MEDICARE PART D AND YOU

Abstracted from
Legal Sense
Volume 1, Issue 1, November 15, 2005
Special Edition

On January 1, 2006, Medicare will implement a new voluntary and privately-administered prescription drug program. It will also be the end of Medicaid prescription drug coverage, with rare exceptions, for Medicare participants who also receive Medicaid services.

You must be in a plan before the end of this year if you cannot afford to pay out of pocket for your medications beginning January 1, 2006. If you delay by even one day, the plan you do choose will not be in effect until the first day of the following month. Open enrollment runs from November 15, 2006 through May 15, 2006. The next open enrollment period will begin November 15, 2006. The only exception is for residents of long-term care or medical facilities covered by both Medicare and Medicaid who may change plans each month.

Anyone 65 and older, or younger and totally disabled, needs to review whether or not he or she needs to make any changes to his or her current prescription drug coverage.

Here are some new vocabulary words you need to become familiar with:

Prescription Drug Program (“PDP”) - stand-alone drug plans under Medicare Part D
administered by private insurance companies which provide

• drug coverage only
• purchased by Medicare participants who do not have other adequate prescription drug coverage

Formulary - the set of covered drugs offered by each plan

• the established guidelines have categories and classes of prescription drugs
• each plan must include two drugs in each class or category
• each plan can choose which drugs to include in its classes and categories
• plans may control costs by steering participants to less costly formulary drugs
• plans may have tiered co-payments based on generic or brand name drugs
• plans are allowed to change the formulary at any time but participants are "locked-in" until the next open enrollment

Lock-in - inability to choose another plan

Standard Medicare Part D - basic Medicare Part D program upon which all other plans are based. Under standard Medicare Part D:

• Participant pays a $250 deductible before coverage begins
• Participant pays 25% of the next $2,000
• All costs over $2,000 up to $3,600 are out of pocket (the doughnut-hole)
• Participants pay 5% of his or her remaining annual prescription costs - or $2 for generic drugs and $5 for name brands, which ever is greater
• Monthly premiums average around $37 per month in Massachusetts

Doughnut-hole - the major gap - between $2,000 and $3,600 in prescription coverage under standard Medicare Part D

Low Income Subsidy ("LIS") - low-income subsidy from the government to assist very low income persons with the costs of Medicare Part D

• low-income persons who do not qualify for MassHealth but Medicare Part B premium is covered by the federal government
• persons who may be eligible for the subsidy but need to complete the questionnaire distributed this summer

Out Of Pocket ("OOP") - actual out of pocket costs used to satisfy the deductible and the "doughnut hole"

• only prescription drugs on the particular plan’s formulary will count towards the deductible and the "doughnut-hole"
• plan premiums, the cost of non-formulary drugs and payments made by retiree health plans do not count

Wrap-Around - supplemental coverage

• if your prescriptions are currently covered under a supplemental or Medi-gap policy you may continue to participate in that plan as long as it is offered
• no new supplemental policies with prescription coverage will be sold after December 31, 2005 - only group plans available to retired employees will continue to be available
• there may be changes to coverage as well as increases in the premiums - these changes must be explained to participants in the policy

 

Credible Coverage - prescription drug coverage equal to or greater than the standard Medicare Part D benefits

Medicare Advantage ("MA or MA-PD") - Medicare HMO's or PPO's, with (MA-PD), or without prescription drug coverage (MA)

Senior Care Option ("SCO") - a health care plan that coordinates all Medicare and Medicaid covered benefits for eligible individuals

Dual eligibles - an individual who is a resident of a nursing facility or medical institution who’s care is paid for by Medicaid (MassHealth) for the entire month and is also covered by Medicare

If you are a Medicare recipient and on Medicaid, or MassHealth in Massachusetts, your prescription drug coverage will terminate on December 31, 2005 (except if you take a benzodiazepine prescribed for seizure disorders and acute muscle spasms). If you fail to choose a Medicare Part D plan, one will be chosen for you by a Federal government that is unable to screen the formularies for each person. The plan chosen for you may not be as comprehensive as your MassHealth coverage and may or may not cover all of the prescriptions you take. Nursing homes must bring in an objective individual to assist residents and there representatives to select a plan.

If you receive your prescriptions through the Veterans Administration or through Tri Care For Life you do not need to enroll in Medicare Part D unless your current prescription needs are not covered by either entities.

If your prescription coverage is part of a retiree plan you should have received a letter from your former company advising you whether or not your current coverage is "credible" or "comparable" to Medicare Part D coverage. Be aware that in the future, employer’s plans may reduce retiree drug coverage. Be sure to keep the letter stating that you have credible coverage on file as you will need it to present it to avoid the penalty if you do apply for Medicare Part D in the future.

If your current coverage is not credible, and you do not sign up for Medicare Part D or a stand-alone plan, you will be assessed a 1% penalty, based on the national average premium, for every month you delay in participation in Medicare Part D. This penalty will be continuous and never go down. In addition, premiums will increase each year.

If you are eligible for Medicare Part A or B but are actively employed and covered under your employer’s plan, you do not need to participate in Medicare Part D at this time. You will not be penalized if you apply for it in the future.

If you participate in a Medicare Advantage plan or a SCO, you will not have a choice as to prescription drug plan. You will be locked into the plan your HMO, PPO or SCO partners with. If you don’t join that particular plan and retain medical coverage under the plan, you will not be allowed to join any other plan. You may change HMO plans now, or during a later open enrollment period. However, many MA-PD plans may offer plans with low premiums which may be good for those who take few or no drugs.

If you participate in a PACE program you should not enroll in Medicare Part D as all of your medications are covered under PACE.

Even if you take no drugs now, and you do not have credible coverage, you should join a plan to avoid the premium penalty if you need to take any drugs in the future.

The Prescription Advantage program will end on December 31, 2005 for individuals not covered by the low income subsidy.

Seventeen companies have been approved to sell Medicare Part D plans in Massachusetts. There are a total of 44 levels of coverage within the plans that are offered.

With so many options and choices how do you decide which plan to choose? Here are some guidelines to follow that may make the process easier:

• make a list of all of the prescription drugs you are taking
• determine if they are generic or brand name drugs
• find out the retail cost of these drugs to use as a point of reference
• find a plan that covers your prescriptions
• compare
  • premiums
  • co-payments
  • any extra coverage
• choose a plan that:
  • covers your prescriptions
  • allows you to continue prescriptions at your local pharmacy
  • is the least expensive but covers your needs
• some plans have no deductible and provide some coverage over the "doughnut-hole"- determine if this makes sense for you

This process should be followed for any resident of a long-term care facility (SNF). If you live in an assisted living facilities (ALF) or are receiving MassHealth in the community, you will have a co-payment for your prescription drugs.

The open enrollment period runs from November 15, 2005 through May 15, 2006. You must sign up during this time period if you don’t want to incur a penalty. The only exception is if you experience a qualifying event. Qualifying events include:

• you have credible coverage now but loose it - you have 63 days to join a plan without incurring a penalty
• you relocate from one area to another and your coverage is regional - if you regularly relocate during the winter months, you should consider national rather than regional plans - even if it raises the overall cost
• you turn 65 or become permanently disabled at some other time during the year

While investigating the available plans you must be careful of Medicare Drug Benefit Scams. Sales people are not permitted to go door to door, nor to call on nursing homes or senior centers. Medicare permits companies to mail you information and to telephone you between 8:00 am and 9:00 pm. Phone calls should only be to explain plans, not enroll you. If you are part of the Do Not Call Registry, only your current insurance company is permitted to telephone you regarding Medicare Part D.

The following precautions have been suggested by AARP in order to avoid falling prey to anyone who is trying to sign you up by using unfair or illegal tactics:

• you should not pay a fee to enroll in a plan
• don’t sign up for a plan over the phone unless you have initiated the call
• suspect anyone who comes to the door soliciting your participation in a plan
• do not give you Social Security number, Medicare ID number, credit card or
• bank information to anyone who telephones you and asks for it
• don’t believe claims of free coverage
• don’t meet anyone alone - have a friend or family member with you
• don’t make any payments online
• report suspicious activity to Medicare

Your plan should have convenient access to network pharmacies and adequate access to out-of-network pharmacies. In addition, you should check with your local pharmacy to understand which plans they will accept. Some pharmacies are partnering up with certain plans and you should be aware that they may try to steer you to that plan, regardless of whether or not it is the best one for you.

You may contact the SHINE Counselor at 1-800-AGE-INFO (1-800-243-4636), log onto www.medicare.gov, or call Medicare at 1-800-633-4227. If you need further assistance, please telephone me to schedule an appointment. I will be happy to assist you in selecting a plan.