November 23, 2005

When Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, referred to as the MMA or the Medicare Act of 2003, it mandated new prescription drug benefits for people with Medicare. The act provides Medicare beneficiaries with access to discount cards to cover some prescription drug expenses and created Medicare prescription drug plans to assist in paying for prescription drug expenses. Beginning the spring of 2004, Medicare beneficiaries have been able to enroll in a Medicare-approved discount card program that offers discounts on their prescription drugs. Beginning January 1, 2006, new Medicare prescription drug plans (Medicare Part D) will be available to people with Medicare. Both the discount card program and the Medicare Part D prescription drug plans are optional benefits for Medicare beneficiaries.

Lesson 1: Medicare-approved drug discount cards

Medicare contracted with private companies to offer voluntary enrollment in drug discount card programs for Medicare beneficiaries. These Medicare-approved drug discount cards are a temporary program intended to help beneficiaries save money on prescription drugs until 2006, when the new Medicare Part D outpatient prescription drug coverage plans will go into effect (see Lesson 2). Anyone with Medicare Part A and Part B, who does not have outpatient prescription drug benefits through Medicaid, can join a Medicare-approved drug discount card program. Enrolling is completely optional, and Medicare will not automatically enroll you in a card program.

Medicare estimates that you can save between 11%-18% on many brand name drugs and perhaps more on generic drugs by enrolling for a Medicare discount card. The card may cost you up to $30 annually, although if you meet Medicare's criteria as having a limited income, you may not have to pay any annual enrollment fee. Also, if you meet the limited-income criteria, you may be eligible for an additional $450 credit to help you pay for prescriptions.

Medicare-approved drug discount cards are not insurance and are not a substitute for health insurance. You should not drop existing insurance prescription drug coverage for a discount card. Companies that offer discount cards can decide which prescription drugs will be discounted and the amount of the price discount for those drugs.

If you are considering enrolling in a discount card program, compare each card carefully to choose the one that covers your prescriptions at the best discounted price. Each discount card has its own limits on discounts and drug coverage, which it lists on a "discount drug list" or "formulary." When you choose a discount card, you will get a lower price only on the prescription drugs on the discount card's list. You can only enroll in one Medicare-approved drug discount card program at a time. Keep in mind that a company can change its discount drug list and the discounted prices anytime.

If you do not have a Medicare-approved drug discount card, you can only sign up for one through December 31, 2005. There are many companies that offer Medicare-approved drug discount cards. You can compare cards for your area by accessing the Medicare Web site at www.medicare.gov or by calling 1-800-MEDICARE. Remember, only cards with a Medicare-approved seal on them are part of the Medicare drug discount program. The discount cards can be used until May 15, 2006, or until you sign up for a Medicare Part D prescription drug plan. Keep in mind, once you join a Medicare Part D prescription drug plan you cannot use your Medicare-approved drug discount card or use any credit remaining on the card.

Lesson 2: Drug discount cards that are not Medicare-approved

You have probably come in contact with a variety of advertisements for drug discount cards on television, Internet sites, and in newspapers. So, what is the difference between a Medicare-approved drug discount card and a card that is not Medicare-approved?

A Medicare-approved drug discount card displays a Medicare-approved seal directly on the card. Companies with approved Medicare-approved discount cards have to apply to be part of the program and must meet Medicare standards. The maximum fee they can charge for their drug discount cards is $30 annually.

Many private organizations offer prescription drug discount cards that have not been approved by the Medicare program. These non-Medicare drug discount cards vary and may offer lesser or better discounts or discounts comparable to the Medicare-approved drug discount cards. Remember, though, drug discount cards are not insurance and they are not reviewed or approved by the state or federal government.

Because non-Medicare discount cards are not regulated, you should use caution when buying these cards. You should read the fine print before purchasing anything. Also, you should always be cautious about giving out personal information, such as your social security number or mother's maiden name. Never give your bank account information.

You should only buy a non-Medicare discount card from a company or organization you know. You will want to compare the costs and benefits of several cards before you purchase one, as costs and benefits vary. Since most prescription drug discount cards cost less than $30, you should not pay more unless the card provides significant additional benefits, such as discounts for dental care or eyeglasses.

You should not assume that buying more than one discount card will result in more savings. Each card has its own terms and most do not allow use of multiple discounts on the same prescription. The limitations on discounts and drug coverage for each card are listed on a "discount drug list" or "formulary." When you choose a discount card, you will get a lower price only on the prescription drugs on the discount card's list.

The Medicare Rights Center Web site at www.medicarerights.org/ provides a representative list of Medicare-approved discount cards that are available, along with contact information for each of the cards and a brief description of coverage and fees. Companies with discount cards included on the list are: AARP MemberRx Choice Program, Affordable Health Card, Alliance Health Card, CVS Health Savings Plan, GSK Orange Card, LillyAnswers Card, Merck Medco (YOURx Plan), Nonprofit Warehouse, Peoples Prescription Plan, Pfizer Pfriends, Plan Plus, Rx101 Savers Card, RxDrugCard, Together Rx Card, Together Rx Access Card, and United States Pharmaceutical Group, Inc.

Although not endorsed or funded by Medicare, a description of and the eligibility requirements for the Together Rx Access Card is included on the Medicare Web site at www.medicare.gov/. The Together Rx Access Card offers savings on more than 275 brand name drugs and some generic drugs to uninsured Americans. Ten pharmaceutical companies are involved in the program. The Together Rx Access Card is available to you if: you are a legal U.S. resident, under 65 years old and not eligible for Medicare, without private or public prescription drug insurance, and have an income of less than $30,000 per year as an individual or $40,000 per year as a couple.

It is important to note that there is a big difference between the Together Rx Access Card and the Together Rx Card. The Together Rx Access Card is offered to those who are uninsured and not eligible for Medicare, while the Together Rx Card is offered to those who are enrolled in Medicare.

Lesson 3: Medicare Part D prescription drug plans (PDPs)

You can use your Medicare-approved drug discount card until May 15, 2006, or until you join a Medicare Part D prescription drug plan (PDP), whichever is first. Once you have a Medicare Part D prescription drug plan, you cannot use your Medicare-approved drug discount card. You will get coverage for your prescription drugs only through your Medicare Part D prescription drug plan, instead of the savings you formerly received using your discount card.

Medicare Part D prescription drug plans will become available to people with Medicare beginning on January 1, 2006. Unlike drug discount cards, which are not insurance plans, the prescription drug plans are part of the Medicare health insurance program (Medicare Part D). If you decide to join a Medicare Part D prescription drug plan, you will pay a monthly premium and may have to pay co-payments for your prescriptions. The monthly premium for Medicare Part D prescription drug plans will vary based on which plan you choose. The cost you pay for prescription drugs will also vary depending on the plan you choose. As with the drug discount cards, if you choose to enroll in a Medicare Part D prescription drug plan, it is important to compare plans to find one that will work best for you.

The federal Centers for Medicare and Medicaid Services (CMS) will be providing you with periodic detailed information about Medicare Part D prescription drug coverage. If you have outpatient prescription drug coverage under your Medicare supplement policy, your insurance company also will be providing information regarding your options for continuing this coverage or choosing Medicare Part D prescription drug coverage.

Medicare Part D prescription drug plans will vary, and the breakdown of costs can be a little confusing. In general, you will pay a deductible of $250, in addition to the monthly premium. Medicare will pay for 75% of your drug costs between $250 and $2,250. Once you have reached $2,250 in drug costs, you will pay for 100% of your prescription costs until you have spent a total of $3,600 within one year. At that time, Medicare will pay 95% of your drug costs. This means that if your prescription drug costs during one year are $8,000, you will pay $3,745, plus a monthly premium, and Medicare will pay for the other $4,255.

The "Medicare & You 2006" booklet, available in October of 2005, lists the Medicare Part D prescription drug plans available in your area. The Social Security Administration (SSA) has sent low-income subsidy (LIS) applications to those individuals it determined met its definition of limited income. If you received a LIS application, you should submit the application to receive notice of the amount of extra help to which you are entitled to assist in paying for your prescription drug plan costs. If you have not received a LIS application, you can receive an application and information by contacting your local Social Security Office.

If you are already enrolled in Medicare Part A or Part B, you can enroll in a Medicare Part D prescription drug plan between November 15, 2005, and May 15, 2006. Medicare beneficiaries who enroll by December 31, 2005, will have coverage starting on January 1, 2006. If you enroll between January 1 and May 15, 2006, your coverage will start the first day of the month following the month you enroll. After May 15, 2006, you can enroll or change plans between November 15 and December 31 each year. Remember, you can use your Medicare-approved drug discount card until May 15, 2006, or until you sign up for a Medicare Part D prescription drug plan, whichever comes first.

There is a penalty charge assessed to late enrollees who enroll in Medicare Part D after May 15, 2006. This penalty is one percent of the average drug premium for all of the months the enrollee was not enrolled in Part D since May 15, 2006. Late enrollees will be subject to the penalty for as long as they remain enrolled in Part D.

If you have prescription drug benefits through an employer or a union health plan, you will receive a notice from them that lets you know if the prescription drug coverage pays at least as much or more than a Medicare Part D prescription drug plan.

If you find out that you are enrolled in a group health plan that covers as much or more than a Medicare Part D prescription drug plan, you have two options:

1. Keep your current group health plan as it is, or
2. Leave your current group health plan and enroll in a Medicare Advantage plan with Medicare Part D prescription drug plan.

Keep in mind that if your group health plan covers as much or more than a Medicare Part D prescription drug plan, you can keep your group plan and not pay a higher monthly premium (late enrollment penalty) if you decide to enroll in a Medicare Part D prescription drug plan at a later time. If you leave your current group health plan to enroll in a Medicare Advantage plan with Medicare Part D coverage, it is unlikely you will be able to return to your employer or union plan.

If you find out that you are enrolled in an employer or union health plan that covers less than a Medicare Part D prescription drug plan, you have three options:

1. Keep your current group health plan as it is,
2. Keep your current group health plan and enroll in a Medicare Part D prescription drug plan, or
3. Leave your current group health plan and enroll in a Medicare Advantage plan that includes a Medicare Part D prescription drug plan.

Keeping your current group coverage and enrolling in a Medicare Part D prescription plan will give you more complete drug coverage. If you choose to keep your current group coverage without enrolling in a Medicare Part D prescription plan, you will have to pay a higher monthly premium (late enrollment penalty) if you decide to enroll in a Medicare Part D prescription plan at a later time. Additionally, if you leave your current group health plan to enroll in a Medicare Advantage plan with Part D prescription drug plan coverage, it is unlikely you will be able to return to your employer or union plan.

Lesson 4: Where do Medigap and Medicare Advantage fit into all of this?

Medigap

If you have a Medigap policy that covers prescription drugs, you can keep the prescription coverage in the policy as long as you do not enroll in a Medicare Part D prescription drug plan. If you enroll in a Medicare Part D prescription drug plan, you will be able to keep your existing Medigap policy. However, any outpatient prescription drug coverage under the policy will be removed. If, after you have made this change, you decide you do not like the Medicare Part D prescription drug plan and wish to reinstate the prescription drug coverage in your old policy, you will not be able to reinstate the drug coverage.

Between September 15 and November 15, 2005, insurance companies will be providing their policyholders with information regarding the option of continuing existing prescription drug coverage under their Medigap policies or choosing Medicare Part D prescription drug coverage.

Medicare Advantage

If you already have prescription drug coverage through your Medicare Advantage plan, you might not need to enroll in a Medicare Part D prescription drug plan. Some Medicare Advantage plans may decide to offer and require that you enroll for their Medicare Part D prescription drug plan coverage.

It is important to weigh your options by comparing your Medicare Advantage plan drug coverage with other Medicare Part D prescription drug plans to find a plan that best meets your needs. You should call your plan to see if and how your current coverage will change.

The Office of the Commissioner of Insurance (OCI) does not endorse any specific plans or programs. This document is intended to serve as an informational piece only. The OCI encourages consumers to contact the Wisconsin Prescription Drug Helpline at www.WisMedRx.org or call 866-456-8211 or visit www.medicare.gov or call 1-800-MEDICARE for more Medicare information. You should also consult with a trusted relative or advisor when making choices about health and drug coverage.