Medicare Part D: Questions and Answers
What is Medicare Part D?
Medicare Part D is a prescription drug benefit provided by the federal government under the terms of the Medicare and Prescription Drug Improvement and Modernization Act of 2003. Like Medicare Part A (which covers most hospitals and skilled nursing facility expenses) and Medicare Part B (which covers doctors' expenses, medical services, and supplies), retirees will have the option to enroll in Medicare Part D if they wish to have prescription drug coverage through the Medicare program.
The Center for Medicare and Medicaid Services (CMS) plans to offer Medicare Part D through separate prescription drug plans (PDPs) or add it to new Medicare Advantage plans (formerly known as Medicare + Choice plans). Like Medicare Part B, Medicare Part D will involve a premium payment. Medicare part D premiums are estimated to average $35 per month.
Where can I find additional general information about Medicare Part D?
You can find more information about Medicare Part D at the Medicare Web site (www.medicare.gov). In addition, if you are eligible for Medicare, each autumn you should receive a handbook in the mail from CMS that describes Medicare benefits in detail. That document is called the Medicare and You Handbook.
In addition, your local pharmacy should have helpful information about the Medicare Part D benefit. For the purposes of the Medicare Part D program, CMS has divided the United States into regions. Each region is served by a PDP. Each PDP has created booklets and other materials that describe the Medicare Part D plans that it offers. Your local pharmacy should have informational materials from the PDP in your region. You can find the name of your regional PDP at the Medicare Web site.
Is Medicare Part D better than HealthFlex?
Generally, no. HealthFlex provides a prescription drug benefit that is equal to or superior to that of Medicare Part D. The prescription drug benefit provided by HealthFlex has been valued by actuaries to be equal to or better than the Medicare Part D benefit using assumptions set forth in the Medicare regulations. For a comparison of the average HealthFlex prescription drug benefit to the standard Medicare prescription drug benefit, please see this chart.
What does Medicare Part D mean for me?
In 2006, HealthFlex will incorporate the changes under the Medicare and Prescription Drug Improvement and Modernization Act of 2003. The General Board will make available a retiree prescription drug benefit in 2006 that is equal to and in most ways superior to that of Medicare Part D.
If you have prescription drug coverage through HealthFlex:
- You are not required to take any action. You do not need to do anything right now regarding Medicare Part D or HealthFlex.
- If you so elect HealthFlex coverage during the Annual Election period, your prescription drug benefit coverage will continue under the HealthFlex program in 2006.
- CMS will not assess any late enrollment penalties against you in the form of higher premiums if you sign up for Medicare Part D at a future date, so long as you have maintained your prescription drug coverage under HealthFlex.
Will my prescription drug benefits under HealthFlex change?
Generally no. You may have heard in the news that some employers are eliminating retiree healthcare coverage as a result of the introduction of Medicare Part D. Other employers may choose to modify their retiree health benefit plans to coordinate their prescription drug coverage with the coverage available through Medicare Part D, through a wrap-around plan. However, your coverage will continue. The General Board, the plan administrator of HealthFlex, the group health plan in which your employer or former employer participates, expects to maintain the prescription drug coverage associated with each of our Medicare Companion plans. In addition, the General Board does not anticipate making any changes to the prescription drug benefits under HealthFlex in 2006.
If a HealthFlex participant enrolls in Medicare Part D what will happen to his or her coverage through HealthFlex?
- If a HealthFlex participant attempts to enroll in Medicare Part D, during the open enrollment period from November 15, 2005, to May 15, 2006, he or she initially will be rejected by CMS. CMS will have identified the participant as being a participant in a creditable plan, HealthFlex – a plan that provides prescription drug coverage that is equal to or better than Medicare Part D. CMS will identify these participants through the retiree list the General Board has provided.
- If the participant chooses to override this initial rejection and continue to enroll in Medicare Part D, he or she can do so through the CMS approved Prescription Drug Plan that he or she wishes to join.
- CMS will provide the General Board a list of those participants that have initiated such overrides.
- The General Board will communicate with those participants to confirm their intent to remain enrolled in Medicare Part D.
- If, as of May 15, 2006, the participant remains enrolled in Medicare Part D (participants can disenroll from Medicare Part D up until that point) he or she likely will lose all HealthFlex coverage, including medical, pharmacy, and vision coverage. In other words, HealthFlex participants who enroll in Medicare Part D should anticipate that they will lose HealthFlex coverage entirely as a result. In any case, HealthFlex participants who enroll in Medicare Part D will lose prescription drug coverage through HealthFlex.
What happens if a participant enrolls in Medicare Part D and then later decides he or she wants back into HealthFlex prescription drug plan? Will that be allowed?
The General Board has not yet determined if participants who terminate HealthFlex coverage because they have enrolled in Medicare part D will be allowed to re-enroll in HealthFlex at a later date (e.g., the following November) if they drop Medicare Part D coverage. However, it would not be prudent for participants to anticipate being able to re-enroll in HealthFlex. Allowing retirees to move in and out of HealthFlex and Medicare Part D would not be practical for HealthFlex, CMS or participants.
Generally, HealthFlex would cease billing the plan sponsors of these participants for premiums as of the effective date of the termination of their coverage. Program sponsors should then cease billing the participants at that point.
Where do Medicare HMOs fit in?
HealthFlex will not be applying for a subsidy from CMS related to participants enrolled in HealthFlex's Medicare HMOs. The General Board has delegated nearly all administrative and fiduciary functions related to the Medicare HMOs to the insurers that manage those plans.
Participants in Medicare HMOs should pay close attention to the communications from their Medicare HMO with respect to Medicare Part D. Each Medicare HMO will decide whether or not to offer prescription drug coverage through its benefit program design or have its participants enroll in Medicare Part D. Each Medicare HMO will make the determination whether its drug coverage is equal to or better than Medicare Part D (whether the coverage is Creditable Coverage).
As of this time, PacifiCare has informed the General Board that PacifiCare's Secure Horizons Medicare HMOs will continue to offer prescription drug coverage in 2006. PacifiCare has indicated that it will send Notices of Creditable Coverage to its covered persons on or before November 15, 2005. Participants in PacifiCare Medicare HMO should expect to receive communications about Medicare Part D directly from PacifiCare.
For more information, please contact Greg Tunnell at PacifiCare by calling (714)226-7604 or emailing Gregory.tunnell@pacificare.com.
Kaiser Permanente (Kaiser) has informed the General Board that it plans to include Medicare Part D prescription drug coverage in its Senior Advantage plan (a Medicare HMO) in 2006. That means that Kaiser will become or partner with a prescription drug provider (PDP) and will enroll participants in its Senior Advantage plan in Medicare Part D.
For more information, please contact Diane Glass at Kaiser by calling (503)813-3068 or emailing diane.m.glass@kp.org.
Should retired participants who are enrolled in a Medicare HMO sign up for Medicare Part D, and if so, how do they do so?
This is an individual decision to be made by each participant. Retirees in Medicare HMOs should carefully review any and all communications about Medicare Part D sent by Medicare HMOs in which they are enrolled. Medicare HMOs are required to inform covered persons on or before November 15, 2005, whether the drug coverage offered by the Medicare HMO, if any, is actuarially equivalent to the Medicare Part D benefit, i.e., whether coverage is creditable. If the Medicare HMO offers Creditable Coverage, covered persons will not be penalized for enrolling later in Medicare Part D instead of when first eligible.
The Medicare Part D benefit is a stand-alone benefit. Persons covered in managed care Medicare HMOs can, if they wish, sign up for Medicare Part D through a PDP in their region that is not associated with their Medicare HMO. However, enrolling in Medicare Part D against the advice of their Medicare HMO could jeopardize their Medicare HMO coverage. It would be prudent for participants in Medicare HMOs to review the guidance about Medicare Part D that they receive from their Medicare HMO provider and consider that advice.
When can I expect to receive a Notice of Creditable Prescription Drug Coverage? And where can I obtain one if I did not receive or have misplaced mine?
The General Board sent a Notice of Creditable Prescription Drug Coverage (NOCC) to all HealthFlex Medicare-eligible participants to provide proof of coverage so that if they should enroll in Medicare Part D at a future date, they will not be subject to any late enrollment penalty in the form of higher Part D premiums. The General Board sent the NOCC in late October 2005. If you did not receive one or need a replacement copy, you may download a copy from the General Board's Web site from the HealthFlex Announcements page or you can contact the General Board at 1-800-851-2201 to request a copy.
What if I have other questions about Medicare Part D and HealthFlex?
Call the Health Team at the General Board at 1-800-851-2201. Representatives are available from 8:00 a.m. to 6:00 p.m., Central time, Monday through Friday.
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