Medicare PART D
Prescription Drug Coverage

General Introduction

The Medicare Modernization Act (MMA) of 2003 established Medicare Part D prescription drug coverage for all people entitled to or enrolled in Medicare Part A or B. Participation in the Part D program is optional.

Medicare Part D is funded by general revenues, beneficiary premiums and state payments. It is a new outpatient prescription drug benefit administered by private insurance companies under contract with the Centers for Medicare and Medicaid Services (CMS). Medicare pays private insurance plans to provide standard and enhanced drug benefit. In addition to Part B premium, there is a separate monthly premium for Part D. Premiums vary greatly among plans as do the drugs that are covered and the amounts charged for prescriptions. The MMA law established the following process for enrolling in Part D plans.

Medicare Part D Enrollment Periods

Automatic Enrollment

Persons receiving both Medicare and Medicaid who fail to join a plan are assigned a Part D plan by Medicare. If the Medicare selected Part D plan does not meet their prescription needs, dual eligibles are permitted by MMA law to change plans on a continuous or monthly basis. Persons receiving Medicare Part B premium payment assistance are also automatically enrolled in a Part D prescription drug plan and are allowed to continually change.

Initial Enrollment Period

People new to Medicare, at age 65 or above can join a Medicare drug plan during an initial enrollment period. Their initial enrollment period is three months before age 65 or Part B enrollment to three months after age 65 or Part B enrollment for a total of seven months. Disabled beneficiaries initial enrollment period is three months before and three months after the 25 th month of disability. A late enrollment penalty of 1% per month may be applied to those who do not enroll during the initial enrollment period. A penalty exception is allowed for persons who did not enroll because creditable coverage was maintained through active employment.

Special Enrollment Period

The special enrollment period (SEP) allows beneficiaries the option to join or switch plans when certain situations occur. The following are some of the exceptions that allow a Special Enrollment Period:

• Moved out of a skilled nursing facility
• Moved into a skilled nursing facility – after 30 days in the facility, the patient can change plans as often as once a month.
• Losing coverage from a former employer
• Moved out of plan service area
• Approved for “Extra Help”
• Approved for or belong to a state pharmacy assistance program (GAPS).
• Approved for a Medicare Savings Program such as Qualified Medicare Beneficiary (QMB) and Specified Low-income Medicare Beneficiary (SLMB). If eligibility for these programs is terminated, there is a three months window to enroll in a new drug plan.

The Part D SEP, in most situations, is limited to 63 days beginning on the day the situation transpires. If coverage is not secured within this timeframe, a penalty may be applied at the next opportunity to enroll which is the annual election period.

Annual Election Period

The annual election period (AEP) for Medicare prescription drug plans is November 15 through December 31 of each year. During this period, any beneficiary who does not qualify for continuous open enrollment is provided one opportunity to drop or switch plans. To prevent enrollment in more than one plan at a time, joining a new plan should automatically cancel the previous plan. The effective date of the new plan is January 1 of the following year. Also during this period, any beneficiary who did not previously join a plan can enroll but may incur a late enrollment penalty.

Enrollment Resources

Below are several ways to compare plans and/or enroll in a Medicare Part D plan:

• Medicare web site at www.medicare.gov
• Contact the SHIP or I-CARE program that serves the region of the state that you live in to get one-on-one help from an I-CARE counselor.
• Call 800 MEDICARE at 800 633-4227 for assistance with plan comparison, ordering publications, appeals or enrollments. This is the Center for Medicare & Medicaid Services (CMS) hotline that provides assistance 24 hours a day, including weekends.

Before contacting MEDICARE or an I-CARE Counselor, make sure and have the following items on hand:

• Your name, address, zip code, date of birth and telephone number
• Your Medicare card or Medicare number and the effective date of your Part A or B coverage
• A list of your medications with dosage and strength

Medicare Part D Costs

Just as in Original Medicare, beneficiaries are responsible for part of the cost of the prescription drug plan. Some beneficiaries must pay Medicare Part D premiums, deductibles and copays. Medicare Part D premiums, deductibles, and copays are adjusted yearly. Options such as prior approval, drug list with generic and brand drugs have an impact on premiums, deductibles and copay. The 2007 Part D premium for South Carolina ranges from $16.60 to $104 monthly. Premium can be paid through withholding from Social Security payment and electronic funds transfer from financial accounts to Part D plans. The 2007 Part D deductible range from $2000 to $2400 yearly and the yearly copay vary greatly from plan to plan.

Premium, deductible and copay assistance is available for beneficiaries with limited income and resources. MMA adjudicated federal funds referred to as “extra help” to the Social Security Administration (SSA) to pay Medicare Part D cost for some beneficiaries. Dual eligibles and persons receiving Part B premium assistance from the Medicare Savings Program are deemed eligible for “extra help” and may not need to apply. Those deemed eligible for “extra help” with income from 100% to 135% of the Federal Poverty Level (FPL) are required to pay small copays ranging from $1 to $5 per prescription. Consumers approved for partial “extra help” are at the 135% to 150% of the FPL. They must meet a $50 deductible and pay a15% copay per prescription. Dual eligible consumers residing in nursing facilities are exempted and not required to make copays.

The annual income limit to qualify for “extra help” is $14,700 or $1,225 monthly for an individual and $19,800 or $1,650 monthly for a couple. Assets must be lower than $11,710 for an individual and $23,410 for a couple. The asset test does not apply to duals with income below 100% of poverty.

“Extra Help” applications can be submitted through the SSA website or mailed to the local SSA office. Only original extra help applications are accepted, photo copies are disregarded.

Medicare Part D Coverage

Medicare prescription drug coverage is insurance that provides both brand-name and generic prescription drugs at participating pharmacies. Medicare prescription drug coverage offers protection for people who have very high drug costs. All people with Medicare are eligible for coverage, regardless of income, resources, health status, or current prescription expenses. Persons enrolled in a Part D plan are provided a welcome packet with plan benefits and a drug card.

Certain drugs such as Barbiturates for nervousness and Benzodiazepines for anxiety are not covered by the Medicare program but may be covered by the Medicaid program. All Medicaid only individuals will continue to receive drug coverage from the Medicaid program.

It is important for beneficiaries who travel often or live in more than one state to enroll in a plan offering national coverage. Beneficiaries should compare plans to make a selection based on drug coverage needs, pharmacy convenience and affordable premiums. In South Carolina, 16 Medicare Advantage companies offer 46 different MA plans with drug coverage; 26 PDP companies offer 59 stand-alone drug plans; and three companies offer 9 different types of Special Needs Plans. All plans must offer the following standard benefits, but can offer more:

2007 Basic Medicare Part D Plan Structure

Many drug plans do not provide coverage in the donut hole phase, but some plans do. During the GAP period, fifteen PDP’s offer generic drug coverage and one plan offer all formulary drug coverage. Some senior citizens may qualify for the state of South Carolina pharmacy assistance program to help pay for coverage during the gap.

State Pharmacy Assistance Program

The MMA law permits states with pharmacy assistance program to participate in Part D by purchasing supplemental benefits through Part D plans . Beginning January 1, 2006 , the Gap Assistance Pharmacy Program (GAPS) for senior citizens was implemented by South Carolina Department of Health and Human Services (DHHS) to operate in conjunction with the Medicare Part D prescription drug program. Since one of the features of Medicare Part D is the existence of a coverage gap for some Medicare beneficiaries, the GAPS program is designed to provide assistance with prescription costs during the coverage gap. Eligible seniors should only pay approximately 5% of their prescription costs during the coverage GAP.

More information about GAPS and an application for the program can be found on the web site for the South Carolina Department of Health and Human Services (DHHS), or call DHHS toll-free at 1-888-549-0820.

Medigap Amendments

No new Medigap policies with drug coverage can be sold or issued on or after January 1, 2006. Companies must modify Medigap plans H, I and J to exclude drug coverage. Existing Medigap policies will be renewed on or after January 1, 2006 to remove drug coverage for individuals who are Part D enrollees. Only individuals who are not enrolled in Medicare Part D will be allowed to maintain Medigap policies with prescription drug coverage.

Employer Health Plans

Retiree Health Coverage

Retiree health care coverage for Medicare beneficiaries that includes prescription drug benefit is usually regarded as creditable coverage. The plan must provide notification of the creditable coverage status to retirees. If the retirees plan offers creditable coverage, enrollees can decide to keep the coverage or enroll in a Part D plan without a penalty. If the retirees plan does not offer creditable coverage, consumers must enroll in a Medicare Part D plan or face the Medicare late enrollment penalty.

TRICARE and VA

TRICARE and VA health care for Medicare enrollees is considered creditable coverage. Notification of the creditable coverage status is disseminated to consumers. TRICARE and VA consumers are not assessed the 1% penalty, if they decide later to enroll in a Medicare Part D plan.