2001 would provide this benefit to all seniors regardless of income, but the monthly premium would be subsidized based on income.

Under the plan, Medicare beneficiaries would pay a $250 deductible and a premium of about $52/month. They would pay 50% of drug costs until they have spent $3,500 out-of-pocket. Then they would pay 25% of drug costs until they have paid $500 more, for a total out-of-pocket limit of $4,000. After that, Medicare would cover the full cost of prescriptions.