Medicare Prescription Drug Coverage Basics

What Social Workers Need to Know

What are Medicare prescription drug plans?

Beginning January 1, 2006, prescription drug coverage will be available to all Americans with Medicare. Every person with Medicare, no matter how they get their health care today or whether they have existing drug coverage, will be eligible for drug coverage under a Medicare prescription drug plan. Insurance companies and other private companies will work with Medicare to offer these drug plans. Medicare prescription drug plans will be available throughout the country, and all plans will cover both brand names and generic drugs.

Medicare prescription drug plans provide insurance coverage for prescription drugs. Like other insurance, if people with Medicare join they will pay a monthly premium and pay a share of the cost of their prescriptions. Costs will vary depending on the drug plan that is chosen.

Drug plans will vary in what prescription drugs are covered, how much someone has to pay, and which pharmacies can be used. All drug plans will have to provide at least a standard level of coverage, which Medicare will set. However, some plans might offer more coverage and additional drugs for a higher monthly premium. When a person with Medicare joins a drug plan, it is important for them to choose one that meets their prescription drug needs.

What do I tell my clients about the Medicare prescription drug coverage?

The new Medicare drug coverage is complex, but it can also be a help in reducing the costs of prescription medications. There are many ways to find additional information about the Medicare prescription drug coverage plans:

• Call 1 (800) Medicare (1-800-633-4227).
• Call the Elder Care Locator at 1-800-677-1116 or visit www.eldercare.gov
• Visit www.benefitscheckuprx.org to learn about extra help available for people with limited incomes and resources, or contact the Social Security Administration at www.ssa.gov/prescription help or 1-800-772-1213
• Contact your State Health Insurance Assistance Program. http://www.cms.hhs.gov/medlearn/cms-11180.pdf

When can people with Medicare join a Medicare prescription drug plan?

Those people who have Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance), can join a Medicare prescription drug plan between November 15, 2005 and May 15, 2006. If they join by December 31, 2005, their Medicare prescription drug plan coverage will begin on January 1, 2006. If they join after that, their coverage will become effective the first day of the month after the month they join. For example, if someone joins on April 15, his or her coverage will begin May 1. In general, they can join or change plans once each year between November 15 and December 31. If a current Medicare beneficiary does not join a plan by May 15, 2006, they may have to pay a penalty if they delay their decision to join by the May 15 th open enrollment deadline.

Is there additional assistance for people with limited income and resources?

People who qualify for extra help paying for Medicare prescription drug costs will get coverage. The amount they pay out-of-pocket depends on their income and resources. Beneficiaries with limited income and resources can apply for extra assistance through the Social Security Administration or their State Medical Assistance Office (Medicaid). For more information on who can get extra assistance with prescription drug costs and how they can apply, call the Social Security Administration at 1-800-772-1213, or visit www.socialsecurity.gov on the web, TTY users should call 1-800-325-0778.

What if someone already has prescription drug coverage from a Medigap (Medicare Supplemental Insurance) Policy?

Those who have an existing Medigap policy with drug coverage should get a detailed notice from their insurance company telling them whether or not their prescription drug coverage is, on average, at least as comparable to the standard Medicare prescription drug coverage. If their Medigap coverage is comparable, and they decide to keep their current drug coverage, they may be able to buy a Medicare prescription drug plan later without having to pay a penalty.

What if someone has a prescription drug coverage from an employer or union?

Those who have prescription drug coverage from an employer or union should get a notice from their employer or union that tells them if their coverage is, on average, comparable to the standard Medicare prescription drug coverage.

If the employer or union plan covers as much or more than a Medicare prescription drug plans the person with Medicare can…

• Keep their current drug plan. If they later join a Medicare prescription drug plan their monthly premium will not be subject to penalty, or
• Drop their current drug plan and join a Medicare prescription drug plan, but they may not be able to get their employer or union drug plan back once they disenroll.

If the employer or union plan covers less than a Medicare prescription drug plan, the person with Medicare can…

• Keep their current drug plan and join a Medicare prescription drug plan to give them more complete drug coverage, or
• Keep their current drug plan. But, if they join a Medicare prescription drug plan later, they will have to pay at least 1% more for every month they waited to join after May 15, 2006, or
• Drop their current drug plan and join a Medicare prescription drug plan, but they may not be able to get their employer or union drug plan back once they disenroll.

What if someone has both Medicare and Medicaid (dual eligibles)?

Medicare is working closely with the Social Security Administration and is expected to auto-assign people who are dual eligibles to a prescription drug plan prior to January 1, 2006 . Coverage will come from a Medicare prescription drug plan starting January 1, 2006 . Dual eligibles are permitted to switch from their auto-assigned prescription drug plan to another approved plan. However, if they disenroll from one drug plan without, at the same time enrolling in another Medicare sponsored drug plan, they may lose any government sponsored coverage for prescription coverage.

For questions concerning beneficiaries who have both Medicare and Medicaid, contact your local SSA Office or the Social Security Administration at 1-800-772-1213, or visit www.socialsecurity.gov on the web, TTY users should call 1-800-325-0778.

November 2005