1

An Easy Guide to…

Understanding Medicare’s new Prescription Drug Benefit

Blue Cross and Blue Shield of Texas presents

2

Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA)

The most dramatic and innovative change

to the Medicare program since its birth

in 1965

• New Prescription Drug Benefits (Part D)

• New and improved Preventive Benefits

• Medicare Advantage

3

Program Highlights

• Eligibility

• Choices

• Benefits

• Enrollment

4

Eligibility for Medicare Part D-All Medicare Beneficiaries

• Entitled to Part A and/or enrolled in Part B

• Reside in plan’s service area

• Must not be enrolled in another Medicare prescription drug Part D plan at the same time

5

What are my choices?

• Buy Part D

• Switch Plans

• Do not buy Part D because you already have a creditable (comparable) drug benefit from another source

• Apply for extra help based on income and assets

• Enrolled in a Medicare Advantage Plan-must receive drug coverage from this plan if offered

6

Buy Part D:Medicare Prescription Drug Coverage

• Coverage effective January 1, 2008

• Available for Medicare beneficiaries (entitled to Part A and/or enrolled in Part B)

• Provided through CMS approved companies…

– Prescription drug plans (PDPs)

– Medicare Advantage Plans (MA-PDs)

– Some employers and unions to retirees

7

Medicare Prescription Drug Plans

Companies that sell Part D…may

Begin Marketing in October 2007

• Must offer basic drug benefit

– Standard benefit

• May offer supplemental benefits

– Enhanced benefit

• Can be flexible in benefit design

8

What is Extra Help?

• If your annual income is below $15,315 for an individual ($20,535 for a married couple living together), you may not have to pay monthly premiums or deductibles, and you could pay as little as $2 for your co-payments.

• To qualify, your resources must be limited to $11,710 for an individual ($23,410 for a married couple living together). These resource limits can be slightly higher (an additional $1,500 per person) if you will use some of your money for burial expenses. Resources include such things as bank accounts, stocks and bonds. We do not count your house and car as resources.

9

What is Extra Help Continued…

• Even if your annual income is higher, you still may be able to get some help with your monthly premiums, annual deductibles and prescription copayments. For example, your income may be higher and you possibly could get extra help if you or your spouse:

– Support other family members who live with you; – Have earnings from work; or – Live in Alaska or Hawaii.

10

What it costs…how it works

•Plans will vary-Some may offer coverage that looks like the standard benefit

-Some will offer additional drug coverage

-Premium will vary based on benefits offered

11

Coverage stages

Coverage Ranges

Medicare Plan pays

Medicare Plan pays

Person with Medicare

pays

Person with

Medicare pays

Annual Deductible

$0 to $275 $0 $0 100% $275

Initial Coverage $275-$2510 75% $1676.25 25% $558.75

Coverage Gap $2510-$5726.25

0% $0 100% $3216.25

Total $1676.25 $4050

Catastrophic Coverage

$5,726.25 and up

95% No Maximum 5% or $2.25 generic/

$5.60 brand name

No Maximum

Standard Medicare Prescription Drug Coverage & Costs

12

TrOOP- What is it?...True out of pocket costs

• The amount of money to reach catastrophic coverage when Medicare pays 95%of approved drug costs

• Consists of– Deductible - $275 in 2008– 25% coinsurance - $558.75 in 2008– 100% between $2,510 and $5726.25- $3216.25 in

2008 TOTAL= $4050

• Medicare prescription drug plan premium is not part of out-of-pocket limit

13

Sources Not Applied to Out-of-Pocket Limit

• Most third party payment arrangements

• Drugs purchased outside the US

• Over-the-counter drugs

• Drugs not on the Plan’s formulary

• Drugs not covered by law

14

Enhanced Prescription Drug Coverage

• Plan can structure benefit differently

Out-of-pocket limit applies no matter how it is structured

• Plan may provide coverage where there is no coverage under the standard plan

• May offer additional drug coverage

15

Medicare Prescription Drug Coverage

• Available only by prescription

• Prescription drugs, biologicals, insulin

• Medical supplies associated with injection

of insulin

• A PDP or MA-PD may not cover all drugs

• Brand and generic drugs will be in each formulary

16

Excluded Drugs

• Drugs for– Anorexia, weight loss, or weight gain– Fertility– Cosmetic purposes or hair growth– Symptomatic relief of cough and colds

• Prescription vitamins and mineral products– Except prenatal vitamins and fluoride preparations

• Non-prescription drugs• Barbiturates• Benzodiazepines

17

Exceptions

• The exception process ensures access to medically necessary Medicare covered prescription drugs

• Enrollees can request an exception if – The enrollee is using a drug that has been removed– A non-formulary drug is prescribed and medically

necessary– The cost sharing status of a drug an enrollee is using

changes– A drug covered under a more expensive cost sharing tier is

prescribed because the less expensive drug is medically inappropriate

18

Formulary Review for Uninterrupted Access

• CMS will review certain drug classes toensure that people treated with these classes have uninterrupted access to the majority of drugs in that class via formulary inclusion, utilization management tools or exception processes– Antidepressants– Antiretrovirals– Antipsychotics– Antineoplastics– Anticonvulsants– Immunosuppressants

19

When do I sign up?

• There are three enrollment periods

1) Annual Coordinated Election Period (AEP)

November 15 to December 31

2) Special Enrollment Period (SEP)

3) Initial Enrollment Period (IEP)

20

Special Enrollment Period

• Permanent move out of the plan’s service area

• Individual entering or leaving a long-term care facility

• Involuntary loss, reduction, or non-notification of creditable coverage

• Other exceptional circumstances

21

Why would I decide not to buy Part D?

22

Possible Examples of Coverage at Least as Good as Medicare’s

• Coverage under a PDP (Prescription Drug Plan)or MA-PD (Medicare Advantage-PrescriptionDrug)

• Some Group Health Plans Retiree coverage

• State Pharmacy Assistance Program

• Veteran Affairs coverage

• Military coverage including TRICARE

23

Why would I decide to buy

Part D?

24

Reasons to consider Part D

• You can save money on prescription drugs

• People with limited incomes can save even more

• Protection against future drug costs

25

Postponing Enrollment

• Higher premiums for people who wait to enroll, unless you had “creditable” coverage

• Assessed 1% of base premium for every month in which you were eligible to enrollbut did not

26

Resources

• Medicare web-based tool– Visit www.medicare.gov– 1-800-MEDICARE (633-4227), 24 hours a day, 7

days– TTY 1-877-486-2048, 24 hours a day, 7 days

• Social Security web-based tool– Visit www.socialsecurity.gov

1-800-772-1213, Monday-Friday, 7 a.m.-7 p.m. TTY 1-800-325-0778, Monday-Friday, 7 a.m.-7

p.m.