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April 14, 2011

Medicare Part D in 2011

Five Ways Health Care Reform Improves Medicare Part D in 2011

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively known as: "health care reform") are responsible for some changes in Medicare, many of which are designed to help low-income beneficiaries. Here is a list of changes that impact Medicare Part D in 2011:

  1. Annual Enrollment Period for Medicare Part D in 2011 begins October 15. Previously, annual enrollment ran from November 15 through December 31. Beginning in 2011, the new enrollment period runs from October 15 through December 7. This change extends the enrollment period from 46 days to 53 days. It also allows a few weeks for everyone to receive their ID cards before the plan begins. Plans will still be effective January 1 of the new year.

  2. Medicare takes another step toward closing the prescription drug coverage gap. With Medicare Part D, you pay the yearly deductible, plus your copayments or coinsurance after your deductible is satisfied. These amounts are different from plan to plan. Once the plan pays out a specified amount in benefits, the plan stops paying for anything until you reach your specified out-of-pocket limit. That's when the "doughnut hole" (or "coverage gap") begins. It is not uncommon for the doughnut hole to be in the thousands. And, if you spend a lot each year on prescription drugs, you are responsible for it. Catastrophic coverage begins when you reach the doughnut hole's out-of-pocket limit.

    To help make the doughnut hole more bearable for Medicare Prescription Drugs in 2011, drug manufacturers will only charge 50% of their normal cost for brand-name Medicare prescription drugs. If your medications are generic Medicare prescription drugs, the government will provide a seven percent discount for those drugs. That means you pay less at the pharmacy for your medications while you are in the doughnut hole.

  3. It's easier to qualify for the Extra Help low-income subsidy. Extra Help is the low-income subsidy program from Medicare that helps pay prescription drug costs if your income falls below a certain threshold. Changes in Medicare Part D in 2011 make it easier for many to qualify:

    • The law removes Medicare Advantage rebates and quality bonus payments from the calculations of the low-income benchmark. This helps make more low-income subsidy plans available each year.

    • Allows Medicare Part D plans that bid slightly above the regional benchmark to qualify as a low-income subsidy plan at the LIS rate.

    • Allows widows and widowers to remain eligible for the LIS for one year after the death of a spouse before having to re-establish eligibility.

    • Makes sure you understand differences in plans if you are automatically reassigned from one low-income subsidy plan to another. The Centers for Medicaid and Medicare Services will transmit the information within 30 days.

  4. There are additional expenses that count toward your out-of-pocket limit. As a result of changes in Medicare prescription drug plans, you can count the cost of drugs toward your out-of-pocket limits even when the drugs are provided by the AIDS Drug Assistance Program and the Indian Health Service. Beneficiaries are still spending money out of their own pocket even if they didn't have to use their Medicare Part D plan to purchase them.

  5. The potential for less common drugs to be covered is improved. The Secretary of Health and Human Services now has the authority to identify drug classes of clinical concern and make exceptions to the classes. This could have an impact on the formularies for some plans. A formulary is the list that helps insurance companies determine which drugs are covered under the plan.

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Medicare Advantage Plans, sometimes called "Part C" or "MA Plans," are offered by private companies approved by Medicare and provide Medicare Part A and Part B coverage. Medicare prescription drug coverage is insurance run by an insurance company or other private company approved by Medicare. A Medicare Supplement plan is a health insurance plan provided by a private company that fills in the "gaps" in original Medicare coverage.