In our newsletter last month, we attempted to explain the basic premise of how the Medicare Part D (Prescription Drug Coverage) would work. Since then, more specific information on the various plans has been released - which has resulted in a generalized state of confusion and a mild state of panic as people struggle to sort through the blitz of information ( and misinformation).

To review, the “basic premise” of the Medicare Prescription plan is as follows: Beneficiaries enrolled prior to Dec. 31, 2005 will begin receiving the benefit on January 1, 2006. The first $250 of drug costs comes out of the beneficiary’s pocket. From $250 -$2250 in drug costs, Medicare will pay 75% of the costs—beneficiary pays 25% of the drug costs. From $2251-$5100, Medicare pays NOTHING, beneficiary pays 100% of these costs. From $5101 and up, Medicare pays 95% of the drug costs—beneficiary pays 5%. In addition to these “deductibles”, beneficiaries will also pay $32 per month  (on average) premium for this benefit.

This “basic premise” is what Congress agreed to when it passed the plan. From here it gets really complex. The “basic premise plan” passed by Congress was then given to the private sector to develop via various competing companies. These companies had to follow the “basic premise plan” in that the benefits provided had to be equal to or better than those of the  original plan. The result was a compilation of plans that are all over the map with regard to premiums, co-pays and deductibles. Comparing one plan to the next looks almost impossible at a first glance. To protect your sanity, let me propose a method to sort through the chaos…

There are basically two types of Medicare Part D plans:  one that will stand alone and complement traditional Medicare beneficiaries (with or without supplemental insurance or employer coordinating insurance), and one that coordinates with managed care Medicare plans (Medicare Advantage plans, PPO plans and special needs plans). The first step is deciding which of these plans you want to go with. BE SURE that you are looking at the right chart. Many insurance companies have both types of plans. If you inadvertently pick a managed care plan when you meant to pick a stand alone plan with the same company, you could find that you just converted all of your benefits to an HMO without meaning to.

Once you are looking at the right plan group, you will need to start finding out which of those plans cover YOUR drugs. This is not easy to do. Medicare has produced some computer tools to help you, but this requires internet access and some level of computer savvy. Most seniors don’t have or use computers at this level. The tools can be found at www.medicare.gov  under “formulary finder” or “compare medicare plans”. If computer access is an issue, seniors can call their local SHINE volunteer (1-800-772-1213) to assist them. Plans that cover 90% of the most popular drugs are most likely to cover your drugs at one level or another (generic or brand). To be certain that your most expensive drugs are covered, you need to check the actual formularies of the various plans.

Once you have narrowed the number of plans down, you need to decide if you can afford a deductible. Deductibles range from none at all to $250. If you are living month to month, dollar to dollar, it might be best for you to choose a plan with no deductible. The trade off is that you may have to pay higher monthly premiums or higher co-pays for the drugs. You need to do the math for the co-pays on each of your drugs combined with the deductible and premiums to really know which plan is rock bottom for pricing in your specific situation. This is a very tedious and time consuming process. Right now the tools on the internet are NOT complete for doing this for you. I do expect the tools to get better down the road, but until then, beneficiaries are going to have to compile this information plan to plan on their own.

Another consideration is the pharmacy participation and locations for each plan. If you have a particular pharmacy that you use that is very important for you to stay with (i.e. they do home deliveries, etc.), you will need to find out what plans have them listed as participants. The easiest way to do this is to ask the pharmacy what plans they are going to work with—then double check that with the plan itself.

If you are totally overwhelmed by this onerous process, you may want to just consider choosing a plan with a comprehensive formulary (90 % or better of most popular drugs), low or no deductible, low premiums, and reasonable co-pays.  (The AARP endorsed United Healthcare Plan is one example). This plan may  not be the rock bottom price for your particular drugs, but even choosing a less than optimal plan for your specific situation is less expensive in the long run than not choosing at all. Remember that each year you can change plans. As time goes on, the choosing process will get more logical and methodical than it is right now. In most cases, the drug  price differences are pretty balanced. The people who need to be really concerned about their drugs being covered on a formulary are people who are taking very specialized cancer medications, HIV medications, or immunosuppressant medications (i.e. transplant patients). The average patient taking blood pressure, arthritis, diabetic, etc. medications are going to find that the formularies and average annual costs are pretty comparable. It certainly isn’t worth working yourself into a frenzy over it. Do the best that you can to make a logical decision and just go with it.

Who needs to sign up for Medicare Part D?  Basically, anyone who doesn’t currently have drug coverage as part of their insurance plan, or those who have insurance coverage that is NOT equal to or better than the new Medicare Part D plan.  The reason that this is so important is that failure to sign up in a timely manner can result in very stiff and costly penalties for sign up later. (1% per month increase in premium for every month that you didn’t sign up when you could have.)  If you choose to stay with coverage that you currently have, you will have to prove that your coverage was as good as the Part D plan to avoid the penalties if you decide to sign up later. You should receive a letter from your insurance company describing how your coverage compares to the new Medicare plan. If that letter states that your coverage is as good as or better than the new plan - SAVE THE LETTER. This will be the proof you need if you have to change plans down the road.

If you have employer co-insurance that has drug coverage, you will need to determine if that coverage is equal to or better than Medicare Part D.  You should get a letter from your insurance coverage clearly stating this. KEEP this letter. You CAN choose to add Part D to your employer coverage without having to change your employer plan. This makes sense as many plans cover dependents who aren’t Medicare eligible. Also, employer plans may not have plan options that allow you to just drop the prescription drug coverage without losing the other benefits as well. If your prescription coverage with an employer plan is equal to or better than Medicare Part D, you DO NOT have to sign up for Medicare Part D. If it is NOT equal to or better than Part D, you will need to select a Medicare Part D plan to ADD to your coverage to prevent premium penalties later.

For those of you that have traditional Medicare and supplemental policies that have prescription drug coverage (plans H through J), beware!  Your drug coverage IS NOT equal to or better than Medicare Part D. It is recommended that you choose a stand alone Medicare Part D plan and reduce your supplement policy to one that doesn’t have drug coverage. Another choice is to upgrade your supplemental plan (into new plans K and L) to include Medicare Part D options. Failure to switch out of H through J plans and add Medicare Part D coverage can result in premium penalties at a later date should you decide to convert to Medicare Part D after May 15, 2006. You cannot just add Medicare Part D to H through J plan coverage. You must choose between plans.

If you currently have both Medicare and Medicaid covering your health benefits and prescription drugs, YOU WILL STILL NEED to select a Medicare Part D plan as Medicaid is going to default to Medicare for drug coverage. The good news is that there is an assistance plan that Medicaid /Medicare beneficiary’s will automatically be enrolled in to cover deductibles, premiums, and co-pays for their drug coverage.   Medicaid will inform those beneficiaries of the plan options that they have to select from.  If they do not pick a plan, one will be assigned to them. It is important for Medicaid beneficiaries to research the available plan options and choose a plan that will cover their specific drug needs. Medicaid is going to randomly assign plan choices for those who do not submit a choice timely. It will be the Medicaid beneficiary’s responsibility to choose a plan that covers their drugs on their formulary if they don’t want to have out of pocket costs for non covered drugs from a randomly assigned plan. On the other hand, if a medication is deemed to be medically necessary but not ordinarily covered by a plan, the patient’s physician can write a letter of medical necessity to appeal for an exception for coverage. There are no guarantees for outcomes with appeals, but at least there is opportunity for some negotiation.

Even clients with Medicaid and Medicare that reside in a nursing home are going to have to choose a Medicare Part D plan as well. The plan options will be much more limited. The important fact to consider here is what pharmacies participate with the various plans. Eventually, I would expect that the pharmacies that currently provide medications to the local nursing homes will contract with all the providers to give residents choices. For this first year, however, nursing home beneficiary’s want to be sure to choose a plan that the pharmacy which supplies their medications in the nursing home works with. Bringing medications in from an outside pharmacy is a nightmare as Florida law requires very specific dose packaging with medications in this type of facility. Also, nursing home patients are more acutely ill as a general rule with almost daily medication adjustments being very common. Asking families to deal with this is just not going to work. Facilities are not allowed to suggest Medicare Part D plans to families (although many are ignoring that rule to avoid disaster in their buildings). If you have a loved one in a skilled nursing facility, please do a little homework on that person’s behalf.

If you are currently enrolled in a Medicare HMO, you are going to need to find out what the new drug coverage rules for your insurance are going to be. Many people signed up for the Medicare Advantage programs because at that time, they were the only means of getting assistance with drug costs. It is time to review your insurance if that was part of your decision making. HMO’s traditionally restrict your medical services to a network of providers that they work with. You now have numerous medication coverage options that don’t require you to have to be in an HMO to get. It may be more advantageous to many beneficiaries to disenroll from the HMO’s and return to traditional Medicare. This would mean researching supplement options or absorbing some deductible and co-pay costs, but for many the trade off is worth it to be able to have a wider variety of doctors and facilities to receive medical care from. This is the time to make the change or at least start looking into it…..

Don’t feel compelled to select plans that match companies. Just because you have a Blue Cross Blue Shield supplement doesn’t mean that there is any added advantage to signing up for a drug plan from Blue Cross Blue Shield. Select the plan that best meets your needs no matter what the sales people tell you.

Remember that the Medicare Part D plans are PRESCRIPTION DRUG plans—not supplements. These plans have nothing to do with coordinating Medicare deductibles or co-pays. You DO NOT have to change your supplement plan unless you are downgrading from a drug plan that was included in the supplement premium previously.

Try to steal yourself for the oncoming media blitz. Insurance companies (especially the HMO’s) are scrambling to get people to sign on to their plans. Many are confusing people by trying to sell their supplement plans at the same time as enrolling people for drug coverage plans. My advice is to NEVER sign up for a plan at a fair or while someone is giving you a sales pitch at your home, or on the phone. Collect information for review, and make your decision in a quiet place with a trusted person to assist you.

One of the really frustrating factors in all of this is that, while the consumer is locked into a plan for a year until the next enrollment period, the insurance companies are NOT locked into a fixed formulary for that year. I think that this is an issue that the public really needs to bring forward to our political leaders for correction. Certainly, I can understand where new drugs may need to be added over a year’s time, but it doesn’t seem right that other drugs can be arbitrarily taken on or off  a formulary during the year—especially when this is such a key part of the decision making process for beneficiary’s in choosing a plan. So while you spend the next several weeks banging your head on the wall to figure out the formulary plan that is going to cover your drugs best, keep in mind that there are no guarantees that the plan won’t change over the next year.    At least there is a requirement that notice of formulary changes have to be given to beneficiary’s at least 60 days in advance.   This gives people a chance to get letters of medical necessity from their doctors to start an appeal process.

For those people who really can’t afford the premiums, deductibles, and co-pays for the Medicare Part D, there is an assistance program that may be able to help you. Contact the Social Security Administration office (1-800-772-1213) for more information on how to apply for this assistance. There are income and asset eligibility requirements, but they are not as stringent as the Medicaid application process. For many seniors, this program will be a real godsend.

These are important dates to keep in mind:        

November 15, 2005 - Medicare Part D enrollment begins
January 1, 2006 - Medicare Part D coverage begins for those who enrolled prior to 12/31/05
May 15, 2006 - Last chance to enroll in Medicare Part D without incurring penalties.

Check with your local newspaper and TV listings for upcoming Medicare fairs. This is a great way to collect information on multiple plans all in one location.

Important contact numbers:

Elder Helpline (to contact a SHINE volunteer)  1-800-963-5337

www.medicare.gov to access plan finder tools and information on Medicare

1-800-Medicare  for all questions about Medicare

Social Security Administration Hotline 1-800-772-1213 for information about assistance program

Of course, Elder Advocates Incorporated is always available to assist you with any questions you may have!

Elder Advocates Incorporated| 407.898.9080 | www.elderadv.com