On the Health front

The ABCs of Medicare’s Part D

By David Linney

On January 1, Medicare introduced its new Part D prescription drug coverage that is available to everyone with Medicare.

Private companies provide Part D prescription drug coverage and Medicare recipients can choose from a number of plans that provide benefits and pay the corresponding premium. These benefits are provided through two types of plans:

Prescription Drug Plan (PDP) provides separate drug coverage only.
Medicare Advantage, a managed care plan that provides drug coverage in addition to all Medicare covered services (including factor products).

Under the “standard benefit” design, recipients pay a premium (approximately $37 per month in 2006) and part of drug plan costs. Drug costs that recipients are responsible for include an annual deductible and either co-insurance or co-payments. Plans can either offer the standard benefit or an alternative benefit that is “equivalent” to the standard benefit. Here’s a breakdown of what recipients can expect to pay out of their pockets:

2006 annual premium costs (about $37 per month) = approximately $444

2006 annual cost-sharing amounts for drugs:

Deductible = $250

Plan pays 75% and recipient pays 25% of the next $2,000 in drug expenses;

recipient’s maximum liability = $500

Plan then pays 95% and recipient pays 5%

(i.e., recipient pays 5% of charges after paying $3,600)

Facts To Know

Make sure you are aware of the ins and outs of the new Part D. Much information has been distributed over the past several months to those who are on Medicare, so it’s good to know the major points:

Future Costs
Amounts that recipients will have to pay after 2006 for premiums and their portion of drugs will increase (based on a Medicare drug benefit spending index).

Assistance for Low-Income Recipients
There is no premium or cost-sharing for individuals with Medicare and Medicaid. For other recipients with lower income, an application can be made for premium and cost-sharing assistance; eligibility is determined by an income and asset test.

Enrollment
Many with Medicare have already enrolled in Part D and many more will enroll in the coming months:

For Medicare recipients who choose to enroll in Part D, initial enrollment began in November 2005 and will continue through May 15 of this year. Late enrollment will involve a financial penalty of approximately 1% of the premium amount for each month after the end of the initial enrollment period.
Individuals with Medicare and health insurance with drug coverage through a former employer that meets or exceeds the government’s standards do not need to enroll in Part D while such coverage is in effect. If, when former-employer drug coverage ends, an individual can enroll in Part D with no late enrollment fee.
Medicare recipients who also have Medicaid will either enroll themselves or have been automatically enrolled in Medicare Part D as of December 31, 2005.

Covered Drugs
Medicare drug plans must provide at least two drugs in each classification of drugs.

Ability to Change Plans
Once enrolled in a Part D plan, an individual can change plans once a year during open enrollment from November 15 through December 31. New coverage will then begin January 1. You can also change plans if you move out of the service area of the current plan. A new plan that serves the new area can be selected.

Considerations

The new Medicare coverage is a good thing. Now, for the first time, there is prescription drug coverage. However, keep in mind:

Enrolling in Part D is advisable. If an individual has no drug coverage, then the benefits of having Part D coverage will usually far outweigh the cost of premiums. Also, even if a recipient has low drug costs now, future costs could be very high.
If you have Medicare and other health plan coverage, check whether your other plan has drug coverage and if it continued after January 1. This will help you to determine if you need Part D. If you have other drug coverage, ask if your plan is a qualified prescription drug plan based on Part D criteria. If so, then you have the ability to enroll in Part D at a later date without being charged a late enrollment fee.
Review Part D plans that are offered in your area. Compare your premiums, deductibles, co-insurance and co-pays. Also, review each plan’s formulary (the list of covered drugs) to see if the drugs you use are listed.
If you have Medicare and Medicaid, drug coverage will be provided through Medicare Part D in 2006. There will be no premium, no deductible and very little out-of-pocket cost.
If you have Medicare (but not Medicaid) and are of lower income, apply for assistance. Your premiums, deductibles and co-pays could be lowered.

To Learn More…….

For more information about Medicare Part D, you can call Medicare 24 hours a day at 1-800-633-4227 or visit the website at www.medicare.gov. The booklet “Medicare & You 2006” has a special section dedicated to Medicare Part D.

Previous article taken from HemAware, a publication of the National Hemophilia Foundation, January/February 2006 issue.

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