©2005 Family Caregiver Alliance
Purchasing prescription drugs has long been a complicated and expensive process for many American consumers, and it’s about to get a whole lot more complicated.
The Medicare program has begun to roll out its new benefit, Medicare Part D, which will provide prescription drug benefits for more than 42 million elderly and disabled people. It starts January 1, 2006, and it could ease the high cost of prescription medications for many of us.
As the federal government enacts this massive program and health insurers begin signing up customers across the country, caregivers covered by Medicare will need to make decisions about their own prescription coverage as well as that of their loved ones.
We encourage you to take your time, do the necessary research, and make careful, well-informed decisions. You can sign up for the new Medicare drug benefit starting November 15, 2005, but the final deadline for enrollment without penalty is not until May 2006.
The information below is intended to help you better understand the changes on the horizon and offer resources for finding help.
Advice for Caregivers
Use the next several months to learn about your options and seek help from organizations and government agencies that can answer your questions about the new prescription drug benefits.
To help in your decision-making, save information sent from the government on the Medicare Part D changes, especially the Medicare & You handbook. Watch for information from former insurance companies, employers or other sources of current drug coverage. Do not divulge your Social Security numbers and finance information to marketers who are selling drug coverage plans over the phone.
The Centers for Medicare and Medicaid Services recommend that caregivers:
Look over any current health insurance coverage that your family member has. Are prescription drugs covered? What are the out-of-pocket drug costs?
Make a list of the name, dosage, frequency and cost of the prescriptions your loved one uses. Since different plans will cover different drugs, this will help determine which plan best meets your family member or friend’s prescription needs.
If you are the legal representative for the person you care for (such as through a Power of Attorney), you can enroll him or her in a Medicare prescription drug plan. You can also fill out the application to get extra help on his or her behalf.
The Basics of Medicare Part D
Medicare Part D was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and is designed to lower the cost of prescription drugs for many senior and disabled Medicare beneficiaries. It will replace the Medicare discount drug card and transitional assistance program started last year.
The new drug benefit presents a wide—and potentially confusing—array of new options to Medicare beneficiaries. Beginning in January, beneficiaries will be covered for prescription drugs by private insurance plans that contract with Medicare to provide the new benefit. Under Part D, Medicare beneficiaries may enroll in Medicare Advantage, Medicare’s managed care program for all Medicare benefits including drug coverage, or enroll in a separate prescription drug coverage plan and get other benefits from Medicare or Medigap policies. Coverage from Medicaid (Medi-Cal in California), or retirement programs also may change. It is important to understand that premiums, deductibles, co-payments and medications covered vary from plan to plan.
The “Standard” Medicare Drug Benefit
Health care plans participating in Medicare Part D are required to offer enrollees the “standard” benefit, which in 2006 includes:
A monthly premium, estimated to average $32 per month nationally (amount will vary across plans and regions);
A $250 deductible;
Cost-sharing: after the deductible, Medicare drug plans will pay 75 percent of drug costs and enrollees will pay the remaining 25 percent until the total drug costs reach $2,250;
Gap in coverage: enrollees will be responsible for all drug costs between $2,251 and $5,100 (referred to as the coverage “doughnut hole”); and
More cost-sharing: once total drug costs reach $5,100, Medicare drug plans will pay 95 percent and enrollees will pay up to five percent of remaining drug costs.
Medicare drug plans will have some flexibility in deciding which drugs to cover and will create a list of covered drugs (known as a formulary), which will be subject to federal approval. (Formulary information for Medicare drug plans is available online at www.medicare.gov. Those who don’t use online services can call (800) MEDICARE. Enrollees will have to pay out-of-pocket for any drug that the plan does not cover, and that payment will not count toward the cost-sharing coverage limits. Medicare drug plans may also offer more comprehensive coverage with higher premiums.
Enrollment in Medicare drug plans is voluntary for most beneficiaries. Dual eligibles—people who are enrolled in both Medicare and Medicaid—will be automatically enrolled if they do not join a plan on their own by January 1, 2006.
Others will need to enroll during open enrollment, which will be from November 15, 2005 to May 15, 2006. If you or a loved one become eligible for Medicare after the initial enrollment period, there will be a seven-month period to enroll, including the three months before and three months after the month you become eligible.
To encourage seniors to enroll in Medicare Part D immediately, a late enrollment penalty will be applied for those who enroll after the initial open enrollment period. The penalty will be applied to individuals who do not enroll when they are first eligible and who do not have other prescription drug coverage. (Other coverage must be at least as good as Medicare’s coverage—it must be creditable coverage.) The penalty will be paid in the form of higher monthly premiums, and the penalty amount increases every month until enrollment is complete.
Your current coverage will determine your enrollment options in the new Medicare Prescription Drug Benefit. See the the table below, Summary of Options Under Medicare Part D.
|If you currently have drug coverage from...
||What you need to know about your options under the new Medicare drug benefit...
Approximately one-third of Medicare consumers are enrolled in Medicare Advantage, which is Medicare’s managed care program (formerly called Medicare+Choice) served by private HMOs or PPOs who have contracted with Medicare to provide services. Under Part D, Medicare beneficiaries may enroll in Medicare Advantage for all Medicare benefits, including drug coverage. If you are currently enrolled in a Medicare Advantage plan, check that the plan offers prescription drug coverage, and the coverage includes the medications you need.
|| Approximately 10 million seniors have Medigap plans—also known as Original Medicare supplemental policies. These plans cover deductibles and other out-of-pocket costs that Medicare doesn’t cover. If you have a Medigap policy with prescription drug benefits, you should receive a notice from your insurance company in the Fall of 2005. Those who sign up for Medicare Part D can keep their Medigap policy without the prescription drug benefit or switch to another Medigap policy. It is not possible, however, to have both a Medigap benefit for prescription drugs and the Medicare Part D benefit at the same time. Many Medigap prescription drug benefits won’t be considered at least as good as Medicare’s and thus will not be “creditable coverage.” If you have a Medigap policy, you will have to decide if you want to keep your existing coverage and risk paying a higher premium if you enroll in Medicare Part D later.
|Medicaid (Medi-Cal in California)
|| Approximately 6.3 million Medicare beneficiaries are “dual eligibles”—they receive drug coverage benefits through Medicaid. Medicaid prescription coverage for low-income seniors ends December 31, 2005. Medicare will automatically enroll dual eligibles into Medicare Part D prescription drug plans if they do not sign up on their own by January 1, 2006.
|Employer-Sponsored Plans/Retiree Benefits
|| More than 11 million Medicare beneficiaries have drug coverage from employer-sponsored plans. Medicare will provide tax-free subsidies to employers providing drug coverage at least as good as the standard Medicare benefit (creditable coverage). If you are receiving prescription drug coverage that is creditable—and most retiree benefits are expected to be—it is likely best to continue your current coverage. However, it is important to be aware of the new options under Medicare Part D because it’s been estimated that more than one-third of retirees will see their companies eliminate their prescription benefits. If you lose your employer-sponsored coverage and want to sign up for the Medicare drug benefit in the future, there will be no penalties for signing up late as long as your coverage was creditable.
|State Pharmacy Assistance
|| Programs At least 41 states have some type of program to provide pharmaceutical coverage or assistance, primarily to low-income elderly or people with disabilities who do not qualify for Medicaid. Most programs use state funds to subsidize costs, usually for a defined population that meets enrollment criteria, but an increasing number of states use discounts or bulk purchasing approaches. Each state runs its program differently, and many of the programs require little or no up-front payment to join. Individuals benefiting from state programs can enroll in Medicare Part D and continue to receive additional coverage provided by their state’s program. These programs can supplement or “wraparound” Medicare drug coverage for eligible enrollees. However, many of the state programs will be changing because of Medicare Part D. State programs should send letters to current enrollees by the end of 2005 with information about expected changes. Call your state program office for more information on changes related to Medicare prescription drug coverage.
|U.S. Department of Veterans Affairs (VA)
|| If you receive drug coverage through the VA system, you are likely best served by continuing your current coverage. The Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA)—a comprehensive health care program in which the VA shares with eligible beneficiaries the cost of covered health care services and supplies offers a more cost-effective benefit than the Medicare Prescription Drug Benefit, with no monthly premiums.
Additional Medicare Subsidies for Low-Income Beneficiaries
In addition to the standard benefit offered under Medicare Part D, the Medicare plan includes significant federal subsidies to reduce costs for lower-income beneficiaries receiving the new prescription drug coverage.
An estimated 14.4 million beneficiaries—one-third of the Medicare population—will be eligible for this additional assistance in 2006. Dual eligibles will automatically be deemed eligible for low-income subsidies. Consumers who are low income but not dually eligible may also qualify for subsidies. Many low-income beneficiaries will receive coverage for the standard benefit with much lower or no monthly premiums. Contact the Social Security Administration for more information.
Note: Recent news reports indicate that there is a factual error pertaining to the new prescription drug benefit in the Medicare booklets, Medicare & You. The booklets incorrectly list all plans available for those with limited assets and income as having no monthly premium. However, only about 40 percent of the plans actually qualify for no premium. Please be sure that you have accurate information before signing up for a plan. For clarification, contact the Centers for Medicare and Medicaid Services (CMS) or the other helpful resources listed on page 6.
Other Prescription Drug Discount Options
In addition to the publicly funded prescription drug benefits being introduced through Medicare Part D, there are also various discount programs available to consumers, including drug company discount cards, private insurance (HMO or PPO), discount pharmacies, and other sources of assistance.
Drug discount cards offered through Medicare-approved HMO plans will be replaced by the new Medicare Part D prescription drug benefits. You may use your Medicare-approved drug discount card until May 15, 2006 or until you join a Medicare prescription drug plan, whichever is first. Once you have a Medicare prescription drug plan, you can no longer use your Medicare-approved drug discount card.
Many pharmaceutical companies offer discount cards to help consumers save money on the prescription drugs that the company makes and sells. There is usually no fee for these cards. It is anticipated that drug discount programs offered by both private insurance and pharmaceutical companies will change as a result of Medicare Part D.
Centers for Medicare and Medicaid Services (CMS)
Federal agency responsible for the Medicare program; provides comprehensive information on all aspects of Medicare.
Medicare Interactive (MI)
A project of the Medicare Rights Center, in partnership with FCA, MI is a one-stop source for information about health care rights, options and benefits. http://www.medicareinteractive.org/
Medicare Rights Center
Independent source provides online information and telephone hotline services to individuals who need answers to Medicare questions.
Comprehensive information about the new Medicare Prescription Drug Benefit as well as other prescription drug information.
Social Security Administration (SSA)
(800) 772-1213 or
(800) 325-0778 TTY
State Health Insurance Assistance Program (SHIP)
Offers counseling in every state. For contact list, see:
Health Insurance Counseling and Advocacy Program (HICAP)
Free telephone and in-person counseling about Medicare coverage options.
(800) 434-0222 or
California HealthCare Foundation
News and information on health care delivery in California, including Medicare and health initiatives on the ballot.
©2005 Family Caregiver Alliance
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