News Release

More Than 21 Million Medicare Beneficiaries To Be Covered For Prescription Drugs As of January 1, 2006

More than 21 million seniors and people with disabilities will get prescription drug coverage as of Jan. 1, 2006, HHS Secretary Mike Leavitt said today. The number includes more than one million Americans who signed up for the new stand-alone coverage in the first 28 days it was offered. Another 500,000 are expected to be enrolled by the end of January.

�The new prescription drug benefit is off to a strong start,� Secretary Leavitt said. �With more than 21 million participating in coverage as of January 1, we are well on the way of meeting our goal of 28-30 million enrolled in the first year of the program. While there is still much work to do, we are encouraged by the early results.�

�Interest in the drug coverage is strong, and these numbers do show that people are getting questions answered and making decisions. For people who have decided they want coverage, they should go ahead and enroll now so they can take advantage of this important new protection,� said Centers for Medicare & Medicaid Services Administrator Mark B. McClellan, M.D., Ph.D.

Dr. McClellan noted the especially strong response from employers and unions who are planning on keeping their retirees in their current coverage. �We expected an initial spike in enrollment, but the participation in Medicare�s new support for retiree coverage is even better than many predicted,� Dr. McClellan said. �With more than 11 million retirees keeping the good coverage they have now, the support for retiree coverage provided in the Medicare drug benefit is working.�

Medicare beneficiaries will be getting their drug coverage in various ways, including from existing federal and/or military programs. The enrollment figures as of Dec. 13 are:

• Stand-alone Prescription Drug Plans: more than 1 million.
• Medicare/Medicaid: 6.2 million (including 600,000 in Medicare Advantage plans).
• Medicare Advantage: 4.4 million (plus 600,000 Medicare/Medicaid beneficiaries).
• Retiree coverage: About 5.9 million retirees are enrolled in the Medicare retiree subsidy, with an additional 600,000 in process. Also, about 1 million retirees are in employer coverage that incorporates or supplements Medicare�s coverage. Another estimated 500,000 retirees are continuing in coverage that is as good as Medicare�s. (See Attachment A.)
• TRICARE/ FEHB retirees: 3.1 million.

�The holidays are a great time for families to have a conversation with a loved one about signing up for the new prescription drug coverage,� Secretary Leavitt said. �The new benefit is the biggest improvement in health care for seniors and Americans with disabilities since Medicare began 40 years ago. We encourage all eligible beneficiaries to enroll so they can start saving right away on the prescription drugs they need to stay healthy -- now and in the future.�

The Centers for Medicare & Medicaid Services will be releasing drug coverage enrollment data monthly.

Additional information follows:

Table 1
Medicare-eligible Retirees Retaining Employment-based Drug Coverage

• Retiree Drug Subsidy (qualified to date): Includes retirees determined to meet the applicable standard for their drug expenses to be claimed for retiree subsidy payments by their plan sponsors.

• Retiree Drug Subsidy (still being processed): Includes additional retirees expected to meet applicable standard

• Federal retirees: Includes retirees receiving coverage from the Federal Employees Health Benefits (FEHB), TRICARE (military health care) and TVA.

• Coverage that incorporates or supplements Part D coverage, includes retirees in:

  • �direct contract� plans, where the employer or union itself becomes a Part D plan for just its retirees, and
  • �employer group waiver� plans, where a plan contracts with just one employer or union to create a plan for just that organization, and
  • separate employer/union maintained plans that �wrap around� Medicare Part D
  • Note: Since tax-exempt entities do not benefit from the retiree subsidy not being excluded from federal taxation, these approaches may be more attractive to tax-exempt entities.
  
  

• Other: Includes retirees that will receive coverage from non-calendar year plans that have not yet come into the retiree drug subsidy program, as well as plan sponsors covering relatively small numbers of retirees that decided the administrative cost of implementing an MMA option outweighed the saving available.

Table 2
Percentage of Unique Sponsors Starting Applications for Plan Year 2006, and Number of RDS Qualifying Retirees Approved So Far, by Type of Plan Sponsor*

*Based on Type of Sponsor self-identified by Sponsors in their applications

• Plan sponsors can be either:

• employers or unions applying on their own behalf, or
• entities providing coverage to multiple employers or unions, such as a state retirement system



• Sponsors can submit multiple applications if they offer multiple plans, so the total number of applications submitted will be greater than the total number of unique sponsors listed in the table

• It is too early to provide a reliable count of total applications, since some sponsors may split or consolidate applications before the application process is complete



• In some cases a single entity has applied as the plan sponsor for retirees in a plan covering multiple employers or unions, so the number of employers and unions providing coverage to qualified retirees is higher than the total number of unique sponsors listed in the table.

• Because the application only captures information about the plan sponsor, we do not have data on the actual number of individual employers and unions that will be receiving retiree subsidy payments.



• Table include only those retirees already determined to be eligible for their sponsor to receive retiree drug subsidy payments

• CMS is still processing additional retiree lists and expects the final total to be about six million qualified retirees

Table 3
Number of Unique Sponsors Submitting RDS Applications*, by State

* A single Plan Sponsor can submit multiple applications, so the total number of applications received is higher than the total number of sponsors.

Important note: The table is based on the plan sponsor�s contact address, which is associated with its Employer Identification Number (EIN). That address may not be the only state in which the sponsor does business or has facilities. That address also does not reflect where retirees live.

• Sponsors can submit multiple applications if they offer multiple plans, so the total number of applications submitted will be greater than the total number of unique sponsors listed in the table

• For example, numerous plan sponsors submitted as many as five applications, though many submitted only one.
• Sponsors are required to submit separate applications for separate plans, so sponsors that maintain separate retiree plans for different lines of business, or separate plans for salary and hourly workers, can be expected to submit multiple applications.



• In some cases a single entity has applied as the plan sponsor for retirees in a plan covering multiple employers or unions, so the number of employers and unions providing coverage to qualified retirees is higher than the total number of unique sponsors listed in the table.