Let’s Learn Medicare! Medicare Prescription Drug Benefit

1. Let’s LearnMedicare!Medicare PrescriptionDrug Benefit September 2005

2. What is the Medicare Rights Center (MRC)? • MRC is the largest independent source of Medicare information and assistance in the U.S. • Founded in 1989, MRC helps older adults and people with disabilities get high-quality, affordable health care. • MRC has three main programs: • Education and training • Client services • Policy and advocacy

3. Section 1:Introduction

4. What we will cover today • What is the Medicare drug benefit (Part D)? • How much will it cost? • What drugs will be covered? • How will it work? • How will it affect other types of drug coverage? • What changes will happen when?

5. Things you should know • Medicare drug benefit (Part D) begins in 2006 • Medicare is not offering drug coverage directly • Enrollment is voluntary, but you might pay a penalty if you decide to enroll later • Medicare drug benefit might coordinate with drug coverage you already have

6. What is the Medicare prescription drug benefit? • Medicare’s new drug benefit is available to anyone with Medicare Part A and/or Part B • Will begin January 1, 2006 • You pay a monthly premium and $3,600 out-of-pocket in deductible and coinsurance before your costs go down to only 5% per prescription • Much lower costs for people with monthly incomes under $1,197 ($1,604 for couples)

7. When can you enroll in the Medicare drug benefit? You can enroll during the following times: • Initial enrollment period: November 15, 2005, through May 15, 2006 • Annual coordinated election period: November 15-December 31 every year, beginning in 2006 • Special enrollment period (when you lose other drug coverage through no fault of your own)

8. What will Medicare drug coverage look like? • Plans have great flexibility in structuring their benefits • Plans will likely charge a monthly premium, an annual deductible and a coinsurance for each prescription filled • Plans will have a list of which drugs they will cover (formulary) and a network of pharmacies you can use • Formulary will likely be tiered—your costs will vary by tier

9. What is the basic Medicare drug benefit? You Pay

10. Section 2:Cost of Medicare Drug Benefit

11. How much will Medicare drug coverage cost? • Medicare drug coverage out-of-pocket costs: • Monthly premiums (average premium $29/month in 2006) • Annual deductible • Coinsurance for each prescription you fill • After the out-of-pocket maximum each year ($3,600 in 2006), your costs go down to a 5% coinsurance • If your income and assets are low, you can apply for help paying for these out-of-pocket costs

12. Can you fill gaps in Medicare drug coverage? • You cannot buy separate insurance to fill gaps in your Medicare drug coverage • State prescription drug programs, as well as some charities, may cover some of your out-of-pocket costs • Employers may offer retiree benefits that work with the Medicare drug benefit • Drug plans may offer policies with lower out-of-pocket costs for a higher premium • You cannot have drug coverage through both a Medigap and Medicare

13. Cost of Medicare drug coverage: Case example Mrs. B needs to decide whether to enroll in a Medicare drug benefit. None of the plans in her area covers all of the four drugs she takes. One plan does cover three of them and she can ask her doctor to help her find an equivalent drug that is covered for the fourth. That plan has a $55 premium, $100 deductible and 30% coinsurance on drugs between $101 and $2,250. Since Mrs. B usually spends about $2,250 dollars on drugs a year, what will her costs be in 2006?

14. What help is there for people with low incomes? • People whose income is below $14,355 a year ($19,245 for couples) may be eligible for Extra Help, a federal program that helps you pay for some or most of the costs of Medicare drug coverage • No or low premium and deductible • Low copayments (as low as $1; no more than 15% of cost of drug) • People will be able to just declare their income and assets through Social Security application • People with Medicaid, MSP or SSI will automatically qualify for this extra help and do not need to apply

15. Section 3:Covered Drugs

16. Which drugs will the Medicare drug benefit cover? • Each Medicare drug plan will have its own formulary (list of covered drugs) • Can change formularies throughout the year • Plans must offer at least two drugs under each type of drug class • A few classes of drugs are excluded from Medicare coverage by law • Drug plans will provide incentives for you to use generic drugs by offering lower out-of-pocket costs for those drugs (cost tiers) • You will have to pay the full cost of any drug not on the plan’s formulary or that you buy from a pharmacy not in the plan’s network

17. Which drugs are excluded from Medicare coverage? • Some types of drugs are explicitly excluded from Medicare coverage by law, including certain anti-anxiety drugs, weight loss and gain drugs, and over-the-counter drugs.

18. What happens if your drug plan does not cover the drugs you need? You can: • Ask your doctor to change your prescription to a covered drug • Ask the plan for an “exception” to its formulary so that it covers the drug you need • Your doctor must submit a letter certifying that the drugs covered are not as effective or may be harmful for you • If a plan denies your request, you can appeal the plan’s decision

19. What are the appeals levels for getting a drug covered? • Five Levels of Appeal • Redetermination by the plan • Reconsideration by Independent Review Entity • Review by Administrative Law Judge • Review by Medicare Appeals Council • Review by Federal District Court

20. Section 4: Enrolling in theMedicare Drug Benefit

21. How do you get Medicare drug coverage? • You can get Medicare drug coverage through any of the following: • Private companies offering stand-alone drug plans • Medicare Advantage plans (HMOs, PPO, PFFS, etc.) offering drug coverage as well as all other Medicare-covered services • Employers and unions offering their retirees and members Medicare drug plans

22. How do you choose a Medicare drug plan? Three things to think about: • How much will it cost? • What is your monthly premium? • What is your deductible? • How much will you pay for each drug you need? • Which drugs does it cover? • Where can you buy drugs? • Does it work at your regular pharmacy? • Will it cover drugs if you are traveling?

23. What if you choose not to get the Medicare drug benefit? • You can enroll later, but you may have to pay a premium penalty if you do not have coverage that is at least as good as Medicare’s (“creditable coverage”) • If you have equal or better coverage, you can enroll late without penalty so long as you are not without coverage for more than 63 days • The penalty means you pay a higher monthly premium, which increases for every month you are eligible for the Medicare drug benefit but do not enroll

24. How do you know if your coverage is as good as Medicare’s? • Companies currently offering drug coverage will send out letters to inform you if your plan is at least as good as Medicare’s (“creditable coverage”) • Your current prescription drug coverage is “creditable” if it is equal or better than the basic Medicare drug benefit

25. When can you change Medicare drug plans? • Generally, you can only change your Medicare drug plan once a year during the Open Enrollment Period (January through March) • Certain special circumstances will give you a Special Enrollment Period, during which you can change your Medicare private drug plan. These include if you move out of your plan’s service area, your plan closes, or you enter a nursing home. • If you have Medicaid or are enrolled in a Medicare Savings Program you can change your Medicare private drug plan once a month.

26. Section 5:What happens to existing drug coverage?

27. How will Medicaid drug coverage change? If you have both Medicare and Medicaid you will: • Lose your Medicaid prescription drug coverage as of December 31, 2005 • Start getting drug coverage through Medicare January 1, 2006 • Be enrolled automatically in a randomly assigned Medicare drug plan unless you select a different one by December 31, 2005 • Be able to change drug plans once a month

28. How will Medicare supplemental insurance (Medigap) change? • In 2006, you will no longer be able to buy plans H, I, or J with prescription drug coverage • If you already have H, I or J, you may keep it, but you cannot enroll in Medicare drug benefit at the same time • Not considered as good as Medicare’s drug coverage • You will have to pay premium penalty if enroll later • Two new high deductible Medigaps (K and L)

29. How will retiree drug coverage change? • Your employer will decide • You will receive a notice this fall telling you if your coverage is as good as Medicare’s • If it is you can keep it and not enroll in the Medicare drug benefit without facing a premium penalty later • If it is not you should consider enrolling in the Medicare drug benefit when you are first eligible • If your plan will fill gaps in Medicare, you can have both

30. How will EPIC change? • Eligibility requirements and copayments remain the same • EPIC will waive annual fee if you qualify for full extra help • Those without extra help: • Not yet known if EPIC will be considered creditable • EPIC will cover drugs not on your plan’s formulary • Their payments will count toward your out-of-pocket limit ($3,600 in 2006)

31. Section 6:Things to Remember

32. Timeline: Important dates October 2005 • Plans become publicly available, begin marketing • Compare at www.medicare.gov or call 800-MEDICARE November 15, 2005 • Initial enrollment period begins January 1, 2006 • Drug benefit begins • People with Medicare and Medicaid start getting drug coverage through Medicare instead May 15, 2006: • Initial enrollment period ends

33. Bottom line: Should you enroll in the Medicare drug benefit? • Like all insurance, it is best to have coverage for future unexpected costs. A few tips: • If you have no other drug coverage and can afford the premiums, you probably should enroll • If you cannot afford the premiums, find out if you qualify for Extra Help to help pay your Medicare drug costs • Will you have to pay a premium penalty if you enroll later?

34. Things to remember • To avoid penalties, find out if your current coverage is creditable • If it’s not, enroll as soon as you are eligible • Those with Medicare and Medicaid will lose Medicaid drug coverage on December 31, 2005 • Information about Medicare private drug plans in your area will be available in October from Medicare: • On www.medicare.gov • By calling 800-MEDICARE • In the Medicare and You 2006 handbook

35. The End Congratulations!