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The New Medicare Prescription Drug Benefit: Questions Retirees Should Ask Before Considering “Part D” Drug InsuranceIn January 2006, benefits began under the new "Part D" prescription drug plans for Medicare beneficiaries. Part D plans are being sold by dozens of competing private insurance companies and are not available through the Medicare program itself. Purchasing a Part D plan isn't the right decision for all retirees, however — particularly those who already have drug coverage through former employers, union health & welfare funds, or pension funds. So, before deciding if Part D is right for you, you'll want to get answers to the following questions. Q. If you're a retiree who currently has group drug coverage sponsored by an employer, union or pension fund, will that coverage change in relation to Part D? In most cases, there will be no changes and retirees won't have to take any action unless the plan sponsor says you should. IF you haven't heard from your plan sponsor about Part D, call them right away to find out your status under your current drug plan. Q. If you currently have group drug coverage, does your plan provide better benefits than Part D plans? You'll want to compare premiums, deductibles and co-pays to decide. In most cases, an employer, union or pension fund plan will provide better coverage than Part D (which has major coverage gaps), particularly if the group plan pays for most of the premium costs. If that's the case, you'll probably want to stay with your current plan. Q. If you already have drug coverage through one of these group plans, but drop it to enroll in Part D, will you have to give up all your group-plan's health benefits in addition to its drug coverage? If you leave now, but want to rejoin your group plan in the future, will you be allowed to go back? Contact your plan sponsor to get the answers before considering Part D plans. It could prevent a big mistake. Q. If you currently have group coverage, does the drug benefit (employer/union/pension fund, Medigap, VA, Military TriCare, etc.) provide "creditable coverage" under the Medicare law? Creditable coverage means the benefits are at least as good as those in Part D. If your plan meets this standard, you won't have to pay a penalty if you don't join Part D in your initial sign-up period, but want to join at a future time. If your plan's coverage is "creditable," the plan is required to send you notification. Retirees who don't get a notice and are still unsure of their status should call their plan sponsor. Q. If you participate in one of the three Medigap plans that cover prescription drugs (plans H, I or J), how will your plan be affected by Part D? Medicare says you can remain in your Medigap plan, but there are two big drawbacks to staying put: (1) new retirees won't be allowed to join, which means premiums will increase rapidly as the covered group ages; and (2) Medigap drug plans provide even less coverage than Part D plans. So, be sure to call your Medigap insurer and find out about some of the new Medigap options that are designed to work with Part D. You'll probably end up with better benefits than you have now. Q. Do you think you may be eligible for Medicare's "Extra Help" program for beneficiaries with lower incomes? You may qualify if your annual income is below $14,355 for a single person or $19,245 for a couple (an assets limit also applies). Medicare Extra Help could pay most of your cost sharing in a Part D plan, making a limited drug benefit (Part D has lots of out-of-pocket costs) much more comprehensive. You can get an application by calling the Social Security Administration at 800-772-1213. Q. What do retirees need to know when comparing different Part D plans? Retirees need to look at the list of drugs each plan covers (a plan's "formulary") because these drugs will vary. A particular plan may not cover all the drugs you take or do business with the pharmacy you prefer. Although Medicare has determined a standard plan design, actual pemiums, deductibles and co-pays vary widely. So, study and compare plans carefully before you buy. Q. What's the penalty for not signing up for Part D during your initial eligibility period, if you decide to sign up in the future? If you don't have "creditable coverage" from a group plan and don't join a Part D plan during your initial eligibility period, you will pay a premium penalty if you decide to sign up for Part D in the future. In this case, premiums will be 1 percent higher for each month you delay signing up beyond the initial period. [Retirees avoid the penalty if they have "creditable coverage" from their group plan.] Q. What's the open enrollment period for Part D plans? If you were a Medicare beneficiary as of November 15, 2005, you had until May 15, 2006 to buy 2006 Part D coverage. The enrollment period for 2007 coverage begins on November 15, 2006 and ends next May 15. Every year, the open enrollment period will extend from November to May for new beneficiaries and those already in Medicare. New beneficiaries who don't sign up during their first open enrollment period (their initial period of eligibility) and don't have creditable coverage from another plan will be subject to the premium penalty.
Information Resources:Every beneficiary is sent a copy of the official Medicare & You handbook each year, with basic information on Part D and other Medicare benefits. Here are some other good resources: Contact the benefits office of your employer/union/pension fund health plan for any changes to your current drug benefits and to find out if the plan has "creditable coverage." The Medicare Helpline answers general questions on Part D. Call 1-800-MEDICARE. State Health Insurance Assistance Programs (SHIP or HICAP) provide free counseling to seniors on many health benefit issues, including Part D. Counselors can help you compare plans. Call the ElderCare Locator (1-800-677-1116) to get the phone number in your state. Log onto The Medicare Website for numerous Part D fact sheets and a "Prescription Drug Plan Finder Tool" to help you compare Part D plans in your area.
Write to Congress:To correct some of Part D's serious shortcomings, AFSCME is asking you to write your U. S. Senators and Representatives and urge them to: Reduce the cost of prescription drugs by requiring Medicare to negotiate lower prices with the drug companies. • Use the savings from price negotiations to close up the doughnut hole — Part D's big gap in coverage. • Give seniors the choice of obtaining drug coverage directly from Medicare, instead of having to choose from dozens of competing private plans. • Prohibit insurers from dropping specific drugs once coverage starts, if seniors are locked into plans and can't switch. Re-open Part D enrollment for 2006 and waive the late-enrollment penalty until Part D is fixed. |
 Jerry LaPoint
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