Retirement Insights

By Karen Gilgoff

Preparing for a recent meeting of CSEA Retiree Local 910 in New York City, Pres. Barbara Rustin focused on the main topic for the day: the new Medicare "Part D" drug benefit. "It's so confusing," she said. "Retirees are getting bombarded with information, and it's really hard for us to sort it all out."

Part D benefits begin in January for those who are Medicare-eligible and who voluntarily sign up with one of the many insurance companies selling Part D drug plans. Most of Rustin's members won't need to buy Part D. Thanks to their union, they already enjoy drug coverage that's employer-paid (in this case, by the state of New York). Nevertheless, they're getting lots of mail touting Part D plans from Medicare, Social Security, HMOs and other private insurers.

The law creating Part D passed Congress in 2003, despite strong opposition from most retirees. AFSCME and other organizations opposed the program's significant coverage gaps, lack of cost containment and availability only from private insurers rather than Medicare itself. (Incredibly, the new law bars Medicare from using its huge buying power to negotiate lower prices with drug companies.) Billions that could have improved Part D coverage were instead earmarked for insurance and drug companies.

Retiree leaders like Rustin started hearing from confused members last summer, when thousands of seniors got official letters saying they might be eligible for Medicare's "Extra Help" — a program that covers Part D premiums and co-pays for limited incomes. To qualify, seniors must have incomes below $14,335 (singles) or $19,245 (couples).

More confusion arose on Oct. 1, when competing private insurers started marketing their plans with TV ads, direct mail and phone solicitations.

Betty Flanagan — president of Philadelphia Retiree Chapter 47 and vice-chair of the national AFSCME Retiree Council — notes that a recent chapter meeting dedicated to the subject of Part D brought out twice as many members as usual. "They all want to know what's going on," she says. Here are some tips that may help:

• Drug coverage paid by an employer, union or pension fund — generally better than Part D — probably won't change. If you have this coverage, don't buy Part D unless your plan tells you to. Call your plan sponsor if you have questions.
• Employer/union plans where retirees pay most of the premiums are allowed to coordinate drug benefits with Part D. This could reduce the amount of premiums retirees currently pay. Call your plan sponsor to find out more.
• Employer/union plans must have sent a notice to retirees by Nov. 14 advising that their plan provides "creditable coverage." This means the plan's benefits are at least as good as Part D's. If you get this notice, you won't have to pay a premium penalty if you decide to buy Part D in the future. Keep the notice with other important papers.
• Enrollment for 2006 Part D plans started Nov. 15, 2005, and extends to May 15, 2006. As a current Medicare-eligible retiree, you will pay a penalty (waived if you have "creditable coverage") of 1 percent for every month of delay.
• When comparing Part D plans, consider each plan's list of drugs (its "formulary"). Not all plans will cover the drugs you take and you may have to switch brands (Lipitor to Zocor for high cholesterol, for example). Also compare premiums, deductibles and co-pays; while most plans will follow the standard benefit, others will vary from the design.

Even though the Part D benefit is far from comprehensive, it will provide some basic benefits for seniors who lack good drug coverage now. For more information on Part D (including "Extra Help," plan comparisons and personal counseling from your state Health Insurance Assistance Program), call the Medicare Helpline at 1-800-633-4227 or log ontoMedicare's website.