Monday, October 25, 2010

Medicare 2011: The Rules Keep Changing

Part II of a Two-Part Series

Part I of this series explained enrollment period changes impacting Medicare Health & Drug Plans; and in this Part we’ll share changes being made to Medicare Part D drug benefits. For our readers who may not be familiar with Medicare Part D, we’ll start out by providing an overview of the program mechanics.

Medicare Part D drug coverage is available to Medicare Beneficiaries enrolled in Part A and/or Part B. Beneficiaries access this voluntary program through insurance carriers and can get their coverage through a standalone Prescription Drug Plan (PDP) or a Medicare Advantage Prescription Drug (MA-PD) plan (must have both Medicare Parts A and B to enroll in MA-PD).

PDPs and MA-PDs operate on a calendar year basis and provide drug coverage in accordance with the following parameters:

• The plan deductible cannot exceed $310 (many plans have a $0 deductible)

• After the deductible is reached, the Beneficiary is responsible for paying drug co-pays according to the “tier” level of each drug as shown in the plan’s formulary (medicines that don’t appear on the formulary aren’t covered at all)

• When the combined total of the Beneficiary's payments and the insurance company's contributions reaches $2,830, the Beneficiary enters the coverage gap (the infamous “donut hole”)

• While in the coverage gap, the Beneficiary is required to pay for all prescription drugs out-of-pocket

• Once the Beneficiary’s total out-of-pocket drug expenses reach $4,550, the Beneficiary is in the Catastrophic coverage period; and medicines on the formulary are now covered for just small co-payments until the end of the year

So what’s changing in 2011? First, the $2,830 calendar year threshold level to fall into the donut hole increases to $2,840; and second, Medicare beneficiaries will receive a substantial discount on their medicines while in the donut hole (a 50% discount on brand-name drugs and a 7% discount on generics).

The donut hole is filling up.

The Medicare Part D benefit will be further improved over the years, so that the donut hole will gradually fill up. Discounts for both brand-name and generic drugs are scheduled to increase every year until the donut hole is gone for good in 2020.

Click here for more detailed information on the Medicare Part D program.

Monday, October 18, 2010

Medicare 2011: The Rules Keep Changing

Part I of a Two-Part Series

Part I of this series explains the Medicare enrollment period changes that are taking place. In Part II, we will discuss changes coming to Medicare Part D drug benefits for 2011.

Since 2006, there have been an Annual Election Period (AEP) and an Open Enrollment Period (OEP) for each year, during which Medicare beneficiaries may change their Medicare coverage. During the Annual Election Period, a beneficiary could enroll into or dis-enroll from Medicare Advantage and Medicare Part D plans for the upcoming year (starting January 1), no matter what type of Medicare coverage the beneficiary had the preceding year.

For example, during AEP (11/15 – 12/31) a Medicare beneficiary could enroll in the Part D program for the first time; or a beneficiary on Medicare Advantage could sign up with a new insurance carrier. One could make as many changes as desired during AEP, and the last plan enrollment (signed and dated by December 31st) would be the one to take effect in the new year.

The OEP has been the first three months of each calendar year, during which time Medicare beneficiaries were allowed to make one plan change. These changes had to be “like-for-like” with respect to having Part D drug benefits (i.e., the status of having or not having Part D benefits, either on a standalone basis or as part of a Medicare Advantage plan, became locked in on January 1st). Despite the restriction, many people took advantage of the opportunity to switch their Medicare Advantage plan or return to original Medicare during the OEP.

For 2011 enrollments, the AEP rules remain the same but the OEP has been eliminated. OEP has been eliminated and replaced with the Annual Disenrollment Period (ADP) that will run from January 1st through February 14th. During the new ADP, one can still opt out of Medicare Advantage in favor of original Medicare; however ADP does not allow a switch in Medicare Advantage plans, nor does it allow someone in the original Medicare program to enroll into a Medicare Advantage plan. Beneficiaries dis-enrolling from a Medicare Advantage plan will get a special enrollment period (SEP) to join a standalone Part D plan.

Since there is no longer any OEP, it is especially important that Medicare beneficiaries make the best possible decision on their 2011 coverage during this year’s AEP, which as in the past runs from November 15th through December 31st.

Anyone wanting a head start on 2012 Medicare enrollments should take note that the AEP will start earlier beginning in the fall of 2011! Instead of running the last six weeks of the calendar year, future AEPs are scheduled to take place between October 15th and December 7th. Enrollments will take effect on January 1st as always.