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Drug Benefit Due Soon

The prescription drug benefit enacted as part of the 2003 Medicare law is scheduled to go into effect in January. AFSCME strongly opposed the law's passage and has been critical of the drug benefit — known as Medicare Part D — due to its significant coverage gaps, lack of cost-containment measures and availability only through private plans rather than Medicare itself. Despite our misgivings, AFSCME wants members to know that the benefit may provide limited help to some retirees.

EMPLOYER SUBSIDY. If you participate in an employer-paid drug plan, your employer (or union health and welfare fund) will be eligible for a small subsidy to help meet the soaring cost of comprehensive drug coverage. AFSCME fought for the employer subsidy in the final legislation in hopes it would stop employers from continually shifting costs to retirees or from canceling retiree coverage altogether. To qualify for the subsidy, your employer won't have to make any changes in your drug plan, but must apply to Medicare by Sept. 30.

A few employers may decide to forgo the subsidy and, instead, offer the new Medicare Part D drug benefit to retirees. They can do this by wrapping additional benefits around Part D — eliminating the Part D coverage gaps in much the same way employers now fill in gaps under Parts A & B.

AFSCME is working with employers across the country to help devise the most desirable arrangements for our retiree members, including those retirees with group coverage who are required to pay the full premium. If you have questions about how your employer intends to handle Medicare Part D, don't hesitate to call your employer, your union benefits coordinator (or health and welfare fund), or your retiree chapter for more information.

ON THE MARKET. Retiree members who don't enjoy employer-paid benefits may want to buy Part D from private insurers (premiums will average $35 per month). While the coverage isn't generous, it could save a few hundred dollars a year for moderate users of prescription drugs (a more generous "catastrophic" benefit will be triggered when a senior exceeds $5,000 in annual drug bills).

Private insurers start marketing their drug plans on Oct. 1. At that point, seniors can expect to get lots of sales pitches (by mail and phone) from competing plans — making for a very confusing selection process.

Those interested in buying a plan will have from Nov. 15, 2005 to May 15, 2006, to decide. If you wait beyond that date and end up choosing a plan later on, a penalty will be applied: a permanent 1 percent increase in premiums for every month you delay.

There's an exception to that rule, however, for retirees who have employer-paid drug coverage. If, down the road, your employer cancels your plan and you want to buy Part D, Medicare will waive the premium penalty. Soon, Medicare will send retirees a special notice telling you if you qualify for this waiver.

EXTRA HELP. Retirees with lower incomes and no employer-paid coverage will want to find out about the special assistance programs designed to cover all or some of the co-pays in Medicare Part D. Many seniors may have already received mailings from Medicare or the Social Security Administration advising you to apply for possible help. If you apply, you're under no obligation to take Part D. But knowing you qualify for extra assistance may help you decide if Part D is right for you.

To get information about the reliability of an insurer, discuss which type of Part D drug-insurance may suit your needs, or to find out more about eligibility for low-income assistance programs, a good source of counseling is the State Health Insurance Assistance Program (SHIP). To reach your state's SHIP, start by calling the Eldercare Locator at 1-800-677-1116 or the official Medicare Helpline at 1-800-MEDICARE (1-800-633-4227).

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