Medicare Prescription Drug Benefit

Dear Friend:

In the coming weeks, from November 15, 2006 to December 31, 2006, you have an opportunity to reevaluate your drug plan choice and to choose a new plan for 2007. If you are not currently enrolled in a plan, you will have the chance to do so, (although, in some instances, you may be charged a penalty if you didn't enroll in 2006). Information will be available to you about the Medicare Part D drug plans in this packet and in the Medicare and You 2007 Handbook as well as from Illinois State Health Insurance and Assistance Program hotline volunteers and private plan marketing materials.

While some senior citizens and persons with disabilities have been able to benefit under Part D, this program has many flaws. It does nothing to control the cost of drugs. In fact, it actually prohibits Medicare from negotiating for drug discounts like the Veterans Administration and large employers do today. It relies exclusively on private insurers. The drug benefit itself is inadequate and extremely complicated. I opposed the law that created the drug program because I supported a simpler, more comprehensive drug plan.

Still, Medicare (Part D) can reduce the cost of medications for some people.  I want to make sure that you are armed with all the information you need to make the best decision about whether to join or switch plans and - if so - which plan you should purchase that best meets your needs.

First, you need to understand that there is still no Medicare-administered drug benefit.  In order to get the new drug benefit, you have to purchase a private drug plan or enroll in a Medicare Advantage (managed care) plan. Each plan offered in our area will be different in terms of your costs, the drugs that are available, and what pharmacies you can use. You will have the ability to change plans once a year during "open season" - but you can only be enrolled in one plan at a time.

Again I urge you not to rush into any decisions. You have six weeks to make a decision. Take your time, understand your options and make the decision that is right for you. If you decide to switch plans, just enroll in the new plan and you will be automatically disenrolled from your current plan.

On my website, you can find information about the drug benefit itself; whether you might qualify for "Extra Help" in paying drug costs based on your income and assets; special tips if you are a veteran, receiving Medicaid or state pharmaceutical assistance, or currently covered by a retiree or Medigap plan; and information sources.  I hope that this information is useful and that you will let me know whenever you have other questions.

Finally, I want you to know about two bills that I have introduced to protect Medicare beneficiaries and improve the drug benefit.

H.R. 3861, the Medicare Informed Choice Act, eliminates the late enrollment fee penalty for the first year, giving all beneficiaries more time to learn about the new drug benefit, obtain independent counseling, and make an informed choice. It also allows every beneficiary to change plans during the first year and prevents employers from dropping retiree coverage for anyone who enrolls in a Part D drug plan without knowing it could cost them their existing benefits.

H.R. 752, the Medicare Prescription Drug Savings and Choices Act, would require that Medicare offer a drug benefit and negotiate for drug discounts for enrollees in order to reduce costs and provide a permanent, guaranteed option in addition to private insurance plans.  Both bills have been endorsed by groups like the Alliance for Retired Americans, the National Committee to Preserve Social Security and Medicare, and Consumers Union.

THE NEW DRUG BENEFIT

Each private drug plan will have to offer a benefit that is at least equal in value to a standard drug benefit (see below):

New Medicare Standard Drug Benefit

Premiums: Estimated to be $27.35/month in 2007

Deductible: $265 a year in 2007

Initial Coverage Limit: After the deductible you pay 25% - the private plan pays 75% - of costs up to $2400

Coverage Gap (the donut hole): You pay 100% of costs between $2400 and $5,451.25

Catastrophic Threshold: If you have costs over $5,451.25, you pay 5% and the private plan pays 95%

Again, private plans can vary premiums and cost-sharing requirements as long as Medicare determines that their coverage provides value at least a good as the standard plan. Some plans may charge higher co-payments for brand name drugs than for generics or charge you more if you go to certain pharmacies. You need to look carefully at premium costs, cost-sharing requirements, the list of covered drugs and pharmacy access before making a decision.

Under the law, deductibles, initial coverage limits and the catastrophic threshold will increase every year. For example, the last year the standard annual deductible was $250 and this year it is $265.  The Kaiser Family Foundation estimates that the annual deductible will grow to $437 in 2014.  Individual plans can also increase premiums and cost-sharing requirements each year.

It is also important to remember that cost-sharing requirements only apply to "covered drugs" and only to payments made by you or a family member.  If you take a prescription drug that your plan does not cover, the costs of those drugs do not count toward your deductible or other cost-sharing requirements.  Prescription drug costs paid by a "third party" - e.g., your employer plan, a drug company's assistance program or Medigap policy - do not count toward your cost-sharing requirements.

THINGS TO CONSIDER IN CHOOSING A PLAN

• The amount of the monthly premium

• Whether the plan covers the specific drugs you currently take

• Whether the plan includes a "donut hole" gap in coverage, during which time you pay 100% of the cost of your drugs.  Even if a plan includes coverage during the "donut hole," that coverage may only include generic drugs or a limited number of brand name drugs.

• The cost of the specific drugs you take (look at strength and dosage)

• The number of days covered in each prescription (e.g., 30, 60 or 90 days)

• Whether the plan uses tiered cost-sharing (e.g., different copayments for generics, brand name drugs or specific drugs) and, if so, the number of tiers and cost-sharing in each tier

• Whether the pharmacies you use are in the plan's network and whether you have to pay more to use your local pharmacy

• The plan's policy regarding use of mail order pharmacies

• Whether the plan requires that you get prior authorization or have to first try less-expensive drugs before you are allowed to get the drug your doctor prescribes

• The sponsor of the plan, whether it has been in the community for a while and whether it has been reliable

• Whether you have existing coverage you like that is at least as good as the Medicare drug or what is called "creditable coverage." If you know that your existing benefits are "creditable," you can keep that coverage and you will still have the option to enroll in a Medicare Part D plan during a future open season without having to pay a late enrollment fee.

ENROLLMENT & THE LATE ENROLLMENT FEE

In order to obtain the new Medicare Part D drug benefit, you have to purchase coverage through a private drug plan or enroll in a Medicare Advantage (managed care) plan that offers a drug benefit. You can only enroll in one plan. If you apply to more than one plan, you will be enrolled in the last plan you have signed up for.

For those who did not sign up for a private drug plan last year, you have a new opportunity to sign up during this year's open season (November 15, 2006 through December 31, 2006). For those who delay enrolling in a plan and DID NOT have creditable coverage, the penalty is a 1% increase in your premiums for every month in which you were eligible but chose not to enroll. The penalty is permanent.

If you were eligible last year but didn't sign up and you enroll during this open season period, your late enrollment fee will be 7%  if you enroll in November (May through November) or 8% if you enroll in December (May through December). That means your monthly premiums will be increased by 7-8%.  If you wait the next open season (November 15, 2007) to enroll, your monthly premiums will be 19-20% higher.

NOTE:

• If you are a veteran and receive drug benefits through the VA, you may enroll in a Medicare drug plan without paying a late enrollment fee, as long as you purchase your coverage within 63 days of dropping your VA benefits.

• If you currently receive employer-provided retiree drug benefits that are at least as good as the standard Medicare benefit, called "creditable coverage," you can drop that coverage and enroll in a Medicare drug plan (again during a future open season) every year. Your employer should send you a letter notifying whether your current coverage is as good as the standard benefit. You should keep that letter for your records. Contact your employer to ask about your current coverage if you do not receive a letter or have any questions.

• If you are currently enrolled in a Medicare supplemental (Medigap) plan that includes drug coverage (Medigap Plans H, I or K), you should have received a letter telling you whether that coverage is "creditable," (at least as good as the standard Medicare benefit). If it considered creditable coverage, you can keep that coverage and enroll in a Medicare drug plan during the annual open season. You should keep that letter for your records. Contact your Medigap insurer if you do not receive a letter or have any questions.

FORMULARIES

Each private drug plan is allowed to use a "formulary," which is a list of drugs that are covered, as long as it meets certain requirements set by Medicare. The private plan can refuse to pay for prescription drugs not on their list or charge more for "non-preferred" drugs that aren't on their list.

In 2007, a private drug plan can add or remove drugs from its formulary during the year, as long as they give 60 days notice, although you cannot change plans until the next open season period even if the drugs you use are no longer covered. Anything you pay for an uncovered drug does not count toward your plan's annual out-of-pocket limit.

You or your doctor can appeal if you need a drug that is not covered by the plan. The plan is supposed to cover drugs that are "medically necessary" but they may not agree with your doctor and they set their own procedures for making that determination. The plan must give you information on how to file an appeal.

If you want help filing an appeal, please contact:

Senior Legal Services

Legal Assistance Foundation of Metropolitan Chicago

828 Davis Street, Suite 201

Evanston, IL 60201

847) 475-3703

or the Public Assistance Hotline at 1 888 893 5327

You May Be Eligible for "Extra Help" Under Federal Law

Depending on your income and assets, you may be eligible for "Extra Help," assistance that means you will pay less for your drugs.  To see whether you qualify, you should contact your nearest Social Security office, (call 1-800-772 1213 or go to www.SocialSecurity.gov). While you can apply for "Extra Help" at any time, you can only enroll in a private drug plan at certain times (November 15 through December 31 of every year.) You must be enrolled in a Medicare Part D drug plan in order to get extra assistance - even if you are currently enrolled in Medicaid or Illinois Cares Rx.

The chart below describes the "Extra Help" you get under Medicare. If you are enrolled in Illinois Cares Rx, you can get additional assistance from the State of Illinois. (See Medicaid section for cost-sharing information if you are on Medicaid.)

IMPORTANT DATES 

• You will be automatically enrolled in a Medicare private drug plan and will no longer receive drug coverage through Medicaid. If you were enrolled in a Part D plan in 2006, you may stay in that plan if it continues to meet qualifications for Extra Help coverage. You may be switched to another plan if your current plan doesn't meet those standards.

• If you do not pick a plan yourself (whether you are newly-eligible for Medicare or are in a plan that no longer qualifies), you will be automatically enrolled in a plan.

• You can choose a different plan that meets your needs at any time and as often as you wish. You will not have to pay a late enrollment fee.

• You are automatically eligible for "Extra Help." (See chart below). If you choose a plan with an above-average premium, however, you will have to pay the extra costs out of your own pocket.

• You may need to switch plans if the drugs you are taking are not covered under your private plan or the plan drops your medications during the year. (Senior citizens and persons with disabilities on Medicare who also qualify for Medicaid may switch plans every month with no penalty). Alternatively, you or your doctor can appeal to have your drug covered or you can pay for the drugs yourself. (The cost of drugs not covered by your plan is not included in reaching the $5,451.25 catastrophic limit.)

"EXTRA HELP" FOR THOSE WITH MEDICARE AND MEDICAID

If you have income..	If you have assets..	Then your premium and deductible are.	And your copayment is..
Below 100% of the federal poverty level. (The federal poverty level goes up every year. In 2006, it is $9,800 for an individual, $13,200 for a couple)	Below state Medicaid limits	$0 (As long as you enroll in a plan with premiums at or below the average level in your area)	$1/generic and $3.10/brand name (no copayment after total annual drug costs reach $5,451.25)
Above 100% of the federal poverty level	Below state Medicaid limits	$0 (As long as you enroll in a plan with premiums at or below the average level in your area.)	$2.15/generic and $5.35/brand name (no copayment after total annual drug costs reach $5,451.25)

• If you are getting prescription drug coverage through the VA, TRICARE, or the Federal Employees Health Benefits Plan, you can keep that coverage. If you lose drug coverage for some reason, you can enroll in a Medicare private drug plan and not incur a late enrollment penalty, as long as you sign up within 63 days. (NOTE: If you decide to drop coverage, you should wait for an open enrollment period so that you don't face the penalty and don't face any gaps in coverage.)

• Most veterans will want to get their medications through the VA, which charges no premiums, waives copayments for low-income veterans and has a $7 copayment for others, and caps patient medication copayments at $840 a year.

• All veterans are eligible for the new Medicare private drug benefit and, depending on their income and assets, are eligible for "Extra Help." The Veterans' Administration believes some veterans may choose that option, for example if they are in nursing homes that do not use the VA drug benefits or if the VA facility is far away and they want to get their drugs from local pharmacies.

• Veterans may choose to enroll in a Medicare drug plan and keep their VA benefits at the same time. Veterans would then choose whether to have their prescriptions provided by VA or covered by their Part D plan. They would be able to make this decision on a case-by-case basis. However, it is important to note that VA and Medicare are two separate stand-alone systems. Generally veterans receiving medications through VA must have their prescriptions written by their VA provider.

IF YOU HAVE MEDIGAP (SUPPLEMENTAL) DRUG COVERAGE

If you enroll in the Medicare drug benefit you cannot also have a Medicare supplemental insurance policy that offers drug coverage (Medigap Plans H, I and J). If you H, I or J you can:

• Cancel your existing Medigap policy and switch to another Medigap policy that does not offer drug coverage and enroll in a Medicare private drug plan. Since the premium for this type of Medigap plans is usually high and the drug coverage is limited, you are probably better off enrolling in the new Medicare prescription drug coverage. To avoid a premium penalty you should have done so before May 15, 2006.

• Keep your Medigap policy but without the drug coverage and enroll in the Medicare drug benefit. Keep in mind that premiums for these Medigap policies will probably increase faster than Medigap policies that never offered drug coverage. You should notify your Medigap insurer of your Medicare drug coverage immediately so they can remove the drug coverage and adjust your premium. If you did not do so before May 15, 2006, you will probably have to pay a premium penalty.

• Cancel your Medigap policy and join a Medicare private health plan that includes Medicare drug coverage. You will not need your Medigap policy because it cannot pay premiums or co-insurance for Part D drug plans (keep in mind you may not have a right to buy a Medigap policy later); or

• Keep the Medigap policy and choose not to enroll in the Medicare drug benefit. If later you want to drop the Medigap drug coverage and enroll in the Medicare drug benefit, you may have to pay a premium penalty.

IF YOU HAVE DRUG COVERAGE THROUGH A RETIREE PLAN

If you already have prescription drug coverage through your employer or union, check with your plan or benefits administrator to learn how your plan coordinates with Medicare drug coverage, regardless whether you are currently working or retired.

Your current or former employer/union should notify you whether your drug coverage is at least as good as Medicare's standard drug coverage ("creditable coverage") each fall before the beginning of the annual open season, which starts on November 15 and ends on December 31 of every year.

If your current or former employer chooses to continue to offer prescription drug coverage you have three choices:

1. If your current or retiree drug coverage covers at least as much as Medicare's basic coverage (it is "creditable"), you may want to keep it and not buy Medicare drug coverage. However, you may want to compare the cost and coverage of your current coverage (including premiums, copayments and list of covered drugs) with the cost and coverage of Medicare private drug plans, to see which offers you the best coverage. (WARNING: If you enroll in a Medicare private plan, you may lose your existing prescription drug coverage and not be able to get it back. You also could lose other retiree health benefits as well.  DO NOT ENROLL IN A PRIVATE DRUG PLAN WITHOUT KNOWING HOW IT WILL AFFECT EXISTING COVERAGE.)

2. If your current or retiree drug coverage covers less than Medicare's basic drug coverage (it is not creditable), a Part D drug plan may be the right option for you. You will need to enroll in a private plan by December 31 in order to avoid a penalty. You have a Special Enrollment Period (SEP) to change your current or retiree drug coverage, but you may need to pay a premium penalty if you go more than 63 days without creditable coverage. (WARNING: Before making a decision, ask your employer if you can drop your drug coverage without losing your other supplemental insurance for doctor and hospital services. Once you drop your existing coverage, you may not be able to get it back.)

3. If your current or retiree coverage will fill in the gaps in Medicare's drug coverage, you may want to keep it and enroll in the Medicare drug benefit as well. (Keep in mind, however, that payments made by other insurance do not count toward your out-of-pocket costs, even for covered drugs.)

Check with your former employer about your options before doing anything.

IF YOU ARE IN A MEDICARE ADVANTAGE (MANAGED CARE) PLAN

• If you are enrolled in a Medicare Advantage (managed care) plan, you will receive information from your plan in October describing what prescription drug coverage they will offer in 2007.

• If you wish to switch plans, you may do so during the annual open season from November 15 to December 31 of every year.

• You are not eligible to enroll in a Medicare Advantage (managed care) plan with drug coverage if you have End-State Renal Disease (ESRD) or do not have both Medicare Parts A and B.

• Check your options carefully before you make any decisions.

INFORMATION SOURCES

You can get general information on the new Part D drug benefit by contacting:

You can get free counseling from:

You can get information on Extra Help Assistance from:

Illinois Department on Aging Senior Helpline:  1-800-252-8966

Illinois Health Benefits Hotline:                         1-800-226-0768

Illinois Cares Rx:                                                 www.illinoiscaresrx.com

JAN'S PRESS RELEASES ON MEDICARE PART D

Schakowsky: Allow Medicare to Negotiate Lower Prices for Prescription Druges

Schakowsky, Durbin Join Seniors, Advocates to Call for Medicare Price Negotiation and an End to the Donut-Hole

Schakowsky Calls for Universal Health Coverage for All

Schakowsky Vows to Fill Gap in Coverage Facing Medicare Druge Plan Beneficiaries With Savings

Emanuel, Schakowsky, Lipinski, Davis, Durbin Mark Medicare Rx Deadline for Millions of Seniors

Schakowsky Joins Seniors, Advocates, House and Senate Democrats to Call for Drug Benefit Enrollment Deadline Extension

House Democrats Call on HHS to Tell the Truth To Public Which Insurance Companies are Telling the Truth About Part D Plans

Gov. Blagojevich, U.S. Reps Emanuel, Schakowsky Urge IL Seniors to Enroll in Illinois Cares Rx To Avoid Facing Gaps in Coverage

New Push for Schakowsky Bill To Provide Uniform Affordable Drug Benefit

MEDICARE PART D DRUG BENEFIT LEGISLATION

In addition to H.R. 752 and H.R. 3861, there is a sampling of some of the other bills that I support to improve Part D.  Some of those include:

  H.R. 5102, the Medicare Drug Formulary Protection Act, to prohibit Part D plans from dropping a covered drug during the year.  Under existing law, a private drug plan can stop paying for a drug during the year although senior citizens and persons with disabilities are prohibited from changing plans if the drug they need is dropped.

  H.R. 3151, to allow coverage of anti-anxiety and anti-seizure medications like Valium and Xanax.  Current law prohibits their coverage under the Part D benefit, leaving senior citizens who take those drugs (including 1.7 million seniors who had received those drugs through Medicaid) to go without their doctor-prescribed medication or pay for them on their own.

  H.R. 4722, to eliminate cost-sharing for low-income senior citizens and persons with disabilities who live in assisted living facilities, group homes and other community-based facilities.  Under existing law, only low-income persons in nursing homes are protected.