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Medicare Update

The Medicare prescription drug law, Medicare Part D, was enacted on December 8, 2003, despite bipartisan opposition. Unfortunately, the new law places the profits of drug and insurance companies ahead of the health and financial security of Medicare beneficiaries. Medicare beneficiaries count on Medicare to be dependable, simple, and affordable; but it’s clear the new Medicare prescription drug law fails beneficiaries on each count.

The new Medicare prescription drug law is confusing, inadequate, and costly. Eighteen different private companies, not Medicare, are offering approximately 42 competing drug plans in Michigan. The new law allows these private companies to charge a $250 deductible, premiums estimated to be $35 each month, and 25 percent copays in 2006. These deductibles, premiums, and copays will increase each year. In addition, there is also a huge gap in coverage. In 2006, individuals with annual drug costs between $2,250 and $5,100 may be required to pay 100 percent of their prescription drug costs out of their own pockets while still paying monthly premiums– a so-called doughnut hole. Once beneficiaries pay $5,100 in out-of-pocket expenses, then they can receive catastrophic coverage for the rest of the year. In addition, the new Medicare prescription drug law allows drug plans to change every seven days what prescription drugs they cover and how much beneficiaries must pay for the drugs, even though beneficiaries can only change plans once a year.

I am also concerned that the new law fails to cap Medicare premium increases, providing beneficiaries no relief from rising health care costs as they struggle to afford mounting housing, energy, and food costs. The Medicare Part B premium in 2006 increased over 13 percent to $88.50 per month. Beneficiaries deserve better than an inadequate and confusing prescription drug benefit and sky-rocketing premiums. Yet, instead of better coverage and lower costs for beneficiaries, the new law invests in windfall profits to insurance and drug companies. The new law includes $139 billion for drug companies and $46 billion in subsidies to HMOs and insurance companies. Taxpayers should not be required to pay private companies to compete with traditional Medicare or to further subsidize the drug and insurance companies.

Finally, the Medicare prescription drug law prohibits approaches that could actually lower prescription drug costs. The new law prohibits beneficiaries from buying cheaper drugs (re-importation) from Canada and other countries and expressly prohibits the federal government from negotiating lower drug prices on behalf of beneficiaries. These prohibitions are contrary to legislation I introduced to use the purchasing power of the federal government to negotiate lower drug prices for all Medicare beneficiaries like the federal government does for the Veterans Administration (VA). We can and should harness the purchasing power of the federal government to lower the cost of prescription drugs for all Medicare beneficiaries. I will continue to keep up my fight to lower prescription drug costs and fix the problems with the new Medicare law.

Before this new Medicare prescription drug law went into effect, I realized that beneficiaries were treated unfairly under the new law. For instance, insurance and drug companies can change the cost of the drug and which drug they cover under their plan every seven days, but beneficiaries are locked in a the plan for one year! Also, the federal government waited for almost two years to implement this new benefit but you must decide in less than five months whether the prescription drug plan benefits you! If you sign up after May 15, 2006, you are penalized 1 percent per month in higher monthly premiums. Finally, many employers and unions continue to offer prescription drug coverage to their retirees. Employers and unions have an obligation to provide accurate information to retirees about their benefits and whether they need to enroll in a plan to prevent retirees from having to pay a huge penalty later.

To address these implementation problems, I am cosponsoring legislation to allow beneficiaries to change their drug coverage plans if the cost or drugs covered change; grant an additional two years to sign up for the new law without penalty; and bring a claim against any employer or union that provides false or misleading information to retirees that could lead to penalties for the beneficiary.

I will continue to review the implementation and the costs of this new Medicare prescription drug plan (Part D) to ensure that all beneficiaries and tax players will receive the prescriptions they need at a cost they can afford. All of these problems with the new prescription drug plan were known before Congress voted on the new law. Still the President insisted on this plan, and I did not vote for this law as it does very little to save taxpayers money or to make prescription drugs and prescription drug insurance coverage affordable over the long haul.

The new law went into effect January 1, 2006. Medicare beneficiaries need to have the best information possible to make a decision about whether to join and, if so, determine which plan best meets their needs. I encourage you to carefully research the available options before making a choice. For instance, some seniors with limited incomes and assets may be eligible for extra help in the form of lower premiums and co-payments. Remember, late enrollment penalties accrue monthly for those who sign up after May 15th, 2006, so I encourage beneficiaries to begin looking at options now.

Attached are some frequently asked questions and answers that may be useful.

Medicare beneficiaries deserve better. Please know that I will continue to fight for a real prescription drug benefit.
 

MEDICARE PRESCRIPTION DRUG PLAN
FREQUENTLY ASKED QUESTIONS AND ANSWERS

Should I purchase a Medicare Prescription drug plan?
The new Medicare benefit is voluntary. It depends on your current situation. Whether or not you should enroll in the new Medicare drug benefit depends on whether you have drug coverage now and the quality of your current benefits.
If you currently have drug coverage, you need to find out whether your current plan is "creditable" (as good as or better than Medicare’s drug benefit). If you have drug coverage that is as at least as good as Medicare’s drug benefit and you’re happy with it, you do not have to do anything. You should get a notice telling you if your current plan is as good as Medicare’s drug benefit from the sponsor of your drug benefits— this could be your insurance company, your current or former employer, your union, or another group. If you don’t get a notice in October, call and ask for it. If you do not have drug coverage now and don’t think you need it, you may want to consider purchasing a very basic plan to avoid paying a penalty later.
What if I already have prescription drug coverage...
...through an employer, former employer, or union already?
Check with your former employer about your options before doing anything. They should send you a notice. Again, if you don’t get a notice, call and ask. If you are happy with your employer coverage, and it is continuing, you should not need to do anything. If you drop your employer or union health coverage, you may not be able to rejoin it later. If your employer coverage drops, you have 63 days to enroll in a Medicare plan without financial penalty.
...through a Medicare managed care program?
Some people have Medicare managed care plans, which are now called Medicare Advantage plans. Your plan will send you information about your options in October. If you do not want to remain in that plan, you may either enroll in a different Medicare Managed Care plan or return to traditional Medicare and select a private drug plan.
...through Michigan Medicaid?
By law, beginning January 1, 2006, states cannot offer a Medicaid drug benefit to people who are also in Medicare. You will be eligible to receive free premiums as long as you pick a plan with average or below average premiums. If you fail to choose a plan, you will be automatically assigned a plan, but you will be able to change plans monthly if need be (this is the only group that can change plans more than once per year).
...through the Veterans Administration?
Your Department of Veterans Affairs (VA) drug coverage will remain the same, and you probably do not want to enroll in a Medicare private drug plan. VA coverage is more comprehensive than Medicare drug coverage.
In addition, if you ever do want to enroll in the Medicare drug benefit later, VA drug coverage is "creditable coverage," so you will not have to pay a penalty as long as you enroll in the Medicare drug benefit within 63 days of losing VA benefits.
Note: Since January 2003, the VA has cut off new enrollment for some veterans because of budget constraints.
Note: You may want to join a Medicare private drug plan if you live very far from a VA facility and the Medicare private drug plan includes nearby pharmacies in its network, or if you live in a nursing home that does not accept your VA drug benefits.
How do I decide what plan is right for me?
Most importantly, take your time. While it may be preferable to enroll by January 1, 2006, you have until May 15, 2006, to enroll without penalty. Once you sign up you can only change plans once per year; so it is important that you carefully examine your options before deciding whether to enroll in a plan and which plan is right for you. Your "Medicare and You" book will give an overview of the plans available in Michigan. There are 18 different insurance companies offering plans in Michigan, most of which offer multiple plans.
You can contact Medicare (Medicare.gov, 1-800-Medicare), the individual plans, and the Michigan Medicare/Medicaid Assistance Program (800-803-7174) to receive assistance in finding the best plans for your health needs. I also recommend speaking with your doctors, pharmacists, and family.
What happens if I do not enroll in a plan?
If you have creditable coverage from your employer or union, nothing happens. If you lose that creditable coverage, you have 63 days to enroll in a new plan or pay a higher premium. If you have no prescription drug coverage, your premiums will be higher if you do not enroll by May 15, 2006.
How do I know if I qualify for extra help?
If you get Medicaid, or receive Supplemental Security Income (SSI), you automatically qualify for help with premiums and co-pays. You do not have to apply for this extra assistance.
In general, you can applyfor help with your premiums if your 2005 income is less than $14,356 for an individual / $19,245 for couples and you have limited assets. If you think you qualify for extra help, you should call the Social Security Administration at 1-800-772-1213 for more information. Keep in mind that applying for the extra help does not enroll you in the Medicare drug benefit. You still have to choose a private drug plan through which to get your drug coverage.
Where will I be able to fill my prescriptions?
Each plan has different pharmacies in their network. Check with the plans you think fit you best to see which pharmacists are accepting the plan. Also, talk with your local pharmacist about which plans he or she is taking.
What do I do if I travel or live in Michigan for only part of the year?
There are eight companies offering national plans that work anywhere in the U.S.
What is the coverage gap, or doughnut hole, that people talk about?
One of the biggest problems of the new benefit is that it requires companies to design their plans with a coverage gap. The basic plan requires people to pay 100% of their drug costs between $2250 and $5100, and continue to pay their premium. Some plans are shrinking or eliminating the coverage gap, but by law plans can only do so if they also raise premiums, deductibles, and copays or eliminate choices. Ask the plans specifically about the coverage gap, or doughnut hole, as it is sometimes called.
Given the increase in Part B premiums, I can’t afford the Part D premiums. What do I do?
The new law has no limits on how much Medicare premiums can go up. The monthly premium for Medicare Part B will increase by $10.30 to $88.50, or 13% in 2006. You may qualify for extra help with your drug benefit premiums and deductibles if your 2005 income is less than $14,356 for an individual / $19,245 for couples and you have limited assets. There is a state of Michigan program that helps seniors pay their premiums. Contact your local Medicaid office.
I receive my prescription drugs through a drug discount card. What will happen?
If you have drug discount cards, such as EPIC, you should call the company to find out what will happen on January 1, 2006.
If you are comparing plans, here are some important questions to ask:
  • How much is the premium (the monthly amount I’ll pay for my plan)?
  • How much are the copayments or coinsurances (the amount I’ll pay at the pharmacy)?
  • What is the deductible (the amount I’ll pay before my plan starts to cover anything)?
  • Does the plan cover all or most of the medicines I take?
  • Does the plan cover the most important medicines I take?
  • Does the plan cover the pharmacies I use?
  • Will I have to pay the full cost of my prescriptions at any point after the deductible?
  • Could I risk losing my current coverage if I join this plan?
  • What is my plan’s network of coverage?
  • If I travel regularly, what kind of coverage will I have outside of my area?

Important Dates

November 15, 2005: The enrollment period for Medicare Drug Benefit begins.
January 1, 2006: Coverage begins for those enrolled by December 31, 2005.
May 15, 2006: Last day to enroll in a drug plan without incurring a penalty and last day to enroll to receive any benefits in 2006.
November 15, 2006: This is the first opportunity for those who enrolled in a drug plan for 2006 to switch plans.

For Further Assistance Contact:
Medicare (800-Medicare, www.Medicare.gov), the Michigan Medicaid/Medicare Assistance Program (800-803-7174, www.mymmap.org), Social Security Administration (800-772-1213, www.ssa.gov)