Public Employee Press

Medicare drug plan (Part D)
Benefit for some, mistake for most retirees

Retirees should be very cautious about signing up for the new Medicare drug benefit that will be available Jan. 1.

Companies marketing their prescription drug plans are bombarding retirees with information about the Medicare Part D coverage.

“Aggressive marketing is creating a lot of confusion,” said Rosaria R. Esperon, administrator of the DC 37 Health and Security Plan. “The DC 37 Health and Security Inquiry Unit is available at 212-815-1234 to answer retirees’ questions about Medicare Part D,” she said.

“In general, DC 37 retirees get a better deal with the union plan than with Medicare Part D,” said Stuart Leibowitz, president of the DC 37 Retirees Association.

Leibowitz pointed out that retirees who enroll in a non-city health insurance plan may risk their eligibility for Medicare Part B reimbursement from the city.

“People should absolutely contact the union before doing anything,” he said.

Coverage letter mailed
Last month, the plan sent retirees an information packet on Medicare Part D. The packet included a “letter of creditable coverage,” required by the federal Centers for Medicare and Medicaid Services. The letter indicates that the union’s prescription drug plan provides as good or better coverage as the Medicare benefit.

The standard Medicare plan is expected to have a monthly premium of $35 and an annual deductible of $250. When a retiree and spouse are both eligible for Medicare Part D, each must enroll separately and meet the premiums, deductibles and coverage limits. The DC 37 plan has no premium or deductible, and it provides family coverage.

The Medicare benefit also has a coverage gap, known as the “donut hole,” where no coverage is provided for expenditures between $2,250 to $5,100. That means that participants will have to pay a total of $3,600 out of pocket before the Medicare catastrophic coverage kicks in, picking up 95 percent of the expense over $5,100. The DC 37 benefit doesn’t have such a gap.

“Wrap-around” coverage
Many Medicare Advantage plans provided through the city’s health insurance program are now including a drug benefit. This will make those plans the primary providers of prescription drugs for retirees covered by those plans, and DC 37’s drug plan will become the secondary provider.

The trustees of the DC 37 Health and Security Plan voted to provide “wrap-around” coverage for retirees enrolled in Medicare Advantage plans that include a Part D benefit by reinstating the union’s drug benefit when the retiree reaches their program’s “donut hole” or annual limit.

Retirees who reach their plan’s gap or limit must submit an explanation of benefits statement from their Medicare plan to be covered by the union’s benefit.

DC 37 retirees who enroll in Part D will not be reimbursed for any premiums, deductibles or co-payments.

The enrollment period for Medicare Part D is from Nov. 15, 2005, to May 15, 2006. Retirees without current plans who fail to meet the deadline will be subject to a permanent penalty of 1 percent of the cost of their premium for each month they delay signing up. Retirees already in a company or union drug plan are exempt from that penalty as long as they can present the letter of “creditable coverage.” However, retirees who drop out of a company or union plan are subject to the penalty if they allow their Part D coverage to lapse for 63 days.