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Is This
Something I Need?
The new
benefit may provide more coverage than your current Medicare
supplement insurance (Medigap) policy or employer-provided
prescription drug coverage. If the drug coverage through your
employer is “creditable coverage” (coverage that is as good as
the new Medicare prescription drug benefit), you should keep the
employer coverage.
Do You Have
Drug Coverage Through a Medigap Policy?
Generally, if you currently have drug
coverage through a Medigap policy, the Medigap drug coverage is
not as good as the new Medicare Prescription Drug benefit (not
“creditable”).* You may choose to keep this coverage or have the
prescription drug benefit removed from the policy and enroll in
a PDP. Another option is to select another Medigap plan and
enroll in a PDP. Medigap companies are required to send
notification to their plan members with Medigap drug coverage
advising them of their options and the consequences of their
choices.
Because the
drug benefit of a Medigap drug coverage plan is generally not
creditable, if you have one of these plans and decide to keep
your current coverage, as is, past May 15, 2006, you should be
aware of the impact that such a decision would have on any
changes in coverage that you may wish to make in the future. For
example, if the premium on your Medigap plan increases in the
future or the drug coverage that it provides no longer meets
your needs, you may someday want to change coverage and buy a
PDP. Since there is no cap on the late enrollment penalty that
can be charged, if you make such a change later than May 15,
2006 you could find that your costs for drug coverage are
higher. For example, if you decide to drop your Medigap drug
coverage two years past the May 2006 cutoff, you could face
premiums that are 24% higher. The average standard PDP coverage
is $32/month. After two years, the coverage would increase by
$7.68/month.
Enrollment
Dates
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Voluntary enrollment for Medicare Prescription Drug plans
begins November 15, 2005 and ends May 15, 2006.
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If you
enroll by December 31, 2005, the new Medicare Prescription
Drug coverage will begin on January 1, 2006.
Beware of
Late Enrollment Penalties
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If you
enroll after December 31, 2005, the coverage effective date
is delayed until the first day of the month following your
enrollment. If you wait to enroll until after May 15, 2006,
the late enrollment may result in a 1% per month penalty for
every month you delayed enrollment. There is no limit on
this monthly late enrollment penalty, so the longer you wait
after May 15, 2006 to enroll, the greater the premium can
be.
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You will
not have to pay a penalty to sign up for the Medicare
Prescription Drug benefit after May 15, 2006 if your
employer coverage is “creditable coverage” and is cancelled
in the future. Check with your employer.
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How To
Obtain the New Medicare Prescription Drug Benefit:
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By
enrolling in a stand-alone prescription drug plan.
-
By
enrolling in a Medicare Advantage plan that includes the new
drug benefit.
-
By
enrolling in one of the new Medicare Regional Preferred
Provider Organizations (PPOs) that includes the new drug
benefit.
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By
enrolling in a Medicare fee-for-service plan that includes
the new drug benefit.
You will
want to compare plans and select the one plan that best meets
your individual needs, such as, are all your prescriptions on
the plan’s list of drugs (called a formulary), can you can use
your preferred pharmacy, what are the copays for your
prescriptions and is the premium affordable. You can only have
one PDP plan.
Other
Important Things to Consider:
If you
already have prescription drug coverage you need to decide
whether you should sign up for the new Medicare Prescription
Drug benefit. There are several things to consider in making
this decision.
Protections
are in place to prohibit Medigap plans from withdrawing from the
market, leaving consumers without coverage. The new Medicare
prescription drug benefit will be offered by a variety of
organizations that are not required to stay in the Medicare
program year after year. You may have to find a new Medicare
prescription drug plan if the one you are in decides to leave
the program.
Also, PDPs
cover drugs according to specific lists called formularies. PDPs
are allowed to change formularies during the contract year, with
60 days’ notice. The drugs you take now that are on a specific
PDP formulary may not always be on the formulary. You may have
to try a different drug or file an appeal to keep taking the
same drug if the PDP changes the formulary.
Federal
assistance with premiums will be available to Medicare
beneficiaries who meet certain income requirements.
Medicare
beneficiaries may seek assistance in reviewing options for
coverage and obtaining financial assistance by contacting their
State Health Insurance Assistance Program (SHIP).
*This is not applicable in Massachusetts
and Minnesota.
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The National Association of Insurance Commissioners
is a voluntary organization of the chief insurance regulatory
officials of the 50 states, the District of Columbia and five
U.S. territories. The overriding objectives of state regulators
are to protect consumers and help maintain the financial
stability of the insurance industry.
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