What is Medicare?
Medicare is a federal health insurance program that covers approximately 43 million Americans who are:
- age 65 or older,
- any age with permanent kidney failure, or
- any age with certain disabilities
- Part A: Hospital Insurance
- Part B: Medical Insurance
- Part C: Medicare Advantage
- Part D: Prescription Drug
Part D is new for 2006
Part D coverage is a new prescription drug benefit effective 1/1/06. It does require enrollment and the premium will be subsidized by the government. Part D does not impact Part A or B drug coverage because a drug that is available under Part A or Part B is excluded from the definition of Part D drug and , therefore, cannot be included in Part D basic coverage.
What are the Standard Medicare Part D Benefit Highlights?
- $250 deductible
- Medicare will pay 75% of drug costs up to $2,250
- Enrollee pays 100% of drug costs between $2,250 and $5,100 (this is called a coverage gap)
- After $3,600 in out-of-pocket spending, Medicare will pay approximately 95%
- Part D members must pay a premium for Part D
Can insurance companies offer better benefits?
Yes, but they must also offer a plan that is actuarially equivalent to the standard plan. All Prescription Drug Plan Sponsors must be approved by CMS.
Beneficiaries with limited income and resources may qualify for extra help. For more information you can check the Social Security Administration website at www.socialsecurity. gov or the Medicare website at www.medicare. gov .
What about Medicare Discount Drug Cards?
Medicare Discount Drug Cards will no longer be available after December 31, 2005. The discount drug cards can be used until May 15, 2006 or until the beneficiary purchases Medicare Part D, whichever comes first.
Enrollment in Medicare Part D
Medicare Part D is open to anyone who is entitled to Medicare Part A OR enrolled in Medicare Part B.
Enrollment is voluntary BUT if you don't enroll when first eligible a late enrollment penalty of 1% of premium per month will apply. At this time there is not a cap on the late enrollment penalty.
What if you don't like the Part D plan you signed up for?
You can stop your Medicare Part D benefit plan at any time but you will not be allowed to join another plan until the annual election period. The annual election period will be from November 15 through December 31 of each year. Late enrollees can only join a plan in the annual election period.
There are special enrollment periods for some situations. Some of them are:
- A permanent move out of the plan service area
- When someone enters or leaves a long-term care facility
- Involuntary loss of, or reduction of, creditable coverage
Part D and Creditable Coverage
Medicare beneficiaries who have another source of drug coverage may stay in that plan and not enroll in Medicare Part D IF that other source of coverage is at least as good as the Part D standard benefit, which is called “creditable coverage". If a beneficiary has creditable coverage they will avoid late enrollment penalties when they enroll for Part D.
Employers must notify anyone who is currently covered under a group health plan if their drug coverage is considered “creditable coverage". Not all group plans are considered creditable coverage.
What Drugs are in the Formulary?
This is where the benefits get a bit tricky to understand.
The actual drugs covered by each Medicare Drug Plan are determined by the Plan. If a company offers three different Part D plans the formulary could be different for each plan.
It is important to people enrolling in Part D to check the formulary listing for the plan they are considering.
If someone gets a drug that is not on their formulary they will need to pay 100% of the drug cost and that amount WILL NOT apply to their out of pocket.
What happens to people who have Medicare Supplements H, I, or J?
They can change to a different Medicare Plan or they can keep what they have. The drug coverage on the supplement plans H, I, & J is not considered creditable drug coverage. Plans H, I, & J will no longer offer prescription drug coverage to new subscribers after 1/1/2006.
How do people sign up for Part D?
They can sign up directly with a PDP provider or with a certified broker. Signing up thru a broker does not change the premium. The benefit of signing up thru a broker is that you have someone local to call with questions.
A qualified broker can help you check the formulary and understand your options. If you sign up directly with a company and then later have questions you will need to call the company and work your way thru their voice mail options.
Don't hesitate to call Robyn Hamlin at 314-438-0222 or send her an email.
Article submitted by:
Group Benefits, Inc.
Benefits for Groups & Individuals
PH: (314) 438-0222
Robyn Hamlin has been in the insurance industry for 22 years and has seen a lot of changes with time. She works with groups and individuals for health, dental, disability, legal, and identity plans in addition to voluntary benefits. Don't hesitate to contact her for questions.