Public Employee Press

Medicare Part D
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New Medicare drug option falls short of DC 37 prescription plan

DC 37 retirees should think twice before they considering signing up for the new Medicare Part D drug benefit.

“I wouldn’t enroll in the new Medicare drug plan,” said DC 37 Retirees Association President Stuart Leibowitz. “The DC 37 benefit is far better, so you should stick with it.”

Part D, which is voluntary, will take effect in 2006. The benefit will be available through the traditional Medicare program and through independent sponsors, such as for-profit health care maintenance organizations and prescription drug providers.

“A lot is still up in the air, so you should really be very careful if you’re considering a switch, which we would strongly advise against,” said Rosaria R. Esperon, administrator of the DC 37 Health and Security Plan. Medicare-eligible retirees cannot be enrolled in both benefit programs.

Esperon said that in upcoming months, private sponsors would likely begin to promote their plans aggressively. But when retirees examine the fine print, she said, many who already have prescription drug coverage from their union or former employer would probably want to sit tight.

“What’s certain now is that you’re better off staying with our union benefit, which has lower out-of-pocket expenses and better catastrophic protection than the Medicare drug benefit,” Esperon said. Leibowitz pointed out that the new federal benefit would be a help to seniors who don’t have any drug coverage.

But Medicare Part D is a relatively bad deal for DC 37 retirees because it includes an annual deductible and a monthly premium contribution as well as significant gaps in coverage. Participants will pay $35 a month for the new benefit and will be charged a $250 annual deductible. They will have a 25 percent co-payment on their first purchases from $250 to $2,250, which amounts to $500 if they reach that plateau.

The new benefit provides no coverage at all between $2,250 and $5,100. In this gap, known as the “donut hole,” participants pay 100 percent of the cost of their medications. After the $5,100 threshold, Medicare will assume 95 percent of the cost.

The private sector alternate to the Medicare Part D will be provided through the new Medicare Advantage Plan. MAP will offer 10 to 50 regional plans, plus a national plan. The experience with Medicare HMOs provides grounds for caution about signing up with a for-profit provider under MAP. After participants signed up for Medicare HMOs, the plans often changed their coverage. When Congress cut Medicare funding, they just shut down.

In the DC 37 drug plan, participants pay $5 at pharmacies for a 30-day supply of generic drugs. The co-pay is $15 for brand-name drugs on a preferred list and $35 for other brand-name drugs. Maintenance drugs must be purchased through the plan’s mail-order program at $10 for a 90-day supply of generics, $30 for preferred drugs and $70 for non-preferred drugs.

— Gregory N. Heires