Question: My client is a retiree over the age of 65. She continues to get health care benefits as part of her pension package. She is also a dual eligible, enrolled in Medicaid as well as Medicare. Does she need to enroll in Medicare Part D? What happens to her retiree health benefits if she enrolls in Part D? What happens if she decides not to enroll in Part D benefits?
Answer: As a dual eligible, your client will be automatically enrolled in a Medicare Part D plan. However, if she has ?creditable? prescription drug coverage through her retiree benefits, she can maintain that drug coverage and choose to disenroll from the Medicare Part D plan in which she was autoenrolled. If she decides to participate in Part D, she may lose her retiree prescription drug coverage or all of her retiree health benefits. If the entity providing drug benefits chooses to act as a Part D plan sponsor, contract with a Part D plan or pay her Part D premiums, the client may be able to maintain her current health care coverage and participate in a Medicare Part D plan.
Background
Beginning January 1, 2006, Medicare will provide payment for outpatient prescription drugs to thirty-five million Americans, including six million seniors and individuals with disabilities who are dually eligible for Medicaid and Medicare benefits. Authorization for this change came from the Medicare Prescription Drug Improvement and Modernization Act of 2003.1 While initiating a prescription drug benefit under Medicare, the Medicare Modernization Act (MMA) also terminates federal funding of Medicaid prescription drug coverage for drugs available to dual eligibles under the Medicare drug benefit.2
Medicare Part D, as the prescription drug benefit is called, will provide coverage of medications through private prescription drug plans. Plans will determine which drugs to cover and will have broad flexibility, beyond certain federal requirements and guidance, to choose which drugs to nclude in their formularies.3 While Medicare Part D will pay for prescription drugs, most beneficiaries are likely to have significant cost-sharing obligations, including premiums, deductibles and copayments.
Dual eligibles and other low-income Medicare beneficiaries may receive subsidies to pay many of these costs.4 The low-income subsidy, referred to by Centers for Medicare and Medicaid Services (CMS) as ?extra help,? will pay most of their premiums and deductibles. However, low-income beneficiaries will have to pay copayments out-of-pocket.
Analysis
Creditable Coverage: Definition and Types
Individuals who are eligible for Medicare Part D benefits and who also have other sources of prescription drug coverage need to determine if their current prescription drug benefits are considered ?creditable,? or as good as the new Medicare prescription drug benefit.
According to the Medicare regulations, coverage is ?creditable? if
the actuarial value of the coverage equals or exceeds the actuarial value of standard prescription coverage under Medicare Part D, as demonstrated through the use of generally accepted actuarial principles and in accordance with CMS actual guidelines. 5
The following types of prescription drug coverage have been deemed to be ?creditable? for Medicare Part D purposes.6 They include
- a prescription drug plan or MA-PD plan7
- Medicaid coverage
- qualified group health plan, including Federal Employee Health Benefits (FEHB)
- qualified retiree drug plan
- state pharmaceutical assistance program (SPAP)
- veterans prescription drugs coverage
- prescription drug coverage under a Medicare supplemental policy (Medigap)8
- military coverage, including TRICARE
- other coverage deemed appropriate by the Secretary of Health and Human Services.9
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