Medicare Prescription Drug Coverage
The Medicare Prescription Drug Program will start in January, 2006. It is an optional program. If you elect the Medicare Prescription Drug Program, which is also called Medicare Part D, you sign up with any one of several health insurance companies that serve your geographical area. In return for a monthly premium, the health insurance company provides you with some or all of your prescription drugs.
What Drugs are authorized by Medicare Part D?
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The Drug has to be approved by the Food and Drug Administration (FDA).
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It has to be prescribed
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It has to be on the list of drugs that Medicaid has to pay for.
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Medicaid does not have to pay for weight gain drugs (to combat weight loss in cancer and HIV patients), barbiturates, benzodiazepines (used to treat anxiety, panic attacks, seizure disorders and cerebral palsy) and over the counter medications, and therefore, Medicare Part D will not cover them, except if they are used for exceptional purposes.
Does the insurance company have to provide you with all Part D drugs?
No! Insurance companies that offer Part D plans may establish formularies. A formulary is a list of covered drugs for which they will pay. A formulary must include only Medicare Part D authorized drugs, but it does not have to include all of them. In order for an insurance company's Part D Plan to be approved by Medicare, the formulary has to be sufficiently inclusive so as not to "discourage enrollment by certain Medicare beneficiaries." In other words, the government will review the drugs on the formulary to determine if they tend to discourage enrollment by certain types of patients. Formularies that are discriminatory in this way will not be approved.
Is there a way to find out if drugs I need are included in a particular company's formulary?
Yes. One way to to go to the web site of the company and see if it has a listing of the drugs in its formulary. Another way to do this is to visit http://plancompare.medicare.gov/drugselect.asp, which is a government Medicare site which permits you to search for your desired drug among Part D Plans with formularies in your area.
However, one problem is that a plan provider may remove a particular drug from its formulary at any time, as long as to do so would not discourage enrollment by certain Medicare beneficiaries.
Does the Part D Plan have to provide unit dosing or bubble packs?
Long term care settings like nursing facilities and assisted living centers typically require that drugs be administered by staff. For the convenience of the staff, facilities typically require that the patient order delivery of the prescription drugs in unit doses or bubble packs. A Medicare Part D provider may establish a network of retail pharmacies in its service area, as long as the pharmacies are conveniently located to serve all plan members. The network, if established, must include pharmacies which adhere to standards for long-term care pharmacies developed by the department of Health and Human Services. These standards require the provision of unit dosing and bubble packs, etc.
Are Insulin and Insulin supplies covered under Plan D?
Yes?
Are Alzheimer's drugs like Aricept and Namenda covered under Plan D?
Probably not, because they are now covered by Medicare Part A and Part B (subject to limitations). Unfortunately, even if the enrollee is not eligible for Medicare Part A, he cannot get Aricept or Namenda under Plan D.
If each plan can feature a formulary containing different drugs, is there such a thing as a standard plan?
Some providers will provide the standard plan, and some will provide alternative coverage or enhanced alternative coverage. Here are the details of the standard plan for 2006:
First, the patient pays for his formulary drugs up to the $250 deductible.
Second, the plan pays for 75% of the next $2000 formulary drugs (and the patient pays the other 25%, meaning $500).
The first $2,250 of formulary drug expense is called the "initial coverage limit." Including the $250 deductible, the patient's total cost up to this point would be $750.00.
Once the initial coverage limit is reached, the patient has reached "the donut hole", meaning he is on his own for a while. He has to pay for the next $2,850 in formulary drug expenses. Thus, there is a total of $2,850, which the patient is solely responsible for while he is in the donut hole.
By this time, the patient has gone out of pocket $750.00 plus $2,850.00 = $3,600.
Once the patient has incurred a total out-of-pocket expense of $3,600 during the calendar year, his catastrophic coverage kicks in. Thereafter, the patient pays $2.00 for a generic or preferred drug and $5.00 for other drugs, or 5% percent coinsurance, whichever is greater.
Is there a standard premium for the Standard Plan?
No. Each company offering the Standard Plan can set its own monthly premium. The average monthly premium for the Standard Plan in 2006 will be about $32.
What is Alternative Coverage?
In such a plan, the beneficiary may have lower co-payments than in a Standard Plan if he uses generic drugs or if he uses a name brand drug that is less expensive for the Plan to procure.
What is Enhanced Alternative Coverage?
The Plan might change the deductible or the initial coverage limit. Or the Plan can elect to provide drugs that are excluded under Part D.
What are the enrollment requirements for a Medicare Prescription Drug Plan?
The essential concept here is that each person will have a window of eligibility in which to enroll while the plan ramps up. Enrollment is purely voluntary. You enroll through the plan provider that you choose. If you enroll at some time during that initial window of eligibility for yourself, you will secure for yourself the lowest possible premium FOR LIFE. This is true even if you change to a different Medicare Prescription Drug Provider during a subsequent year. For each month of delay in enrollment after your initial window of eligibility, your premium goes up by 1% per month of delay FOR LIFE, unless you can demonstrate that you had other "creditable" prescription drug coverage. (By the way, those of you that have prescription drug coverage under a Medi-gap policy need to be aware that the prescription drug coverage provided in those policies is NOT considered as "creditable" and therefore, if you delay in enrolling in a Medicare Prescription Drug Plan, you will be penalized 1% per month for each month of delay. Of course, you could just stick with your Medi-gap policy - but we will discuss that option under another heading.)
For individuals who have Medicare Part A and/or Part B, or who will have either one by February, 2006, the initial enrollment period runs from November 15, 2005 through May 15, 2006. BUT, such individuals may be eligible for a special (extended) enrollment period under special circumstances (See the question on Special Enrollment Periods).
For individuals who first become eligible to enroll in Part D on or after March, 2006, their enrollment window is seven months wide, beginning three months before the month of first eligibility, and ending three months after the first month of eligibility.
After 2006, there will be an Annual Coordinated Enrollment period which begins November 15 through December 31.
Are there people who can enroll at other times?
Yes, there are people who are allowed "special enrollment" for a variety of different reasons.
Can I change my plan in mid-year?
You can only change your plan during the annual coordinated enrollment period, November 15 through December 31. This is true even if they remove your drug from their formulary.
What about enrollment in Part D for people who are presently on Medicare Advantage?
Medicare Advantage is what used to be called Medicare+Choice. These plans substitute a managed care program for traditional Medicare. Advantages of these managed care plans included comprehensive services with no claims, no need for Medi-gap insurance, and often, prescription drug coverage. But many of these plans terminated in recent years. In other respects, patients who needed specialized care, received less than what they would have gotten on regular Medicare. For these, and other reasons, people will consider a return to Medicare Part A and B. When they do, they may also want prescription drug coverage.
For 2006, people who enroll in a Medicare Advantage plan that offers a prescription drug benefit may use the open enrollment period, January through June, to return to traditional Medicare and a Prescription Drug Plan. For 2007 and beyond, the period is reduced from January through March.
A person who enrolls in a Medicare Advantage plan that does NOT offer a prescription drug benefit may not use open enrollment to switch to a Prescription Drug Plan, and must wait to do so until the Annual Coordinated Enrollment Period - November 15 through December 31.
Should I switch to a Medicare Prescription Drug Plan if I currently have a Medi-gap policy that has some prescription drug coverage?
There is not a simple answer to this question. But here are some facts that may help you to decide.
First, you cannot enroll in a Medicare Prescription Drug Plan and retain the prescription drug coverage in your Medi-gap policy. You can choose one or the other, but not both.
Second, you will not be able to purchase prescription drug coverage in a Medi-gap policy after December 31, 2005, so once you drop it, there is no going back.
Third, if you take a wait and see approach to getting on Medicare Plan D, it will cost you 1% per month for every month of delay. To put this in perspective, if the average Part D premium is $32 per month, the penalty after 10 months of delay would be 32 cents per month, or $3.84 per year of delay. The added cost would be a lifelong cost.
Fourth, with your Medi-gap policy, any Medicare approved prescription drug is covered, but with a Part D plan, only drugs on the plan's formulary are covered, and the provider can change the formulary in mid-stream. It is predictable that Plan D Plans with alternative coverage, i.e., ones that offer tiered co pays for generic versus brand name drugs, and plans that offer enhanced alternative coverage by actually offering drugs that are excluded under Part D for a somewhat higher premium will probably have fewer mid-stream changes in their formularies.
Fifth, we think it is predictable that premiums for prescription drug coverage in Medi-gap policies will rise at a faster rate than premiums for Part D plan coverage. This is because the Part D plan providers will have greater purchasing power with respect to drugs because of the rule that all new enrollees have to be on Plan D and not on Medi-gap.
Whether a patient changes from his current Medi-gap drug coverage may depend on what that coverage is. For example, Medi-gap policies H and I have a maximum annual drug benefit of $1,250. Under those policies, the patient pays a $250 deductible and 50% of the cost. So under those policies, the patient is using $2,750 of drugs in the course of a year to max out on the policy benefits, and to do so , the patient pays $1,500. Under the Standard Part D Plan, after paying the same $250 deductible, the patient only pays $700 of the first $2,250 of formulary drug use. So, a Medigap patient with an H or I policy with modest drug needs and a willingness to be subjected to a a managed care type drug formulary, may save $700 per year by switching to a Part D drug plan. By contrast, the holder of a Medi-gap J policy, which pays a maximum of $3,000 per year may think twice about switching to a managed care type drug formulary. If the J participant's drug expense is more than $2,500 per year but less than $5,100 per year, he has an incentive to keep the drug coverage under his J policy. If the J participant's drug expense will exceed $5,100 per year, it makes sense for the J participant to switch to Part D Plan drug coverage, provided that all his prescription drugs are on the Part D plan formulary, and provided further that the premiums for the coverage are more or less equal.
Just remember that if you want to elect a Part D Medicare Prescription Drug Plan, you are not required to drop the other parts of your Medi-gap Plan.
How can a poor person participate in the new Medicare part D Prescription Drug Program?
There are subsidies depending upon a persons income, Medicaid status, and institutional status.
Full benefit dual eligibles (Medicare and Medicaid) who are institutionalized have no responsibility for cost sharing.
Full benefit dual eligibles with incomes up to 100% of Federal Poverty Level who are not institutionalized pay very modest co pays.
Those with SSI but no Medicaid, enrollees in Medicare Savings Plans (QMBI, SLMBI and QI), and those with incomes below 135% of Poverty Level and countable resources of no more than $$6,000 for an individual and $9,000 for a couple are also considered "full subsidy" individuals, and are entitled to copayments of $2 per generic or preferred brand or $5 for non preferred brand drugs.
Partial subsidy individuals can have incomes of up to 150% of the Federal Poverty Level and resources of not more than $10,000 per individual or $20,000 per couple. In a Part D Plan, Partial subsidy individuals have a 15% coinsurance and a $50 deductible. They have full coverage even after their total formulary drug usage comes to exceed $2,250. They pay a modest co payment for each prescription.
Application can be made through ALTCS (the state Medicaid agency in Arizona), or through the Social Security Administraton. There is likely to be some advantage to going through ALTCS, as they will assess the person for eligibility for other poverty programs, as well.
I am a veteran, Is there prescription drug coverage available for me outside the Medicare program?
Yes. You can determine your overall eligibility for VA health care benefits here.
You can apply here for VA assistance.
If you are entitled to VA health benefits, you can receive prescription drugs, provided that the drugs are on the VA's national formulary system. You can also receive over the counter drugs and medical and surgical supplies. Generally, these items must be prescribed by a VA health care provider. The co-pays that the patient must pay are very low.
No Endorsement is implied.
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