Medicare Part D: Creditable Coverage & Retiree Drug Subsidy

For Distribution to Brokers/Wholesalers/Administrators Only September 23, 2005 Medicare Part D: Creditable Coverage & Retiree Drug Subsidy Market: All CareFirst would like to keep you informed of the latest information regarding the new Medicare Prescription Drug Program (also called Medicare Part D). CareFirst has applied and received approval from the Center for Medicare and Medicaid Services (CMS) to be a Medicare Prescription Drug Provider for the Individual Market only. The new Medicare Part D coverage will be effective January 1, 2006 with the initial open enrollment period starting November 15, 2005 and extending through May 15, 2006. The Part D coverage will be offered by either a stand-alone prescription drug plan (PDP) or through a Medicare Advantage plan that also includes prescription drug coverage. For many employers, two key aspects of this new law are the creditable coverage certificate and the employer subsidy. To make you aware of what CareFirst is doing in response to these two initiatives, we are providing a brief summary of both and we are also providing you with responses to several frequently asked questions. Please keep in mind that while CareFirst broker sales representatives have been trained on our initiatives for Medicare Part D, we strongly encourage you and your accounts to educate yourselves on this topic. Your accounts should carefully review the literature they will receive from the government and their own legal counsel. CREDITABLE COVERAGE All CareFirst MSGR and Standard Group Over 65 accounts are creditable. Attached is a copy of the Creditable coverage form letter that CareFirst is mailing to MSGR and Standard Over 65 accounts. We have also attached a copy of the Non Creditable coverage form letter for your reference. Groups in the 51+ segments, VA 1-50 and D.C. 1-50 will be advised whether or not they have creditable coverage by way of one of the attached form letters throughout the next few weeks. If you need to address questions from accounts in the 51+, VA 1-50 or D.C. 1-50 market segments, you will need to ask the account directly whether or not they have creditable coverage. The Medicare Prescription Drug Improvement and Modernization Act (MMA) requires all employer groups to notify their Medicare-eligible employees (active and retired) and Medicare eligible dependents as to how their current prescription drug program compares to Medicare Part D coverage. Based on the information that employers provide, these individuals may then decide whether to keep their current coverage and/or enroll in Medicare Part D.

What notices are employers required to file? An employer offering prescription drug coverage must notify each Medicare-eligible active and retiree enrollees and their Medicare eligible dependents as to whether their current pharmacy coverage qualifies as creditable prescription drug coverage under the Part D rules. If the coverage is not creditable, the notice must also explain that there are limits on when the individual may enroll in a Part D plan during the year, and that he or she may be subject to a late enrollment penalty under Part D should they choose to enroll at a later date. Further, the employer must provide a disclosure of creditable coverage status to the Centers for Medicare & Medicaid Services (CMS) on an annual basis. CMS will provide further guidance relating to disclosure to CMS. Prescription drug coverage is creditable for Part D purposes if the actuarial value of the coverage equals or exceeds the actuarial value of the standard prescription drug coverage defined by CMS. When must employers provide these notices? Employers must notify their Medicare-eligible active and retiree enrollees and their Medicare eligible dependents between September 15, 2005 and November 14, 2005. In addition, notice must be provided to Medicare-eligibles annually before November 15 of each year. The notice must be provided: (a) before each individual s initial enrollment period for Part D, (b) before the effective date of enrollment in the prescription drug coverage (c) upon any change that affects whether the coverage is a creditable prescription drug coverage, and (d) upon request. How do they know if their Rx plan is creditable? To determine if a plan is at least as good as the Medicare Part D coverage, CareFirst will provide all groups with information about the status of their drug offering as compared to the standard Medicare Prescription Drug Coverage. These groups, as well as all Medicare eligible individual non-medigap/or pre-standardized Medicare supplemental market subscribers, will receive a copy of the appropriate CMS model notice titled "Important Notice from [Insert Name of Entity] About Your Prescription Drug Coverage and Medicare." Groups may use these notices (completed with their information) to notify their Medicare-eligible active employees and retirees. When will CareFirst mail creditable coverage notices? CareFirst will mail notices to groups as the determination of the creditability of their programs are completed, in a phased approach, to be completed by 10/15/05. For more information on creditable coverage please visit the CMS web site at http://www.cms.hhs.gov/medicarereform/credcovrg.pdf 2

RETIREE DRUG SUBSIDY The MMA will afford employers who sponsor retiree prescription drug coverage, several opportunities to reduce their employee benefit costs. One such opportunity is a new Federal Retiree Drug Subsidy. As an incentive to employers to maintain their employer-sponsored retiree health plans, the government will pay any employer that sponsors a qualified retiree prescription drug plan a tax-free subsidy equal to 28 percent of a qualifying enrollee s allowable annual prescription drug costs. These amounts are subject to an adjustment each year. The Center for Medicare and Medicaid Services (CMS) has estimated the average subsidy to be $611 per enrollee in 2006. Employers can qualify for the new Federal Retiree Drug Subsidy if they provide drug coverage that is at least as good as the new Medicare standard prescription drug coverage. How do they qualify for the subsidy? To qualify for the subsidy, accounts or their designees are required to: Apply annually for the subsidy, A registered actuary must formally certify that the employer coverage is at least as generous as the new Medicare standard prescription drug coverage on both a gross and net basis, Submit enrollment data on each retiree monthly; estimated claims data can be submitted monthly, quarterly, or annually depending on the chosen subsidy payment schedule Submit payment reconciliation reports annually, Notify CMS and enrollees that the plan offers coverage at least as generous as Medicare standard prescription drug coverage, and Federal monetary records should be retained for 10 years. Where can I get an application? The entire RDS application is paperless and can be found at http://rds.cms.hhs.gov. Please note: To be eligible for the subsidy, employers must begin the application process by September 30, 2005 and complete it by October 30, 2005. How will CareFirst support the Retiree Drug Subsidy Option? CareFirst has developed standard drug reports that employers and consultants can use to provide the actuarial attestation clients need to qualify for the employer subsidy. At an additional cost, CareFirst will offer actuarial attestation services to those accounts not hiring a consultant. If requested, CareFirst will produce the drug costs reports on an on-going basis for a fee. When can employers get the data needed to conduct the actuarial analysis? A new standardized report is now available at no charge. To obtain the report, accounts and consultants merely have to ask for it in writing. Please contact your CareFirst Broker Sales Representative for details. 3

Are employers required to apply for the Retiree Drug Subsidy? Employers may forego the subsidy and choose one or more of the following options: Continue to offer your current program with no changes, Continue to offer your current program and coordinate benefits with Medicare Part D plans chosen by retirees, Contract with a PDP or a Medicare Advantage Program for Group Part D coverage, Contract directly with CMS to offer your own Group Part D Plan, or Drop retiree drug coverage and instruct retirees to enroll in Part D coverage on their own through a Prescription Drug Plan (PDP) or a Medicare Advantage Prescription Drug plan (MA-PD). Groups may choose not to fund this coverage or may opt to fund all or a portion of this coverage. For more information on Retiree Drug Subsidy please visit the CMS web site at: http://www.cms.hhs.gov/medicarereform/pdbma/rds.asp http://www.cms.hhs.gov/medicarereform/pdbma/overviewoftheretireedrugsubsidy.pdf In addition, attached is a CMS document that outlines Frequently Asked Questions on Retiree Drug Subsidy for your reference. Please contact your Broker Sales Representative to get reports related to the Retiree Drug Subsidy and if you have groups interested in CareFirst providing an actuary for the attestation for the Retiree Drug Subsidy. Should you have any questions relative to this communication, please contact your CareFirst Broker Sales Representative. Shekar Subramaniam Director, Broker Sales CareFirst BlueCross BlueShield is an independent licensee of the Blue Cross and Blue Shield Association. Registered trademark of the Blue Cross and Blue Shield Association. Registered trademark of CareFirst of Maryland, Inc. 4

10455 Mill Run Circle Owings Mills, MD 21117 www.carefirst.com September 2005 Dear Account Administrator: CareFirst BlueCross BlueShield and CareFirst BlueChoice, Inc. (CareFirst) are committed to providing you with information that thoroughly explains your health care coverage. The following information provides you with your determination relating to your current group prescription drug coverage. CareFirst has determined, based on Medicare Guidelines, that your group prescription drug coverage is CREDITABLE This means your current coverage is as good or better than that being offered through the new Medicare Prescription Drug Program (also called Medicare Part D). This determination is based on a review of your specific prescription drug coverage benefits and the guidelines defined by the Centers for Medicare and Medicaid Services (CMS). To view these specific guidelines, please visit http://www.cms.hhs.gov/medicarereform/ccguidance.pdf. You are now required by CMS to take the following action: 1. Now that you have learned that your plan is creditable, you have from between September 15 and November 14, 2005 to communicate the status of your plan to all Part D-eligibles. CMS has developed a model notice that you may customize and use for this purpose. This notice can be found at http://www.cms.hhs.gov/medicarereform/credcov-benedsclsrentc.pdf. While you are not obligated to use this letter, there are very specific government directions about what must be included in any communication to Medicare-eligibles regarding their current prescription drug coverage. (Please refer to www.cms.hhs.gov/medicarereform/ccguidances.asp for details) 2. You are also required to notify CMS as to your Creditable status. CMS, however, has not yet released the format of this communication. 3. Because your plan is creditable, you must decide whether to pursue a 28% tax-free subsidy. This optional step requires additional testing and an application process related to the subsidy. You must begin the application process, or request an extension through CMS, by September 30, 2005. Please note that this letter does not serve as your actuarial attestation. To qualify for the new Federal Retiree Drug Subsidy, you must provide to CMS a written actuarial attestation certifying that your group coverage is at least as generous as the new Medicare standard prescription drug coverage on both a gross and net basis. - please turn the page - CareFirst BlueCross BlueShield and CareFirst BlueChoice, Inc. are independent licensees of the Blue Cross and Blue Shield Association. The Blue Cross and Blue Shield names and symbols are registered trademarks of the Blue Cross and Blue Shield Association. CareFirst is a registered trademark of CareFirst of Maryland, Inc.

10455 Mill Run Circle Owings Mills, MD 21117 www.carefirst.com Background Regarding Medicare Part D Beginning November 15, 2005, individuals who are eligible for Medicare will have the opportunity to enroll in subsidized prescription drug coverage through a new Medicare Prescription Drug Program. Effective January 1, 2006, this new program brings prescription drug benefits to individuals who might not have had access to such coverage in the past. In the coming weeks, Medicare-eligibles will be receiving a considerable amount of Part D information from such entities as The Centers for Medicare and Medicaid Services (CMS), local departments of aging, and health care insurers. No doubt, your employees and retirees will have questions about this new plan. CareFirst wants to support you by providing the best information available, as well as resources to facilitate your decision-making and next steps. We encourage you to consult with legal and tax advisors who are familiar with your individual business needs if you have specific questions regarding your Part D obligations. For specifics regarding the Medicare Modernization Act and how it affects employers, please refer to the following CMS website: http://www.cms.hhs.gov/medicarereform/pdbma/employer.asp. Should you have any additional questions, please contact your broker or CareFirst representative. Sincerely, Michael J Felber Senior Vice President, Sales CareFirst BlueCross BlueShield and CareFirst BlueChoice, Inc. are independent licensees of the Blue Cross and Blue Shield Association. The Blue Cross and Blue Shield names and symbols are registered trademarks of the Blue Cross and Blue Shield Association. CareFirst is a registered trademark of CareFirst of Maryland, Inc.

10455 Mill Run Circle Owings Mills, MD 21117 www.carefirst.com September 2005 Dear Account Administrator: CareFirst BlueCross BlueShield and CareFirst BlueChoice, Inc. (CareFirst) are committed to providing you with information that thoroughly explains your health care coverage. The following information provides you with your determination relating to your current group prescription drug coverage. CareFirst has determined, based on Medicare guidelines, that your group prescription drug coverage is NOT CREDITABLE This means your current coverage is not as good as that being offered through the new Medicare Prescription Drug Program (also called Medicare Part D). This determination is based on a review of your specific prescription drug coverage benefits and the guidelines defined by the Centers for Medicare and Medicaid Services (CMS). To view these specific guidelines, please visit http://www.cms.hhs.gov/medicarereform/ccguidance.pdf. You are now required by CMS to take the following action: 1. Now that you have learned that your plan is not creditable, you have between September 15 and November 14, 2005 to communicate the status of your plan to all Part D-eligibles. This information is vitally important to your covered employees and retirees, as a delay in their enrolling into Medicare Part D will likely result in a higher premium. CMS has developed a model notice that you may customize and use for this purpose. This notice can be found at http://www.cms.hhs.gov/medicarereform/non-credcov-benedsclsrentc.pdf. While you are not obligated to use this letter, there are very specific government directions about what must be included in any communication to Medicare-eligibles regarding their current prescription drug coverage. (Please refer to www.cms.hhs.gov/medicarereform/ccguidances.asp for details) 2. You are also required to notify CMS as to your Non-Creditable status. CMS, however, has not yet released the format of this communication. Background Regarding Medicare Part D Beginning November 15, 2005, individuals who are eligible for Medicare will have the opportunity to enroll in subsidized prescription drug coverage through a new Medicare Prescription Drug Program. Effective January 1, 2006, this new program brings prescription drug benefits to individuals who might not have had access to such coverage in the past. - please turn the page - CareFirst BlueCross BlueShield and CareFirst BlueChoice, Inc. are independent licensees of the Blue Cross and Blue Shield Association. The Blue Cross and Blue Shield names and symbols are registered trademarks of the Blue Cross and Blue Shield Association. CareFirst is a registered trademark of CareFirst of Maryland, Inc.

10455 Mill Run Circle Owings Mills, MD 21117 www.carefirst.com In the coming weeks, Medicare-eligibles will be receiving a considerable amount of Part D information from such entities as The Centers for Medicare and Medicaid Services (CMS), local departments of aging, and health care insurers. No doubt, your employees and retirees will have questions about this new plan. CareFirst wants to support you by providing the best information available, as well as resources to facilitate your decision-making and next steps. We encourage you to consult with legal and tax advisors who are familiar with your individual business needs if you have specific questions regarding your Part D obligations. For specifics regarding the Medicare Modernization Act and how it affects employers, please refer to the following CMS website: http://www.cms.hhs.gov/medicarereform/pdbma/employer.asp. Should you have any additional questions, please contact your broker or CareFirst representative. Sincerely, Michael J Felber Senior Vice President, Sales CareFirst BlueCross BlueShield and CareFirst BlueChoice, Inc. are independent licensees of the Blue Cross and Blue Shield Association. The Blue Cross and Blue Shield names and symbols are registered trademarks of the Blue Cross and Blue Shield Association. CareFirst is a registered trademark of CareFirst of Maryland, Inc.

FREQUENTLY ASKED QUESTIONS ABOUT: RETIREE PRESCRIPTION DRUG COVERAGE & THE NEW MEDICARE PRESCRIPTION DRUG COVERAGE SIntroduction Starting January 1, 2006, Medicare prescription drug coverage will be available to all people with Medicare, regardless of income, health status, or current health care coverage. Beginning November 15, 2005, anyone with Medicare will be able to join a Medicare drug plan to get this new coverage. There will be a lot of information in the mail, on the radio, and on television urging people with Medicare to sign up for a Medicare drug plan. However, because you already have retiree prescription drug coverage from a former employer or union, you may not need or want to join a Medicare drug plan, especially if it would affect your retiree prescription drug coverage. This document will help you decide if you should do anything other than keep your current retiree prescription drug coverage. It answers common questions about retiree prescription drug coverage and the new Medicare prescription drug coverage, and tells you what information you should consider and where to get this information so you know your specific options. Important Note: If you have prescription drug coverage because you are still working, or your spouse or other family member is still working, then your choices might be different from the choices available to retirees. Before you enroll in any Medicare drug plan, make sure you get information about how your active employee prescription drug coverage will work with Medicare. 1

Tips To Make Your Decision Easier Watch for information about your retiree prescription drug coverage and read this information carefully. You should receive information from your employer or union (or the plan that administers your retiree drug coverage) about how your retiree drug coverage compares to the new Medicare prescription drug coverage, and how this coverage will work with Medicare. Read the communications carefully. This information will help you understand your options. Ask for help if you need it. If you have questions, visit the employer or union webpage or contact the office listed in the communications you receive. If no contact information is given, the office that answers questions about changes in your current health care plan (including doctor, hospital, and drug coverage) is a good place to ask for help. And ask your friends and family for help if you need it. You may also be able to get free personalized help from your local Administration on Aging or State Health Insurance Assistance (SHIP) program. You can find out how to contact your local SHIP by reading the Medicare and You 2006 handbook that will be mailed to you in October. Don't rush to make a decision. You can join a Medicare drug plan at any time between November 15, 2005 and May 15, 2006. You don't need to make a decision right away. Take the time to learn the facts you need to make an informed choice about what meets your needs. For Many Retirees, The Decision Should Be Fairly Simple For most people, the decision whether to keep their current retiree coverage and/or join a Medicare drug plan will be simple because one choice will clearly be better. For example: Let s say you have generous retiree prescription drug coverage paid for primarily by your former employer or union plan. Let s also say that your former employer/union plan tells you the coverage you have now is, on average, at least as good as standard Medicare prescription drug coverage. If you are not eligible for extra help from Medicare, and the drugs you take now are typically covered by your retiree prescription drug coverage, you will generally pay the least for prescription drugs if you keep your current coverage and do not join a Medicare drug plan. And you can probably keep the coverage without doing anything new. You should still check the employer or union plan materials to make sure that you don t need to do anything special this fall. 2

What if you have a limited income and resources and are eligible for extra help paying for Medicare prescription drug coverage? You will generally pay the least for your prescription drugs if you join a Medicare drug plan instead of your current retiree prescription drug coverage. (For more information about the extra help, see the question Can I Get Extra Help If I Join a Medicare Drug Plan? below.) However, if you do join a Medicare drug plan, your current retiree prescription drug or retiree health (doctor and hospital) coverage from your employer or union could change. It is important to review materials from your employer/union plan to learn how joining a Medicare drug plan could affect your current retiree coverage. What if you pay most or all of the premium for your current drug coverage? You will generally pay the least for prescription drugs if you join a Medicare drug plan instead of keeping your current retiree prescription drug coverage. You might want to consider joining a Medicare drug plan in addition to or instead of your current retiree coverage. Again, it is important to review materials from your employer/union plan to learn how joining a Medicare drug plan could affect your current retiree prescription drug or retiree health (hospital and doctor) coverage. What if you have employer or union prescription drug coverage that is not, on average, at least as good as standard Medicare prescription drug coverage? You will generally pay the least for your prescription drugs if you join a Medicare drug plan instead of keeping your current prescription drug coverage. And if you don t join a Medicare drug plan by May 15, 2006, you may pay a penalty in the form of a higher premium if you choose to enroll later. So you might want to consider joining a Medicare drug plan in addition to or instead of your current retiree coverage. Your employer or union plan will let you know this fall if your current retiree prescription drug coverage is not, on average, at least as good as standard Medicare prescription drug coverage. They should also let you know if joining a Medicare drug plan could affect your current retiree prescription drug or retiree health (doctor and hospital) coverage. Let s say that starting in 2006 your employer or union will offer you a plan that supplements Medicare drug coverage. This means that Medicare will pay part of your prescription drug costs, and your supplemental retiree prescription drug coverage plan will pay part of your prescription drug costs. You MUST join a Medicare drug plan to get full prescription drug coverage. 3

Frequently Asked Questions About Retiree Prescription Drug Coverage and the New Medicare Prescription Drug Coverage What Is the Best Source of Information About My Retiree Prescription Drug Coverage?? The best source of information about your retiree prescription drug coverage is the communications you get from your former employer or union (or the plan that administers your retiree prescription drug coverage). Medicare does not have information about your specific retiree prescription drug coverage or details about how it will work with the new Medicare prescription drug coverage. What Kind of Information Will I Get About My Retiree Prescription Drug Coverage From My Employer or Union? You can expect to get information about how your retiree prescription drug coverage will work with Medicare prescription drug coverage, how your retiree prescription drug coverage compares to standard Medicare prescription drug coverage, and whether you will pay a penalty if you wait to join a Medicare drug plan until after you are first eligible. Keep an eye out for any changes to your current retiree coverage for 2006. How Will I Get This Information? You may get this information in different ways, including direct mailings, newsletter articles, in-person meetings, email and your employer or union website. Save this information when you get it, because you will need it to make an informed decision about your prescription drug coverage. Make sure you know where you can get more information about your retiree prescription drug coverage if you need it. What Are Some of the Ways My Retiree Coverage Can Work With Medicare? Medicare now offers financial support to help employers and unions continue to provide their retirees with high quality prescription drug coverage. Many retirees have current prescription drug coverage that is, on average, at least as good as standard Medicare prescription drug coverage, with a significant portion of their premium paid by their former employer or union. These retirees may want to stay with their current drug coverage and not join a Medicare drug plan. Other retirees might find that their former employer or union coverage will work with Medicare in different ways. For example, the employer or union might want their retirees to join a Medicare drug plan, and then the employer or union will provide additional coverage to supplement the Medicare drug plan. (This is similar to the way that employers and unions often provide health coverage to supplement Medicare 4

doctor and hospital benefits.) Some employers and unions will make special arrangements with a particular Medicare drug plan, while others will provide coverage that supplements any Medicare drug plan their retirees choose. The total amount of drug coverage from Medicare plus this employer or union supplement may be as good as or better than the drug coverage previously provided by the employer or union alone. If I Keep My Retiree Drug Coverage and Do Not Join A Medicare Drug Plan Now, Can I Still Join A Medicare Drug Plan Later? Yes. But you will have to wait until the next annual enrollment period (November 15 to December 31 of each year) to join a Medicare drug plan, unless you qualify for a special enrollment period. In addition, if you do not join a Medicare drug plan when you are first eligible, you may have to pay a penalty in the form of a higher premium, and you will have to pay this higher amount for as long as you have Medicare prescription drug coverage. How Will I Know Whether I Will Have to Pay a Penalty If I Wait to Join a Medicare Prescription Drug Plan? By November 15, you should receive information that will let you know whether your retiree prescription drug coverage is, on average, at least as good as standard Medicare prescription drug coverage. You need to know this information before you decide whether to join a Medicare drug plan. If your employer/union retiree prescription drug coverage is not, on average, at least as good as standard Medicare prescription drug coverage, you may have to pay a penalty if you wait to join a Medicare drug plan until after you are first eligible. Your employer or union should also tell Medicare whether your current coverage is, on average, at least as good as standard Medicare prescription drug coverage. You have a legal right to this information. If you have not received the information by November 15, you should ask your former employer or union (or the plan that administers your retiree prescription drug coverage) for it. Some employers and unions will include this information with other communications they may give you about your retiree prescription drug coverage. For example, this information may be included in the material you receive about your health plan s annual open enrollment period or as part of your summary plan description. Other employers will provide this information in a separate notice. 5

Is This the Only Information I Need That Compares My Retiree Prescription Drug Coverage to Medicare? No. While you do need to know whether your employer or union coverage is at least as good as Medicare prescription drug coverage on average, you also may want to consider whether it is as good or better for your individual situation. You may want to compare the cost and coverage of your current retiree plan with the cost and coverage of available Medicare drug plans, including the premium you pay, the prescription drugs that are covered (especially the specific drugs you currently take), the pharmacies you use, and any other factors that are important to you. Also, in making a comparison, remember that there are different ways that you can get Medicare prescription drug coverage. Medicare Advantage Plans and other Medicare health plans offer drug coverage along with health care coverage. Prescription Drug Plans add coverage to the Original Medicare Plan and some other Medicare health plans. You should also consider whether you can or should get coverage from both your employer or union plan and a Medicare drug plan, and how both types of coverage work together. Can Joining a Medicare Prescription Drug Plan Affect My Current Employer or Union Coverage? Yes. In some cases, if you join a Medicare drug plan, it could change your retiree prescription drug coverage. If your spouse or other family members are included in the plan, their coverage might also be affected. For example, employer or union coverage may only pay drug costs for you and covered family members if you do not join a Medicare drug plan. Your retiree health (doctor and hospital) coverage could change as well. For example, you may not be able to drop your retiree prescription drug coverage to join a Medicare drug plan without also dropping your retiree health coverage. And if you drop your retiree prescription drug coverage and/or health (doctor and hospital) coverage, you and any family members covered by your plan may not be able to get the coverage back. Make sure you know if your retiree prescription drug and health coverage will change, and how they will change, before you decide to join a Medicare drug plan.? 6

What Are the Best Sources of Information About My Medicare Prescription Drug Plan Options? The best sources of information about your specific Medicare prescription drug plan options are: Look at your Medicare & You 2006 handbook which will be mailed to you in October. Visit the Medicare website at www.medicare.gov. You can find fact sheets there now, and an online Medicare Prescription Drug Plan Finder tool will be available starting in October. Call 1-800-MEDICARE (1-800-633-4227), available 24 hours a day, 7 days a week. TTY users should call 1-877-486-2048. Can I Get Extra Help If I Join a Medicare Drug Plan? People with resources less than $11,500 (single) or $23,000 (married and living together) in 2005 may qualify for extra help in paying for Medicare prescription drug plans. The amount of extra help you get depends on your income and resources. You can only get this extra help if you join a plan that provides Medicare prescription drug coverage. If you think you might qualify for extra help, you should contact the Social Security Administration or your State Medicaid office to apply, or apply online at the Social Security website (www.socialsecurity.gov). Remember, you can only receive this extra help if you join a Medicare drug plan. Because Medicare with extra help pays more drug costs than many employer or union drug plans, it may make sense to join a Medicare drug plan if you are eligible to get this extra help, even if your employer or union drug plan provides coverage that is intended to take the place of Medicare. However, it is important to review information you get from your employer or union plan to learn how joining a Medicare prescription drug plan could affect your current retiree coverage. People with Medicare and full Medicaid benefits (both health benefits and prescription drug benefits), people who get help from Medicaid paying their Medicare premiums, and people with Medicare who get Supplemental Security Income (SSI) benefits automatically qualify for extra help for their prescription drug costs. This means that if they join a Medicare drug plan, they will pay a small amount out of their own pocket for the cost of their drugs. 7

What If I Have Full Medicaid Benefits, and Medicare Sends Me a Letter Saying I Will Be Automatically Enrolled in a Medicare Drug Plan? If you are eligible for Medicare and full Medicaid benefits, you will get a letter telling you that you will be enrolled in a Medicare drug plan as of January 1, 2006 if you don t choose one on your own. However, you do not have to get Medicare drug coverage. You still need to decide if you want to be in a Medicare drug plan and/or keep your retiree prescription drug coverage. Read all the information you get from your employer or union (or the plan that administers your retiree coverage). If you don t want to join a Medicare drug plan, and you don t want Medicare to enroll you in a Medicare drug plan, call 1-800-MEDICARE by December 31, 2005, and tell them you don t want to join. In Summary... Again, you can expect to get information (if you have not gotten it already) from your employer or union about how your retiree prescription drug coverage will work when the new Medicare prescription drug coverage begins in 2006. Remember: If your current coverage is generous and paid for primarily by a former employer or through a union fund, you may want to keep the coverage you have and not join a Medicare drug plan. But remember to check for any changes in your retiree coverage for 2006. Don't rush to make a decision before you know the facts about your choices. Read the information you get from your employer or union about how your retiree prescription drug coverage compares to the new Medicare prescription drug coverage, and how they will work together. Make sure you understand: whether your employer or union expects you to join a Medicare drug plan in addition to your current coverage; if joining a Medicare drug plan will affect any retiree prescription drug coverage and/or health coverage you currently have; and whether you will have to pay a penalty if you wait to join a Medicare drug plan until after you are first eligible. You may also want to compare your retiree plan s cost and coverage information with available Medicare drug plans. If you have questions, visit the employer or union webpage or contact the office listed in their communications. Ask your friends and family for help if you need it. 8 CMS Pub. No. 11162