Understanding Medicare Changes: Prescription Drug Coverage and Support for Beneficiaries

1. 2005 National Medicare & You Training Program Speaker Name Group Name Date

2. Changes in MedicareKeeping up with Today’s Health Care • Promoting a healthy lifestyle • Covering preventive services • Offering prescription drug coverage • Expanding coordinated care options • Including care for chronic conditions • Helping people with Medicare live longer, healthier lives

3. What You Need to Know Now Medicare Prescription Drug Coverage

4. Important Information For All People With Medicare • Medicare prescription drug coverage is available to all people with Medicare • There is additional help for those who need it most • Medicare prescription drug coverage pays for brand-name as well as generic drugs • Look for a Medicare prescription drug plan that meets your needs • Medicare prescription drug coverage helps you pay for the prescriptions you need

5. Important Information For All People With Medicare • Medicare prescription drug coverage is available to all people with Medicare • There is additional help for those who need it most • Medicare prescription drug coverage pays for brand-name as well as generic drugs • Look for a Medicare prescription drug plan that meets your needs • Medicare prescription drug coverage helps you pay for the prescriptions you need

6. Medicare Prescription Drug Coverage • Begins January 1, 2006 • Available for all people with Medicare • Part A, Part B, or both • For minimum standard coverage in 2006, enrollees would pay • Average monthly premium of about $32 • First $250 per year for prescriptions (“deductible”) • Part of the cost of prescriptions after $250 • 5% of drug costs (or small copayment) after paying $3,600 out of pocket

7. Savings in 2006 • On average, for a person with Medicare and no drug coverage now • Total drug spending will go down by about 50% • Over $1,100 per year saved • People with other drug coverage that, on average, is at least as good as Medicare’s also may save money • These estimates do not include the extra help for people with limited incomes

8. Important Information For All People With Medicare • Medicare prescription drug coverage is available to all people with Medicare • There is additional help for those who need it most • Medicare prescription drug coverage pays for brand-name as well as generic drugs • Look for a Medicare prescription drug plan that meets your needs • Medicare prescription drug coverage helps you pay for the prescriptions you need

9. Extra Help With Drug Costs • Available for many people with limited income and resources • Those below Federal poverty level save over 95% on average • People with lowest income and resources • Pay no premiums or deductibles • Have small or no copayments • Those with slightly higher income and resources • Have a reduced deductible • Pay a little more out of pocket

10. Eligibility for Extra Help • Income • Below 150% Federal poverty level • $1,197 per month for an individual* or • $1,604 per month for a married couple* • Based on family size • Resources • Up to $11,500 (individual) • Up to $23,000 (married couple) • Includes $1,500/person funeral or burial expenses • Counts savings and stocks • Does not count home the person lives in *Higher amounts for Alaska and Hawaii 2005 amounts

11. Automatic Eligibility for Extra Help • Some people may automatically qualify • People with Medicare who • Get full Medicaid benefits • Get Supplemental Security Income (SSI) • Get help from Medicaid paying their Medicare premiums • All others must apply

12. How to Apply for Extra Help • Social Security Administration (SSA) is mailing applications to those who may be eligible • Throughout the summer of 2005 • Those who think they may qualify should • Complete this application • Mail it to the address on the back • Use the enclosed postage-paid envelope • Use original forms only (do not photocopy) • People who are not sure should still apply • www.socialsecurity.gov can help people decide

13. Extra Help and Other Drug Coverage • People with other drug coverage • Should apply for extra help, even if covered by • Employer or union group health plan • Indian Health Service • VA health benefits • Should ask how Medicare drug coverage with extra help will work with the current coverage • Could save money with Medicare prescription drug coverage

14. Important Information For All People With Medicare • Medicare prescription drug coverage is available to all people with Medicare • There is additional help for those who need it most • Medicare prescription drug coverage pays for brand-name as well as generic drugs • Look for a Medicare prescription drug plan that meets your needs • Medicare prescription drug coverage helps you pay for the prescriptions you need

15. Which Drugs Are Covered? • Medicare-covered drugs • Drugs available only by prescription • Drugs, biologicals, insulin • Medical supplies associated with injection of insulin • Brand-name and generic drugs • Drugs not covered • Drugs excluded by MMA law • Non-prescription drugs • Drugs that are covered for a person under Medicare Part A or Part B

16. Coverage Varies by Plan • Plan may not cover all drugs • Formularies must include more than one drug in each classification • Centers for Medicare & Medicaid Services (CMS) will review formularies • Plan must give 60-day notice of many changes • Plan must have exception process • Gives enrollees access to medically necessary drugs • Decision can be appealed

17. Important Information For All People With Medicare • Medicare prescription drug coverage is available to all people with Medicare • There is additional help for those who need it most • Medicare prescription drug coverage pays for brand-name as well as generic drugs • Look for a Medicare prescription drug plan that meets your needs • Medicare prescription drug coverage helps you pay for the prescriptions you need

18. Ways to Get Coverage • Medicare prescription drug coverage is provided through • Medicare Prescription Drug Plans • Medicare Advantage and other Medicare Health Plans • Some employers and unions to retirees • Coverage is NOT automatic • People need to understand their options

19. Joining a Plan • Enroll directly with the plan sponsor • Can get help in enrolling • Legal representative • Spouse, other relative, friend, or advocate • Initial Enrollment Period

20. Late Enrollment • Most people will have to pay a penalty if they wait to enroll • Additional 1% of base premium for every month the person was eligible but not enrolled • For as long as the person is enrolled in a Medicare prescription drug plan • Unless they have other coverage that, on average, is at least as good as Medicare prescription drug coverage

21. Coverage on Average at Least as Good as Medicare’s • People with other coverage • Will receive information from the other plan • Will not pay a penalty if they wait to enroll • If coverage is at least as good as Medicare prescription drug coverage • Possible examples • Some group health plans (GHP) • State Pharmacy Assistance Program (SPAP) • VA coverage • Military coverage including TRICARE

22. Annual Coordinated Election Period • November 15 – December 31 every year • Person who does not have a Medicare drug plan can enroll • Person who currently has a Medicare drug plan can switch • Change effective January 1 • Special Enrollment Period may apply at other times in special circumstances

23. Example of Late Enrollment Mrs. Jones has Medicare Part A and Part B, and she has no prescription drug coverage. She does not enroll in a Medicare prescription drug plan by May 15, 2006, the end of the Initial Enrollment Period. • When will she have another opportunity to enroll in a Medicare prescription drug plan? • What are the consequences of waiting to enroll later?

24. Example of Late Enrollment When will Mrs. Jones have another opportunity to enroll in a Medicare prescription drug plan? • She can enroll during the next Annual Coordinated Election Period, November 15 – December 31, 2006, with coverage effective January 1, 2007. What are the consequences of waiting to enroll later? • Since Mrs. Jones does not have coverage at least as good as Medicare drug coverage, she will pay a penalty.

25. Medicare Advantage Open Enrollment • Person can join a Medicare Advantage Plan or other Medicare Health Plan • In 2006: January 1 – June 30, 2006 • In 2007 and beyond: January 1 – March 31, each year • Change effective the first of the month after the month person joined

26. Open Enrollment Limit • During Medicare Advantage Open Enrollment • Person who has a Medicare plan with prescription drug coverage • May only switch to another plan with prescription drug coverage • Person who has a Medicare plan without prescription drug coverage • May only switch to a plan that does not have drug coverage

27. Important Information For All People With Medicare • Medicare prescription drug coverage is available to all people with Medicare • There is additional help for those who need it most • Medicare prescription drug coverage pays for brand-name as well as generic drugs • Look for a Medicare prescription drug plan that meets your needs • Medicare prescription drug coverage helps you pay for the prescriptions you need

28. Things to Consider • What is current health insurance coverage? • Original Medicare Plan without drug policy • Original Medicare Plan with Medigap drug policy • Medicare and employer/union, including military • Medicare Advantage and other Medicare Health Plans • HMO, PPO, PFFS • Medicare Cost Plans • Medicare and Medicaid • Is there currently prescription drug coverage? • Even those with current drug coverage should ask • “Is Medicare prescription drug coverage right for me?”

29. Medicare and Employer/Union Coverage, including the Military Current Insurance Coverage* • Original Medicare Plan • Without Drug Coverage or • With Medigap Drug Policy Medicare Advantage and Other Medicare Health Plans Medicare and Medicaid or Other State/Federal Assistance Programs Which box describes the health insurance you have now? *Does NOT include doctor samples, discount cards, Medicare-approved drug discount cards with or without the $600 credit, free clinics, or drug discount websites

30. Original Medicare Plan Without Medigap or With Medigap Plans A - G “I have Original Medicare only, or Original Medicare and a Medigap (‘Supplement’) Policy without drug coverage.”

31. Original Medicare Plan • What to do • Watch the mail this fall for the Medicare & You handbook • Choices to make • Join a Medicare Prescription Drug Plan • Join a Medicare Advantage or other Medicare Health Plan with prescription drug coverage • Don’t enroll in Medicare prescription drug coverage • But you may pay a penalty if you join later

32. Original Medicare Plan and Medigap With Drug Coverage “I have Original Medicare and a Medigap (‘Supplement’) Policy with drug coverage.”

33. Original MedicareAnd Medigap With Drug Coverage • What to do • Watch the mail this fall for important information from the insurance company on Medigap coverage • Choices to make • Keep coverage through the Medigap policy • Join a Medicare Prescription Drug Plan after you • Modify the Medigap policy to remove drug coverage, or • Change to a Medigap policy with no drug coverage • Drop Medigap policy and join a Medicare Advantage or other Medicare Health Plan with prescription drug coverage

34. Medicare and Employer/Union Coverage, including the Military “I am a retiree and I have drug coverage through my (or my spouse’s) employer or union.”

35. Employer/Union Coverage • Medicare is working with employers to help people with Medicare keep their current coverage • Employer options • Offer coverage in place of Medicare prescription drug coverage and receive a tax-free subsidy • Offer or contract with a Medicare drug plan to provide prescription drug coverage • Provide coverage that supplements the Medicare prescription drug coverage • Pay all or part of Medicare drug plan premiums

36. Employer/Union Coverage • What to do • Watch the mail this fall for important coverage information from the plan sponsor • Contact the benefits administrator before you make any changes • Choices to make • Keep coverage offered by employer/union • Join a Medicare Prescription Drug Plan • Join a Medicare Advantage or other Medicare Health Plan with prescription drug coverage CAUTION: If you drop or lose your employer/union coverage, you may not be able to get it back

37. Medicare Advantage and Other Medicare Health Plans “I have a Medicare Advantage Plan (like an HMO or PPO) or other Medicare Health Plan.”

38. Medicare Advantage Plans(HMO, PPO, and PFFS) • What to do • Watch for a notice from your plan • Call the plan for details • Choices to make • If plan will offer drug coverage • Stay in plan and get Medicare prescription drug coverage • If plan won’t offer drug coverage • Switch to another Medicare Advantage or other Medicare Health Plan with prescription drug coverage • Switch to the Original Medicare Plan and join a Medicare Prescription Drug Plan • Don’t enroll in Medicare prescription drug coverage • But you may pay a penalty if you join later

39. Medicare Cost or PACE Plan • What to do • Call the plan for details • Choices to make • If Cost Plan with drug coverage • Get Medicare prescription drug coverage from the plan or • Join a Medicare Prescription Drug Plan • If Cost Plan with no drug coverage • Join a Medicare Prescription Drug Plan • If PACE plan, will get coverage through that plan

40. Medicare and Medicaid or Other State/Federal Assistance Programs “I have Medicare and Medicaid, and I get my drug coverage from Medicaid.”

41. Medicare and Medicaid • What to do • You automatically qualify for the extra help • Watch the mail this fall • Letter about choosing a Medicare prescription drug plan • Medicare & You 2006 handbook • Choices to make • Compare drug plan options and enroll in a plan • If not, Medicare will enroll you in one by December 31, 2005 • Starting January 1, 2006, Medicare will pay for your prescription drugs • Can switch to another plan at any time

42. Other State/Federal Assistance Programs • What to do • You automatically qualify for the extra help if you • Get help from Medicaid paying your Medicare premiums • Get Medicare and Supplemental Security Income (SSI) benefits • Watch the mail for Medicare & You 2006 handbook • Choices to make • Compare drug plan options • Find a plan that meets your needs • If no choice made by May 15, 2006, you will be enrolled on June 1, 2006 • Also applies to people who applied and qualify for extra help • Can switch once to another plan (if you get help from Medicaid paying your Medicare premiums, you can switch at any time)

43. Special Populations • State Pharmacy Assistance Program participants • People in long-term care facilities • Residents of the U.S. territories

44. State Pharmacy Assistance Programs • Provide wraparound coverage • Provide same or better coverage and save money • Reduce state costs or expand population served • Costs incurred by SPAP may or may not be counted toward out-of-pocket limit

45. Long-Term Care Facilities • Residents • Usually obtain drugs from pharmacy chosen by the facility • Can change plans at any time • Will have convenient access • Those with Medicare and full Medicaid coverage have no premiums, deductibles, or copayments

46. U.S. Territories • Each territory has its own prescription drug plan region • Each territory can develop its own extra help • Help with premiums, coinsurance, copayments, deductibles or • Provide supplemental coverage

47. Choosing a Plan • See Medicare & You 2006 handbook • To be mailed October 2005 • Read about prescription drug plans in the area • For help in choosing a plan • Visit www.medicare.gov • To get personalized information • Call 1-800-MEDICARE (1-800-633-4227) • TTY users call 1-877-486-2048 • Call the local State Health Insurance Assistance Program • Attend local community events

48. Important Dates • May 2005 • Medicare mailed notices to people who automatically qualify for extra help • Summer 2005 • Social Security Administration mails applications to people who may be eligible for the extra help • July 1, 2005 • Social Security application for the extra help available online

49. Important Dates • September 16 – November 15, 2005 • Medigap plans with drug coverage mail information to policy holders • October 13, 2005 • Begin comparing plans • www.medicare.gov • 1-800-MEDICARE (1-800-633-4227)

50. Important Dates • October 2005 • Medicare & You 2006 handbook mailed • Medicare notifies people with Medicare and Medicaid of the plan they will be automatically enrolled in on January 1, 2006, if they do not enroll on their own • Employer plans send coverage information to enrollees • November 15, 2005 • Initial Enrollment Period begins