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The New Medicare Rx Benefit: Ask Questions Before BuyingOn November 15, Medicare participants started signing up for the new Part D prescription drug plans, which are being sold by private insurance companies. Part D won't be an appropriate choice for all retirees, however — including most retirees who already have drug coverage through former employers, union health & welfare funds, or pension funds. So, before deciding if Part D is right for you, get the answers to the following questions. Q If you're a retiree who currently has group drug coverage sponsored by an employer, union or pension fund, will that coverage change in relation to Part D? A In most cases, there will be no changes and retirees won't have to take any action unless the plan sponsor says you should. IF you haven't heard from your plan sponsor about Part D, call them right away to find out your status under your current drug plan. Q If you currently have group drug coverage, does your plan provide better benefits than Part D plans? A You'll want to compare premiums, deductibles and co-pays to decide. In most cases, an employer, union or pension fund plan will provide better coverage than Part D (which has major coverage gaps), particularly if the group plan pays for most of the premium costs. If that's the case, you'll probably want to stay with your current plan. Q If you already have drug coverage through one of these group plans, but drop it to enroll in Part D, will you have to give up all your group-plan's health benefits in addition to its drug coverage? If you leave now, but want to rejoin your group plan in the future, will you be allowed to go back? A Contact your plan sponsor to get the answers before considering Part D plans. It could prevent a big mistake. Q If you currently have group coverage, does the drug benefit (employer/union/pension fund, Medigap, VA, Military TriCare, etc.) provide "creditable coverage" under the Medicare law? A Creditable coverage means the benefits are at least as good as those in Part D. If your plan meets this standard, you won't have to pay a penalty if you don't join Part D in your initial sign-up period (Nov. 15, 2005 to May 15, 2006), but want to join at a future time. If your plan's coverage is "creditable," the plan should have sent you notification by now. Retirees who've received no notice and are unsure of their status should call their plan sponsor. Q If you participate in one of the three Medigap plans that cover prescription drugs (plans H, I or J), how will your plan be affected by Part D? A Medicare says you can remain in your Medigap plan, but there are two big drawbacks to staying put: (1) new retirees won't be allowed to join, which means premiums will increase rapidly as the covered group ages; and (2) Medigap drug plans provide even less coverage than Part D plans. So, be sure to call your Medigap insurer and find out about some of the new Medigap options that are designed to work with Part D. You'll probably end up with better benefits than you have now. Q Do you think you may be eligible for Medicare's "Extra Help" program for beneficiaries with lower incomes? A You may qualify if your annual income is below $14,355 for a single person or $19,245 for a couple (an assets limit also applies). Medicare Extra Help could pay most of your cost sharing in a Part D plan, making a limited drug benefit (Part D has lots of out-of-pocket costs) much more comprehensive. You can get an application by calling the Social Security Administration at 800-772-1213. Q What do retirees need to know when comparing different Part D plans? A Retirees need to look at the list of drugs each plan covers (a plan's "formulary") because covered drugs will vary. A particular plan may not cover all the drugs you take or do business with the pharmacy you prefer. Although Medicare has determined a "standard benefit," plan designs will vary and co-pays may differ. So, it's important to study and compare plans carefully before you buy. Q What's the penalty if I don't sign up for Part D now, but decide to sign up in the future? A If you don't have "creditable coverage" from a group plan and don't join a Part D plan during your initial eligibility period (November 15, 2005-May 15, 2006), you will pay a premium penalty if you decide to sign up for Part D in the future. In this case, premiums will be 1 percent higher for each month you delay signing up beyond the initial period. (Retirees will avoid the penalty if they've been told they have "creditable coverage" by their group plan.) Information Resources: In October, every Medicare beneficiary received a copy of the official Medicare & You 2006 handbook, with basic information on Part D. Here are some other resources:
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