Medicare Prescription Drug Benefits

1. 11/8/05 1 Medicare Prescription Drug Benefits Employee Workshop November 2005

2. 11/8/05 2 Purpose of This Workshop To help you help someone else To give you an overview To help get you started To give you some resources NOTE: We are not the experts!

3. 11/8/05 3 What is Medicare? Different than Medicaid (low income) Health insurance program for People age 65 and older People under age 65 with certain disabilities, and People of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant) Part A � Hospitalization Insurance Part B � Medical Insurance Part C � Medicare+Choice (Medicare Advantage) Part D NEW � Prescription Drug Coverage

4. 11/8/05 4 Medicare Premiums Part A No monthly premium, part of FICA tax Part B deducted from Social Security check $88.50 per month for 2006 Part D ~$32 per month for 2006 Will vary if enroll in private plan

5. 11/8/05 5 Medicare if 65+ Year Old is Covered by Active Employee Plan Part A begins even if working and is secondary (employer coverage pays first) Part B enrollment can be delayed with no late sign up penalty Part D enrollment can be delayed with no late sign up penalty if coverage is considered �creditable� � at least as good as Medicare Employer must send a notice by November 15, 2005

6. 11/8/05 6 Medicare Part D: What is it? Currently, Medicare does not cover most outpatient prescription drugs Medicare Modernization Act of 2003 adds this coverage as of January 1, 2006 Centers for Medicare and Medicaid Services (CMS) in charge of Part D Part D coverage is voluntary coverage Most enrollees will pay a premium Exception for lower income people Penalty for late enrollment (1% per month), if not enrolled in a plan that is at least equivalent, on average, to Part D

7. 11/8/05 7 Medicare Part D: Standard Plan Design Premium: You pay a monthly premium in addition to your Medicare Part B premium � the estimated average monthly premium is $32 Deductible: You pay the first $250 in drug costs before the plan begins to pay Coinsurance: You pay 25% of your drug costs from $250 to $2,250; Medicare will pay 75% 100% Self-Pay Portion, called �The Donut Hole�: You pay 100% of your drug costs from $2,250 to $5,100 Catastrophic Coverage: After your total drug costs reach $5,100 and you have paid $3,600 in out-of-pocket costs, you pay only 5% of any costs above $5,100 for the rest of the year; Medicare will pay the other 95%

8. 11/8/05 8 Medicare Part D: Standard Plan Design