Medicare prescription drug improvement and modernization act of 2003
Sponsored Links
This presentation is the property of its rightful owner.
1 / 15

Medicare Prescription Drug Improvement and Modernization Act of 2003 PowerPoint PPT Presentation


  • 117 Views
  • Uploaded on
  • Presentation posted in: General

Medicare Prescription Drug Improvement and Modernization Act of 2003. David Adams, Evangelical Lutheran Church in America Jean C. Hemphill Ballard Spahr Andrews & Ingersoll, LLP November 30, 2004. 2003 Medicare Act. Creates New Medicare Part D for Prescription Drug Coverage

Download Presentation

Medicare Prescription Drug Improvement and Modernization Act of 2003

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Medicare Prescription Drug Improvement and Modernization Act of 2003

David Adams, Evangelical Lutheran Church in America

Jean C. Hemphill

Ballard Spahr Andrews & Ingersoll, LLP

November 30, 2004


2003 Medicare Act

  • Creates New Medicare Part D for Prescription Drug Coverage

  • Effective January 1, 2006

  • Pays Commercial Carriers to Offer Prescription Drug Plans (PDPs)

  • Authorizes Subsidy Payments to Employers that Sponsor Retiree Prescription Drug Benefit Plans


Medicare Part D – Prescription Drugs

  • Eligible individuals may enroll to receive “qualified prescription drug coverage” under Medicare Part D

    • Unlike Parts A and B, Part D coverage will be provided through private vendor plans

    • Enrollees will be able to choose between at least two plans

    • Private plans (PDPs) will receive a Federal subsidy for a portion of their costs


Medicare Part D – Prescription Drugs

  • Who is Eligible?

    • Each individual eligible for Part A or enrolled in Part B

  • Enrollees will pay a monthly premium for Part D coverage

    • $35 month in 2006

    • Special rules for low-income enrollees

  • PDPs will be announced in Fall, 2005


Medicare Part D – Prescription Drugs

  • Annual Deductible -- $250 (adjusted after 2006)

  • Cost-Sharing – individual pays 25% of the costs above the annual deductible, up to the initial coverage limit


Medicare Part D – Prescription Drugs

  • Initial Coverage Limit – $2,250 (adjusted after 2006)

    • Part D reimburses 75% of costs up to $2,250, subject to the annual deductible

  • The “Donut Hole”

    • Individuals pay 100% of annual costs between $2,250 and $5,100

    • Private vendors may offer supplemental coverage for donut hole expenses


Medicare Part D – Prescription Drugs

  • Out-of-Pocket Expense Limit – once individual out-of-pocket expenses reach $3,600 (adjusted after 2006), 95% reimbursement of costs

    • Out-of-pocket expenses include the deductible, individual cost-sharing, costs above the initial coverage limit

    • $250 deductible + $500 cost-sharing + $2,850 in donut hole costs = $3,600


Medicare Part D – Prescription Drugs


Employer Coordination With Part D

  • Two ways for employers to coordinate coverage:

    • Provide primary coverage and receive a Federal subsidy; or

    • Provide secondary coverage (wrap around PDP coverage)


Employer Coordination With Part D

  • Subsidy for primary coverage is 28% of the “allowable” annual costs between $250 and $5,000 per retiree

    • Up to $1,330 per retiree (cannot average costs among all retirees)

  • Allowable costs are those costs actually paid on behalf of the retiree

    • Net of discounts and charge backs

    • Excludes administrative costs (other than direct dispensing costs)


Employer Coordination With Part D

  • Subsidy Requirements

    • Benefits under retiree plan must be at least actuarially equivalent to Part D Qualified Prescription Drug Coverage

    • Employer must file an annual actuarial certification with Medicare to qualify

    • Employer will be subject to audit of records


Employer Coordination With Part D

  • Employers may offer supplemental retiree prescription drug coverage that is secondary to Medicare Part D

    • Supplemental plan will not receive any subsidy

    • Supplemental coverage cannot eliminate donut hole (TROOP Rule)


Employer Coordination With Part D

  • Employers may pay PDP or Medicare Advantage premiums for Retirees

  • Employers may coordinate with PDPs for a customized plan


CMS Timeline

  • February: Final Part D regulations, including eligibility rules for employer subsidy

  • June: PDP vendor applications to CMS

  • September: Deadline to apply for Employer Subsidy for 2006; no indication of when CMS will publish application forms or accept applications.

  • October 15: Regional PDP options announced

  • November 15: Open Enrollment period begins and runs through May 2006.


Church Plan Issues

  • CBA filed Comment Letter with HHS

    • Many church plans may not qualify for the subsidy because proposed regulations require offset for Retiree contributions in determining eligibility for subsidy

    • No time to align with national PDP for church-wide plan for retirees.

    • Low cost of monthly Part D premium may lead to adverse selection against employer plan


  • Login