f you still have questions about the government's new prescription drug benefit, you're not alone.
As the Jan. 1 effective date loomed, a special presentation on Medicare Part D —as the drug benefit is known — drew particular interest from patients and caregivers at the American Academy of Neurology (AAN) “Neurology Expo.” The attendees at the Georgia World Congress Center in Atlanta last fall kept the presenter from the Centers for Medicare and Medicaid Services (CMS) on her toes with questions ranging from deductibles to doughnut holes.
These questions and answers heard at the Expo and countless similar sessions across the country may help demystify the new plan.
What exactly is Medicare Part D?
Think of it is as insurance against prohibitive prescription drug costs for people who are eligible for Medicare. That includes most people who are at least 65 years old and younger individuals with disabilities or end-stage kidney disease. “Dual-eligibles,” who qualify for Medicaid as well as Medicare, can also enroll.
Essentially, the program is designed to limit out-of-pocket spending when drug expenses approach the stratosphere. “We see it as peace of mind for people who could get sick,” says CMS public affairs specialist Barbara Cebuhar.
How does the plan work?
There's a $250 deductible. Medicare then pays 75 percent, or up to $1,500, of the next $2,000 in drug expenses. So, of the first $2,250 in drug costs, you're responsible for $750.
Then comes the so-called doughnut hole — a large gap in coverage between $2,250 and $5,100 of drug costs. People whose drug costs exceed the first $2,250 must pay the next $2,850 entirely out of pocket. So, of that first $5,100 in costs, most beneficiaries will have to ante up $3,600.
For example, if Mrs. Smith takes medication that costs $2,250 per year, she'd pay $750: the $250 deductible plus $500 as her share of the next $2,000. If she has another $2,850 in drug costs, she'd also pay all of that for a total of $3,600. If her annual drug costs were $4,000, she'd be out of pocket $2,500 ($750 of the first $2,250 plus all of the remaining $1,750).
Of course, these figures don't include the monthly premiums charged by the prescription drug plan (PDP) that you choose. Those vary widely from state to state and plan to plan, but are expected to average $32 to $37.
Relief finally comes when your annual drug costs exceed $5,100. From that point on, you would pay only a $2 copayment for every generic drug, a $5 copayment for every brand-name drug or 5 percent of each prescription, whichever is higher.
So if Mrs. Smith's annual costs were $7,500, or $2,400 above that $5,100 threshold, she would pay $3,720: the first $3,600 plus 5 percent of the additional $2,400, or $120 — assuming that figure is higher than the copays of $2 or $5 per prescription. “Most Medicare beneficiaries need five to seven medicines, which would put them above the $3,600 annual threshold,” Cebuhar says.
What if I receive both Medicaid and Medicare?
As a dual-eligible, you won't have to worry about premiums, deductibles or doughnut holes. Your only out-of-pocket expenses will be a $1 copayment for generic drugs and a $3 copayment for brand-name drugs.
Does the government assign me to a PDP?
In most cases, no. Each state has a variety of PDPs to choose from. They range from inexpensive programs offering bare-bones coverage to costlier plans with lots of options.
The one exception is if you're a dual-eligible. You'll be assigned to a PDP in your state, and instead of Medicaid paying for your drugs, Medicare will pick up the bill for your premiums as long as they don't exceed the average for PDPs in your state. You can choose a more expensive plan, but you'll have to pay the difference between the average and the actual premium cost.
You can learn more online about the programs in your state by going to the CMS home page, www.cms.gov, and clicking on “Medicare Prescription Drug Plan Finder.” Have handy your Medicare claim number and the date on which you became eligible for Medicare Part A or Part B.
My plan's administrators insist that I start with a different drug than my doctor has prescribed. I want to stay with what he recommends. What can I do?
The government requires every PDP to have an appeals process, says Mike Amery, legislative counsel for the AAN. By appealing, you're asking for your drug to be included in the plan's formulary, or list of approved drugs. Your doctor will have to state that the drug is medically necessary and that none of the other drugs currently in the formulary will suffice. Your doctor's help also will come in handy to ensure that all the necessary information is included and that the appeal is submitted properly.
If you're unhappy with your PDP, you can switch to another one, with no penalty, during the annual open-enrollment period that runs from Nov. 15 through Dec. 31.
How do I learn which drugs are included in a PDP's formulary?
You can find this information on the CMS website. Click on the “Formulary Finder” and you'll be taken to a site that asks the name and dose of the drug you're interested in. Fill in that information, click “Continue” and you'll be taken to a list of all the PDPs in your state that have the product in their formularies.
What if I don't have access to the Internet?
CMS has a special round-the-clock phone number, 1-800-MEDICARE, where operators can answer questions about Medicare Part D and help you find PDPs in your state.
My employer's health plan includes great drug benefits. Must I change to Medicare Part D even if I don't want to?
Programs with drug coverage at least as good as that offered by the Medicare plan are called “creditable,” says Cebuhar, and “we encourage you to stay with those” rather than signing up for Medicare Part D. In fact, CMS is offering subsidies to employers who offer creditable drug benefits to their workers and retirees. Veterans Administration and Tri-Care are considered creditable coverage.
Won't I have to pay a penalty if I sign up for Medicare Part D after a certain deadline?
Anyone currently eligible for Medicare should sign up for the drug benefit by May 15, says Amery.
If you sign up later than that, you'll be subject to a penalty of 1 percent of the monthly premium for each month you delay, and that penalty remains in effect permanently. So if you wait until Oct. 15 to sign up for a plan that costs $32 a month, you would pay a monthly penalty of $1.60 (1 percent of $32, or 32¢, times the five delayed months) for as long as you stay with the program.
People currently ineligible for Medicare must sign up for Part D benefits no later than three months after they become eligible, through age or illness, in order to avoid the penalty. However, these penalties don't apply if you're already in one of the creditable plans described above and decide to switch to the Medicare program at some later date.
My income is only $900 a month, and my only asset is a $10,000 CD that I'm trying not to touch. How will this program help someone like me?
Extra assistance is available for some people with limited incomes, says Rhonda Hunter, the CMS Medicare outreach representative who gave the presentation at the AAN's Neurology Expo. In general, single people with assets of less than $11,500, and married couples with assets of less than $23,000, are exempt from the premiums, deductibles and all copays except a $2 copay for generic drugs and a $5 copay for brand names.
The rub is, these figures refer to total assets, so that CD might disqualify you. What's more, different rules apply depending on your exact income and assets. So it's best to check with your PDP's Medicare administrator to learn what kind of assistance you're eligible for, if any.