MEDICARE PART D PRESCRIPTION DRUG PLANS AND MEDICARE ADVANTAGE PLANS Important Information for Retired Clergy North Alabama Conference – United Methodist Church November 15, 2006 Section I. Medicare Part D Prescription Drug Plans Overview • Medicare prescription drug plans are the most significant change in Medicare health plans for seniors and disabled persons in 40 years. These plans are known as Medicare Part D plans, or Med D plans, and are offered by private insurance companies approved by the government through the Centers for Medicare & Medicaid Services. Med D plans are drug-only plans added to Medicare Parts A and B coverage. However, several companies in Alabama offer Medicare Advantage plans. For more information about Medicare Advantage plans, see Section II of this discussion document. • • • Don’t sign up for any plan until you have done your homework. Reading this discussion document is a good way to begin your homework. Any Medicare participant can purchase a Med D plan. Income, assets, and health have no bearing on eligibility. Retirees or working seniors who already have drug coverage through an employer, a spouse’s employer, or some other source may want to stay with the drug plan they already have, provided it qualifies as being as good as or better than Medicare Part D coverage (known as creditable coverage). An example of this situation would be a retiree that has drug coverage through the State of Alabama public education employees’ plan known as PEEHIP. The current enrollment period is November 15, 2006 through December 31, 2006. However, persons must enroll in a Medicare Part D plan by December 8, 2006 for coverage to be effective January 1, 2007. Note: Enrollment after December 31, 2006 will result in higher premiums because of a penalty for each month’s delay in enrolling. Open enrollment after December 31, 2006 will be November 15, 2007 through December 31, 2007 for 2008 Medicare prescription drug plans. In Alabama, approximately 17 companies offer over 40 Medicare Part D plans for retirees to consider. However, BlueCross BlueShield of Alabama does not offer a Medicare Part D plan.
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Monthly premiums for the various Medicare Part D plans generally range from approximately $14 to $70, with deductibles ranging from $0 to $250 and co-pays generally ranging from $4 to over $60. In addition, some plans may require a percentage payment for certain drugs. Some low-income persons, such as Medicaid recipients, may qualify for financial assistance with the cost of Medicare prescription drug coverage. Call the Social Security Administration at 1-800-772-1213 or go online at www.socialsecurity.gov to find out if you qualify for financial help. Also, Medicaid (telephone: 1-800-363-1504) or the State Health Insurance Program (telephone: 1-800-243-5463) can advise you concerning your eligibility for financial help through the Medicare Savings Program from the State of Alabama.
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None of the Med D plans cover all drugs. The percent of the top 100 drugs covered by each plan generally ranges from as low as 74% to as high as 99%. Some plans have a restricted number of pharmacies that accept their coverage. The “standard” Med D plan has a $250 deductible, pays 75% of cumulative drug costs between $251 and $2,250, provides for no coverage for cumulative drug costs between $2,251 and $5,100 (known as the do-nut hole), and pays 95% of cumulative drug costs greater than $5,100. There are also “enhanced” plans that offer better coverage for higher premiums.
How to Select a Medicare Part D Plan • Many retirees may require the services of an advocate – someone who will assist them in making a Medicare Part D plan decision. This person could be a spouse, an adult child, a family friend, or a paid professional. Do some basic research by referring to the Medicare & You 2007 handbook mailed in October 2006 to most retirees. Section 6 in the handbook provides excellent information about Medicare prescription drug coverage. A comparison of available Med D plans is critical to making an informed choice. The best plan will provide an appropriate balance between premium cost, deductibles (the drug cost that must be paid before coverage begins), co-payments and/or percentage payments (the amount that must be paid per prescription after coverage begins), coverage for specific drugs, and convenience (know whether your pharmacy accepts the specific Med D plan you are considering).
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Some plans with a lower premium may cover fewer drugs, while other plans with a higher premium may have little or no deductible and cover a larger number of drugs. If you have significant drug costs, it is very important that you compare the total expected out-of-pocket costs for several plans. This is where an advocate can really be helpful. Every Medicare participant that wants prescription drug coverage must enroll in a Med D plan that is appropriate for his or her needs. Question: Answer: Should retirees that don’t have a drug benefit sign up for a Med D plan? Yes, most retirees should sign up for a Med D plan unless the retiree plans to purchase a Medicare Advantage plan (see Section II below).
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The lowest-premium Med D plan may be the best choice for persons who currently have a low need for drugs but want to avoid higher premiums associated with enrolling at a later date. Don’t be concerned about anticipating future drug needs. If your circumstances change, you will be able to change to another Med D plan during the open enrollment season each year from November 15 to December 31.
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Contact Medicare directly through the Internet at www.medicare.gov or by calling 1-800-633-4227. Medicare’s web tool has a Prescription Drug Plan Finder designed to help seniors identify the plans in their geographic area that cover their specific drugs, and at what cost. Seniors who don’t have access to the Internet may call the 1-800 number for the same information. You may also contact companies offering Med D plans directly to find out if your medicines are covered and what the co-payments will be. Telephone numbers are available from Medicare.
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The Coalition To Advance Prescription Drug Education (CARxE) is a non-profit organization dedicated to helping seniors enroll in the new Medicare prescription drug benefit. Access important Medicare Part D prescription drug information at www.carxe.org. Question: Answer: What effect will purchasing a Med D plan have on my current C Plus coverage with BlueCross and BlueShield of Alabama? None. Are there funds available from the North Alabama Conference to assist me with the cost of purchasing a Med D plan? No.
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Section II. Medicare Advantage Plans • Medicare Advantage plans provide a supplemental benefit to Medicare Parts A and B, and include medical benefits in addition to drug coverage. However, retirees may not receive benefits under a Medicare Advantage plan and also under C Plus. Some Medicare Advantage plans may only be available in certain counties in Alabama. Prescription drug coverage for Medicare Advantage participants must be provided by their Medicare Advantage plan rather than a separate Med D plan. Monthly premiums for Medicare Advantage plans generally range from $17 to over $100, and are in addition to Medicare Part B premiums. Medicare Advantage co-payments for prescriptions range from relatively low amounts for generic drugs to higher amounts for non-preferred brand names. In addition, some plans may require a percentage payment for certain drugs. Medicare Advantage plans may not cover all drugs. The percent of the top 100 drugs covered by each plan generally ranges from as low as 86% to as high as 97%. Expected out-of-pocket costs under Medicare Advantage plans (including the monthly premium) must be compared with the expected out-of-pocket costs under C Plus and a Med D drug plan (including the monthly premiums) in order to determine which option is best. Monthly premiums for Medicare Part B must be paid in either case. Question: May the cost sharing provided by the Conference for C Plus be applied to a Medicare Advantage plan in lieu of C Plus? No.
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Disclaimer The North Alabama Conference Board of Pension and Health Benefits and the Conference Treasurer are not engaged in financial planning or other professional advisory services. This discussion document is not a substitute for professional consultants who have pertinent expertise.
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