The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established a prescription drug program for people with Medicare. The Act established Medicare Part D, which is a federal program to subsidize the cost of prescription drugs for Medicare beneficiaries. In order to receive the benefit, eligible individuals must enroll in a standalone Prescription Drug Plan or the Medicare Advantage Plan. All Medicare prescription drug plans will provide at least a standard level of coverage set by Medicare. Some plans might also offer more coverage for a higher monthly premium. Individuals covered by both Medicare and a group health plan should carefully evaluate their prescription drug needs to determine when and whether to purchase additional coverage under a Medicare Prescription Drug Plan.
That decision will depend heavily upon whether or not your group health plan offers prescription drug benefits that are “creditable” under Medicare. To be considered “creditable”, the prescription drug benefit of your health plan must be expected to pay, on average for all plan participants, at least as much as the standard Medicare prescription drug coverage would pay.
The rules and potential penalties vary for creditable and non-creditable coverage. Please refer to your Summary Plan Description or other Medicare Creditable Coverage Notice to confirm whether your plan is Creditable or Non-Creditable under Medicare.
For Plans with Creditable Prescription Drug Coverage
Because your existing coverage is on average at least as good as the standard Medicare prescription drug coverage, you can keep this coverage and not pay extra if you later decide to enroll in Medicare prescription drug coverage, so long as you apply for Medicare prescription drug coverage within 63 days of terminating your creditable group sponsored plan. Each year, you will have the opportunity to enroll in a Medicare prescription drug plan between October 15th and December 7th. However, if you lose your current creditable prescription drug coverage, through no fault of your own, you will also be eligible for a two (2) month Special Enrollment Period to join a Medicare drug plan. If you drop your employer sponsored coverage and enroll in a Medicare prescription drug plan, you may not be able to get the employer sponsored coverage back later. You should compare your current coverage, including which drugs are covered, with the coverage and cost of the plans offering Medicare prescription drug coverage in your area.
Information about your employer’s group health plans and prescription drug benefits is available in your health plan certificate. In addition to prescription drugs, your current health plan coverage pays for other health expenses, and you may lose your current health and prescription drug benefits if you choose to drop your employer sponsored coverage in favor or enrolling in Medicare and a Medicare prescription drug plan.
For Plans with Non-Creditable Prescription Drug Coverage
Because your existing coverage is, on average for all plan participants, notexpected to pay out as much as the standard Medicare prescription drug coverage would pay, you need to make some important decisions regarding your prescription drug coverage. Most likely, you will get more help with your drug costs if you join a Medicare drug plan than if you only have prescription drug coverage from the employer plan. This also is important because it may mean that you may pay a higher premium (a penalty) if you do not join a Medicare drug plan when you first become eligible.
Starting January 1, 2006, prescription drug coverage became available to everyone with Medicare through Medicare prescription drug plans. All Medicare prescription drug plans provide at least a standard level of coverage set by Medicare. Some plans might also offer more coverage for a higher monthly premium.
If you did not purchase Medicare prescription drug coverage or equivalent coverage before May 15, 2006, you may have to pay a higher premium if you join later. You will pay that higher premium as long as you have Medicare prescription drug coverage.
For all Medicare Eligible Individuals
Periodic Notice. Medicare eligible individuals are entitled to notice regarding their rights under Medicare before each annual enrollment period. You will also receive notification if the prescription benefit under your group health plan ends or changes so that is no longer creditable or becomes creditable. You may request a certificate of Medicare prescription drug plan creditability from the plan sponsor at any time.
Premium Surcharge for Late Enrollment. If you go 63 days or longer without prescription drug coverage that is at least as good as Medicare’s prescription drug coverage, your Medicare base beneficiary premium will go up at least 1% per month for every month that you did not have that coverage. You will have to pay this higher premium as long as you have Medicare prescription drug coverage. For example, if you go nineteen months without coverage, your premium will always be at least 19% higher than what most other people pay. In addition, you may have to wait until the following October to join.
Annual Enrollment Period for Medicare Prescription Drug Plans: Generally, you can only join a Medicare prescription drug plan between October 15 and December 7 of any year. This may mean the number of months you have to wait for coverage will be longer, which could make your premium higher.
Group Health Plan Considerations: Your current employer-sponsored coverage pays for other health expenses in addition to prescription drugs. You will still be eligible to receive all of your current health and prescription drug benefits if you choose to enroll in a Medicare prescription drug plan. When you make your decision, you should also compare your current coverage, including which drugs are covered, with the coverage and cost of the plans offering Medicare prescription drug coverage in your area.
For Additional Information Regarding Available Medicare Prescription Drug Plans
Detailed information is available in the “Medicare and You” handbook. Medicare eligible individuals will get a copy of the handbook in the mail every year from Medicare. You may also be contacted directly by Medicare prescription drug plans. You can also get more information about Medicare prescription drug plans from these places:
Call your State Health Insurance Assistance Program (see your copy of Medicare & You handbook for their telephone number)
Call 1-800-MEDICARE (1-800-633-4227) or TTY 1-877-486-2048.
Extra Financial Help Available
For people with limited income and resources, extra help paying for a Medicare prescription drug plan is available. Information about this extra help is available from the Social Security Administration (SSA). For more information about this extra help, visit SSA online at www.socialsecurity.gov, or call 1-800-772-1213 (TTY 1-800-325-0778).