Medicare Part D Update

When can you expect to receive more Information? In our last Newsletter, we noted that we were waiting for more details to emerge from the Centers for Medicare and Medicaid Services (CMS) so that we could share the most current information with you. All Medicare Part D plans were to have been approved by September 14, 2005. Unfortunately, many of the details surrounding the specific Medical Part D plans are still not available. However, the good news is that the specific details surrounding the individual Medicare Part D plans should become available within the next week. Starting Saturday, October 1st, 2005, insurance companies offering Medicare Part D plans will begin providing information on their individual Medicare Part D Prescription Drug plans to the general public. But PLEASE NOTE, as mentioned previously, enrollment into a Medicare Part D plan does not actually begin until Tuesday, November 15, 2005. No Medicare Part D applications may be taken prior to this November 15 date. :: Top What if I wait and purchase a Medicare Part D plan after May 15, 2006? In our last Newsletter we added a few more comments about the 1% premium "penalty" for enrollment after the May 15, 2006 deadline. We have also been corresponding with many of you about the possible "costs" of late enrollment. As we noted in our eMail responses, much of the information surrounding the Medicare Part D plans is still not available, however in this Newsletter, let us focus on two factors that (based on the annual Open Enrollment period information) could be theoretically effected by late enrollment: The Amount of the Premium Penalty When Your Medicare Part D Coverage Begins For purposes of explanation, let us use an example/fictitious Medicare Part D beneficiary: "Thomas" who is currently eligible for the Medicare Part D plans and does not have any other creditable prescription drug coverage. - The Amount of the Premium Penalty. Although it still is not 100% clear, it appears that if our Medicare beneficiary Thomas (who does not fall within one of several special classes defined by CMS) waits until after the May 15, 2006 Open Enrollment deadline, he may be subject to a minimum of a 6% premium penalty because the next annual Open Enrollment period (or Annual Coordinated Election Period) does not begin until November 15, 2006 and runs until December 31, 2006. Therefore, according to some sources, after the May 15, 2006 deadline, Thomas cannot enroll in a Medicare Part D program until Open Enrollment begins again on November 15, 2006. - When Your Medicare Part D Coverage Begins -- In addition to the increased premium penalty, it is possible that if Thomas waits until after May 15, 2006, not only will he be subject to several months of the 1% monthly premium penalty, but in theory Thomas also may not receive any Medicare Part D coverage before January 1, 2007. As noted above, it appears from the existing guidelines that if a Medicare Beneficiary misses the end of the Open Enrollment period (May 15, 2006) then someone like Thomas may not be able to enroll in a new plan until the start of next annual Open Enrollment period (starting November 15, 2006). Further, although enrollment on November 15, 2006 halts the 1% premium penalty, it appears as though the newly selected plan will not take effect until January 1 of the next year (in this case 2007). In other words, if a Medicare beneficiary waits until after May 15, 2006 to enroll in a Medicare Part D plan, they may not be able to receive Medicare Part D coverage until January 1, 2007. As noted previously, the details surrounding the Medicare Part D program are still not 100% clear and further explanations are expected in the next days. In Summary - If our assumptions are correct, then our example Medicare beneficiary Thomas could not apply for Medicare Part D coverage on, for example, June 15, 2006 and expect to receive immediate Medicare Part D coverage with only a 1% Premium Penalty. Instead, it is more likely that he would expect a minimum of a 6% Premium Penalty and his Medicare Part D coverage would not begin until January 1, 2007. :: Top All existing Medicare-Approved Drug Discount Cards expire on May 15, 2006 As noted in an earlier Newsletter, as the Medicare Part D Prescription Discount plans are introduced, existing Medicare-Approved Drug Discount Cards will be phased-out. If you enroll in a Medicare Part D plan prior to May 15, 2006, your old Medicare-Approved Drug Discount Card will expire on the date your Medicare Part D coverage begins. However please note, all Medicare-Approved Drug Discount Cards will expire on May 15, 2006. :: Top What is a Medicare Part D plan's "Formulary"? A Medicare Part D plan's "Prescription Drug List" is also called the Medicare Part D plan's "Formulary". In the last Newsletter, we discussed that every therapeutic class of prescription drugs will be covered under the Medicare Part D prescription drug plans. However, insurance companies may provide Medicare Part D plans covering different prescription drugs. In other words, it is expected that not every plan will cover every prescription drug. For example, it may be possible that for a higher premium, a Medicare beneficiary will be able to purchase a plan with a more comprehensive list of prescription drugs. However, specific details covering the Formularies are not yet available. :: Top Can a Plan's "Formulary" change? Yes, a Medicare Part D plan's list of covered prescription drug or "Formulary" can change with 60 days prior notice to the Medicare Part D plan's participants or members. :: Top What is the "Donut Hole"? The "Donut Hole" is a term used to describe the gap in the Medicare Part D plan coverage where the Medicare Part D plan participant (i.e. you) must pay 100% of the cost for your prescription drugs. The Donut Hole is the portion of your prescription drug costs from $2,250 to $5,100 as illustrated on our Web Sites under: :: Out-of-Pocket Cost Estimator Some people have considered the Donut Hole as a second deductible before the plan's "catastrophic coverage" begins. In other words, the CMS model Medicare Part D plan has a $250 deductible (100% paid by the individual) and then 75% coverage from $251 until $2,250 (25% paid by the individual). Then, as noted, after $2,250, the individual pays again 100% up to $5,100. After $5,100 the individual pays only 5%. It appears, that not every plan will follow the CMS model and may actually provide additional coverage to close up the "Donut Hole" so that the individual would not face the second 100% out of pocket expenses. However, the actual details for individual plans have not yet been released and we will need to wait until after the first of October to see what plans are available in the specific regions. :: Top How will I keep track of my prescription drug costs? Many people have written eMails to us questioning how they will keep track of their personal prescription drug expenditures. Each Medicare Part D plan approved by CMS is required to account for how much each of their plan participants has spent on prescription drugs. Each Medicare Part D plan may have various ways to track your personal prescription drug costs, including monthly written statements showing how much you have spent and your expenses in relation to "catastrophic coverage" (which starts with over $3,600 in out of pocket expenses). :: Top Not yet signed up for our FREE newsletter? Sign-up here! 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