MEDICARE PRESCRIPTION DRUG PLANS: INFORMATION FOR CONSUMERS

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1 MEDICARE PRESCRIPTION DRUG PLANS: INFORMATION FOR CONSUMERS Contents: 1. General Information 2. Dates to Remember 3. Frequently Asked Questions Prepared by Susan V. Murray, MSW, CMSW Medical Social Worker Section of Geriatrics & Gerontology Department of Internal Medicine University of Nebraska Medical Center November 2005

2 GENERAL INFORMATION: MEDICARE PRESCRIPTION DRUG PLANS HOW THE PLANS WORK Beginning January 1, 2006, Medicare will provide an optional prescription drug benefit (Medicare D) to all persons enrolled in the Medicare program. This benefit will be provided through a number of private insurance companies. Each insurance company will offer one or more prescription drug plans to consumers. While these insurance companies may individualize their plans to some degree, the basic framework for all Medicare-approved plans is as follows: Each benefit year runs from January 1 December 31. In 2006 beneficiaries will pay a premium ranging from $20 - $100 per month, with an average premium of $32. The beneficiary must meet a $250 deductible before Medicare pays anything. After the deductible is met, Medicare will pay $1500 (75%) of next $2,000 of prescription medication expenses. After Medicare pays that $1500, the beneficiary will be responsible for paying the next $2,850 out-of-pocket. Once the beneficiary has personally paid $3,600 ($250 annual deductible + $3350 in out of pocket drug costs), he/she will then pay a maximum 5% co-pay for each additional prescription or refill for the remainder of that calendar year. ENROLLMENT Enrollment is voluntary A person must have Medicare Part A or B to enroll. The initial enrollment period will run from November 15, May 15, After 2006, there will be an annual enrollment period when beneficiaries may apply for the prescription benefit. This enrollment period will run from November 15 - December 31 of each year. If a beneficiary who is eligible for the prescription benefit, chooses not to enroll during the initial enrollment period (or at the time he/she first

3 become eligible) and then decides to enroll at a later time, he/she will pay a 1% penalty for each month they delayed enrollment. This penalty will be a permanent part of their premium costs. Penalties do not apply to persons who currently have comparable prescription drug coverage from a private insurance carrier, but later decide to change to a Medicare plan. LOW INCOME MEDICARE BENEFICIARIES Beginning January 1, 2006, State Medicaid will stop paying for prescription medications and Medicare will assume this responsibility. Medicaid will continue to pay for health costs other than prescription medications. The beneficiary must join a Medicare prescription plan in order to continue receiving prescription medication coverage. If a beneficiary does not join a prescription plan by December 31, 2005, Medicare will automatically enroll him/her in one of the available prescription plans. The following information describes prescription plan coverage for lower income beneficiaries: For beneficiaries who are eligible for Medicaid, with assets of $2000 for a single and $3,000 for a couple: - There will be no monthly premium or annual deductible. - The beneficiary will make a co-payment of $1 - $5 for each prescription, depending upon the medication. - Medicare will pay ALL other medication costs. For beneficiaries with an annual income of $12,569 for a single and $16,862 for a couple, and with assets at $6,000 (single) or $9,000 (couple): - There will be no monthly premium or annual deductible - The beneficiary will make co-payment of $2 - $5 for each prescription, depending upon the medication. - Medicare will pay ALL other medication costs. For beneficiaries with an annual income of $14,364 for a single and $19,248 for a couple, and with assets below $10,000 (single) or $20,000 (couple): - There will be a monthly premium based on a sliding-scale fee - There will be a $50 annual deductible - The beneficiary will pay 15% ($330) of the first $2,200 of prescription medication costs. - Medicare then pays all costs up to a total of $5,100, after which the beneficiary will make a co-payment of $2 - $5 for each prescription, depending upon the medication.

4 MEDICARE PRESCRIPTION DRUG COVERAGE DATES TO REMEMBER OCTOBER - NOVEMBER 2005 Medicare will mail each beneficiary a copy of the MEDICARE AND YOU 2006 handbook with up-to-date information on Medicare and the prescription drug benefit Medicare will name the insurance providers it has approved to offer drug plans for each state. These insurance providers will begin releasing details of the coverage they will provide. Beneficiaries will receive information by mail and through media advertisements. Beneficiaries are able to identify the insurance plans that have been approved for their state, and determine which plans cover their specific medications in two ways: On line at or By phone at MEDICARE ( ) The Medicare website allows you to enter the names of all your prescription medications. It then displays a list of the insurance plans in your area that cover all or some of those medications. Beneficiaries may then do an internet search to access the web sites for those insurance companies. The company web sites will provide specific details about their prescription drug plans, including estimated premiums and co-insurance amounts, and identify participating pharmacies. They also provide toll-free customer service numbers, and some even allow you to download an application form. Employers and unions that currently provide prescription drug benefits must notify their members/retirees how their current prescription coverage compares with the Medicare prescription drug benefit. Medicare will mail a letter to all people who have both Medicare and Medicaid informing them of their automatic enrollment in a drug plan

5 NOVEMBER 15, 2005 Enrollment for the Medicare prescription drug plan begins. People must call the company whose plan they have selected, or they may enroll by calling MEDICARE. Enrollment continues through May 15, JANUARY 1, 2006 Medicare prescription drug coverage begins for those persons who have enrolled in a drug plan by December 31, Medicare starts providing prescription drug coverage for those who have Medicare and full Medicaid coverage. APRIL 2006 Reminder letters will be sent to those eligible for the prescription drug benefit who have not yet enrolled. MAY 15, 2006 The last day to enroll at the lowest monthly premium. The next open enrollment period will run from November 15 December 31, MEDICARE PRESCRIPTION DRUG COVERAGE FREQUENTLY ASKED QUESTIONS ARE ALL MEDICARE DRUG PLANS THE SAME? No. Each plan will be slightly different. Some insurance providers will have more than one plan from which to choose, offering slightly different premiums, deductibles and co-payments depending upon one s income and average medication costs. Each provider will determine which prescription medications their plans will cover, and which pharmacies their enrollees may use.

6 WILL MEDICARE DRUG PLANS COVER ALL PRESCRIPTION DRUGS? WILL THEY COVER GENERIC AS WELL AS BRAND NAME DRUGS? No plan will cover all generic and brand name drugs, but all plans must cover at least two drugs in every drug class, and most drugs used to treat mental illness, cancer, HIV/AIDS and organ transplant maintenance. Each plan will publish a formulary a list of all medications it covers. Each enrollee should compare their own list of medications with the formularies of each drug plan to insure that they choose the plan that will provide the most complete coverage. The web site contains a link for beneficiaries and those assisting them to enter the names of their specific prescription medications, and receive a list of Medicare-approved drug plans which cover all or some of their medications. HOW OFTEN WILL I BE ABLE TO CHANGE DRUG PLANS? If your needs change, so can your coverage. Each year, there will be an open period in which you can review your plan choices for the coming year and either rejoin your current drug plan or choose a new one. If you move out of the service area of your plan, you will have an opportunity to choose another plan that serves your new area. CAN I BE TURNED DOWN FOR MEDICARE PRESCRIPTION DRUG COVERAGE? No. No matter how many health problems you have, or how many prescription drugs you take, you cannot be denied coverage for prescription drugs under any Medicare drug plan. HOW DO I AVOID BEING SCAMMED BY PERSONS CLAIMING TO MARKET MEDICARE DRUG PLANS? No one can enroll you before November 15, They cannot come to your door uninvited. No one can ask you for personal information (Social Security number or bank account/credit card numbers) during

7 the marketing process. If you have questions concerning a marketer, or suspect fraud, call MEDICARE. I AM HEALTHY AND DON T TAKE MANY MEDICATIONS. WHY SHOULD I JOIN A MEDICARE DRUG PLAN? Even if you have low drug costs today, these costs may be higher in the future if you become ill. A recent study found that the average Medicare beneficiary will receive significantly more in benefits from having Medicare drug coverage over his/her lifetime than he/she would pay in premiums. IF I QUALIFY FOR DRUG COVERAGE THROUGH THE VETERAN S ADMINISTRATION, WILL THE VA CONTINUE TO COVER MY PRESCRIPTIONS? VA benefits will not be affected. Medicare beneficiaries who currently receive their medications through the VA can continue to do so under the same co-payment rules as before. The VA drug benefit does not have a deductible or premium. WHAT IF I ALREADY HAVE A MEDICARE SUPPLEMENT (MEDIGAP) POLICY THAT PROVIDES COVERAGE FOR PRESCRIPTION MEDICATIONS? You will receive a detailed notice from your Medigap insurance provider informing you whether their policy covers as much or more than a Medicare prescription drug plan. This notice will explain your rights and choices. You can decide to keep your current prescription drug coverage provided though your Medigap policy, however starting January , federal law will prohibit insurance companies from selling new Medigap policies with prescription drug coverage. In some cases this could cause the premium for your current Medigap policy to increase faster than it would otherwise You may keep your current Medigap policy, even if you decide to cancel its prescription drug coverage and enroll in a Medicare prescription drug plan.

8 WHAT IF I ALREADY HAVE PRESCRIPTION DRUG COVERAGE FROM MY FORMER EMPLOYER OR UNION AS PART OF MY RETIREE BENEFITS? If an employer or union offers prescription drug benefits, you should compare the plan and costs with those offered under the Medicare prescription drug plans. You can then decide whether to stick with your current plan, or change to a Medicare drug plan. It is the employer s responsibility to inform you if their prescription drug plan is a Medicare qualifying plan. If your current plan is not a Medicare qualifying plan, and you do not purchase a Medicare prescription drug plan by May 15, 2006, you may have to pay a 1% per-month penalty on Medicare drug plan premiums for each month you delay enrolling. CAN I CONTINUE TO USE MY MEDICARE-APPROVED DRUG DISCOUNT CARD AFTER I JOIN A MEDICARE DRUG PLAN? No. Medicare prescription drug plans are different from the Medicareapproved drug discount cards that were available in 2004 and You can use your Medicare-approved drug discount card until May 15, 2006, or until you join a Medicare prescription drug plan. WILL MY MEDICARE DRUG PLAN PAY FOR MEDICINES THAT I ORDER FROM ANOTHER COUNTRY? No. Only medications supplied by pharmacies in the United States and it s territories will be covered. SHOULD I ENROLL IF I LIVE IN A NURSING HOME OR AN ASSISTED LIVING FACILITY? Yes. If you have full coverage of your medications through the Medicaid program, and reside in a nursing home, your new Medicare drug plan will start paying all your prescription drug costs on January 1, If you reside in an assisted living facility, you will have a small co-payment for each covered prescription drug.

9 Many nursing home and assisted living facilities provide their residents with prescription medications from a pharmacy that is under contract with that facility. Be aware that no pharmacy is required to participate with Medicare Part D prescription drug plans. Therefore, residents, or their representatives, should check with the contract pharmacy to see which plans, if any, they will accept then decide between those plans based upon the formularies. IF I CURRENTLY HAVE A MEDICARE ADVANTAGE PLAN, WILL MY MONTHLY PREMIUM DECREASE IF THE GOVERNMENT IS HELPING TO PAY FOR PART OF THE COST FOR THE MEDICARE PRESCRIPTION DRUG PLAN? For those Medicare Advantage plans that include Medicare prescription drug coverage, the government financial help may affect either premiums, co-payments or both. For Medicare Advantage plans that do not include prescription drug coverage, monthly premiums will probably not be affected. CAN A CHILD OR GUARDIAN ENROLL HIS/HER PARENT IN A PRESCRIPTION DRUG PLAN? Generally, only the Medicare beneficiary can complete an enrollment request. However, another individual (such as a power of attorney, a guardian or conservator) could be an appropriate party to make an enrollment or disenrollment request. Appropriate documentation would be required with the enrollment application. Sources: Medicare Medicare Rx Education Network Centers for Medicare and Medicaid Services