Medicare Prescription Drug Coverage Retiree Town Hall Presentation: The Basics of Medicare

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Medicare Prescription Drug CoverageRetiree Town
Hall PresentationThe Basics of Medicare

• September 2005

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Todays Agenda

• Whats happening
• Why were here today
• What Medicare is and whats changing
• How Medicare Prescription Drug Plans work
• How Medicare drug coverage affects Oak Ridge
• What you can expect in the coming months

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Whats Happening

• Medicare Prescription Drug, Improvement, and
  Modernization Act of 2003 or the Medicare
  Modernization Act (MMA) signed into law on
  December 8, 2003
• Most sweeping legislation affecting Medicare
  benefits since its inception in 1965
• Effective January 1, 2006, Medicare will provide
  optional prescription drug coverage called
  Medicare Part D
• It replaces prescription drug discount card,
  which will phase out by May 15, 2006
• Beginning November 15, anyone with Medicare is
  eligible to enroll for this coverage
• Legislation encourages employers to continue to
  be the primary provider of prescription drug
  benefits for their Medicare-eligible population

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Whats Happening (cont.)

• The benefits of this legislation include
• Offers prescription drug coverage to Medicare
  beneficiaries who dont have access to adequate
  prescription drug coverage today
• Provides enhanced benefits with lower
  out-of-pocket costs to limited-income
  beneficiaries, as defined by the government
• Gives employers the choice to continue to be the
  primary provider of prescription drug benefits ?
  not intended to replace employer-sponsored
  coverage thats as generous or more generous

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Whats Happening (cont.)

• Oak Ridge will continue to offer the current
  prescription drug coverage, which is as generous
  as or more generous than Medicare Part D for 2006
  
• Anyone who participates in an Oak Ridge retiree
  medical plan receives prescription drug coverage
  automatically
• Oak Ridge prescription drug coverage does not
  coordinate with Medicare Part D coverage
• This means, for most Medicare-eligible Oak Ridge
  employees and retirees, enrolling in Medicare
  Part D will not provide additional benefits
• If you are a Medicare-eligible retiree or LTD
  recipient enrolled in Oak Ridge coverage and you
  elect Medicare drug coverage, your Oak Ridge
  medical and prescription drug coverage will be
  cancelled

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Why Were Here Today

• This fall, anyone eligible for Medicare will
  begin receiving information from the Centers for
  Medicare and Medicaid Services (CMS) and private
  insurance companies promoting Medicare health and
  prescription drug plans
• Oak Ridge wants you to understand
• What Medicare drug coverage means to you as a
  Medicare-eligible Oak Ridge retiree or employee
• That your current prescription drug coverage is
  as generous as or more generous than the standard
  Medicare coverage
• Enrolling in Medicare Part D will not offer any
  additional benefits, although there are some
  exceptions
• Enrolling in private Medicare prescription drug
  coverage for 2006 will jeopardize your Oak
  Ridge-provided coverage
• We understand that, with so many messages, its
  easy to get confused

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• What is Medicare and Whats Changing?

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What Is Medicare?

• Health insurance component of Social Security
• Administered by Centers for Medicare Medicaid
  Services (CMS)
• Provides health benefits for
• Individuals age 65 and older
• Certain disabled individuals under age 65
• Individuals with End-Stage Renal Disease (ESRD)
• Original Medicare is a fee-for service plan
• Part A hospital insurance
• Part B medical insurance
• Part A is financed by payroll taxes, Part B by
  general revenues and monthly premiums from
  participating Medicare beneficiaries

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In General, How Does Medicare Work?
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In General, How Does Medicare Work? (cont.)
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Whats Changing with Medicare?

• Starting January 1, 2006, prescription drug
  coverage will be available to everyone with
  Medicare through private Medicare prescription
  drug plans
• Part D replaces Medicare discount prescription
  drug cards, which phase out by May 15, 2006
• Until now, Medicare typically did not cover
  prescription drugs
• Medicare prescription drug plans will be offered
  by private health plans, not the federal
  government
• All Medicare prescription drug plans will provide
  at least a standard level of coverage set by
  Medicare
• Special coverage for retirees with limited income
  and resources

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Whats Changing with Medicare? (cont.)

• For 2006, a special Medicare Part D enrollment
  period will be held
• For individuals eligible by November 15 November
  15, 2005 May 15, 2006
• Individuals eligible later Same initial open
  enrollment period as Part B
• In later years, from November 15 to December 31
  for next benefit year (January 1 December 31)

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Lets stop for a minute to see if there are any
questions?
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• Medicare Prescription Drug Coverage

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Medicare Part D Terminology

• Terms and abbreviations
• CMS Centers for Medicare and Medicaid Services
• Medicare Part D also refers to Medicare
  prescription drug coverage
• As generous as or more generous than the
  Medicare phrase applied to employer-provided
  coverage that offers a benefit comparable to (or
  better than) the standard Medicare Part D
  coverage
• Creditable Coverage verification that an
  individual has coverage that is as generous as or
  more generous than standard Medicare Part D
  coverage
• Formulary a specific list of drugs that are
  considered covered by a health plan or
  prescription drug plan
• Limited Income and Resources individuals who
  meet specific criteria established by CMS that
  qualify them for extra assistance through CMS
• TrOOP True out-of-pocket maximum that is
  defined as the amount of out-of-pocket costs a
  retiree would expect to pay if enrolled in a
  Medicare Part D plan, not including monthly
  premiums

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How Do Medicare Prescription Drug Plans Work?

• You will receive information directly from
  private health insurance plans in your area
• What do these plans offer?
• There is no easy answerbecause different
  Medicare prescription drug plans will be offered
• Although Medicare has outlined a standard way
  to cover benefits, different health plans will
  offer different benefits
• Deductibles, coinsurance, copayments and
  formularies will vary
• Premiums are likely to vary by health plan
• Approximately 32 per person per month for 2006,
  in addition to Part B premiums
• Individuals will be allowed to change plans
  annually, so long as they maintain continuous
  drug coverage (employer plans can qualify as
  creditable coverage)

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Standard Medicare Part D Drug Benefit

• A 250 annual deductible applies
• After the deductible, benefits are paid as
  follows
• Medicare will pay 75 of drug costs between the
  deductible and 2,250
• Beneficiaries will pay 100 of the drug costs
  between 2,250 and 5,100 (also called the
  coverage gap or donut hole)
• Medicare generally will pay 95 of drug costs
  above 5,100 for the year after the beneficiary
  has paid 3,600 out of pocket

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Standard Medicare Part D Drug Benefit (cont.)

• Deductible, 2,250 initial coverage limit,
  coverage gap and 3,600 annual out-of-pocket
  amounts will be adjusted annually based on per
  capita drug expenditures
• For example, a 10 annual increase in per capita
  drug expenditures means the deductible will be
  366 by 2010
• Plans must provide access to negotiated
  (discounted) prices
• Out-of-pocket exclusions (i.e., dont count
  towards out-of-pocket limit)
• Costs paid by another plan
• Costs of drugs not on formulary

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Standard Medicare Part D Drug Benefit A Visual
Retiree out-of-pocket costs
250
3,600
750
100
Retiree pays 5 (no maximum)
Retiree pays 100 of first 250
Retiree pays 25 of next 2,000, up to 500
Retiree pays 100 of next 2,850, up to
3,600total out-of-pocket limit
Plan pays 95
75
Plan pays 75
Coinsurance
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Coverage Gap (Donut Hole)
CatastrophicBenefit
Coinsurance
Deductible
25
0
250
2,250
5,100
Annual drug costs
Part D benefits
Retiree liability (counts toward 3,600 true
out-of-pocket maximum (TrOOP)
TrOOP is true out-of-pocket maximum amount
retiree must pay before catastrophic (95)
benefit begins. Employer and insurance company
payments do not count toward satisfaction of
TrOOP.
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Standard Medicare Part D Drug Benefit An Example
The amount retirees pay will increase each year
after 2006 based on Medicares total cost for
prescription drugs. Premiums are also
expected to increase annually.
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Who Should Enroll in a Medicare Prescription Drug
Plan?
Medicare prescription drug plans are designed for
people who need them most

• Those who qualify for extra help
• The Social Security Administration has identified
  people who may qualify for assistance in paying
  for drugs based on their income and assets ?
  applications were mailed directly to people in
  May 2005

• Those without drug coverage
• For people without the benefit of
  employer-sponsored coverage

but its completely up to each individual to
decide what prescription drug coverage option
makes the best financial sense for his or her
family.
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Whos Eligible for Extra Help?

• Limited income and resources defined as
• Income less than 150 of federal poverty level
• 14,355 for individuals in 2006
• 19,245 for couples in 2006
• Limited liquid assets
• 11,500 for individuals
• 23,000 for couples in 2006
• The Social Security Administration is sending
  applications to those who may qualify for the
  extra benefit
• If you receive an application, you should
  complete it. Submitting this application does
  not enroll you for Medicare drug coverage

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What Does Extra Help Cover?
There are three levels of benefits and
eligibility
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• What Medicare Prescription Drug Coverage Means
  for Oak Ridge

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The Key Question
If I already have coverage through Oak Ridge,
does it makes sense for me to enroll in a private
Medicare prescription drug plan in 2006?
The answer
In most cases, no! Remember the reason ? Oak
Ridge already provides drug coverage that is
expected to pay out at least as much as and in
most cases more than a standard Medicare
prescription drug plan

• Most retirees are better off under Oak Ridges
  plan, unless
• You are eligible for extra help or on Tricare
  (the plan for military retirees and spouses),
• Remember, if you are Medicare-eligible and elect
  Medicare Part D coverage, your continued coverage
  through Oak Ridge will be dropped

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Oak Ridge Retiree Prescription Drug Coverage
Overview

• Your Oak Ridge retiree medical plan includes
  prescription drug coverage
• Anyone enrolled in the Oak Ridge retiree medical
  plan receives prescription drug coverage
  automatically
• Medical and prescription drug coverage is
  integrated you cannot enroll in one without the
  other
• Oak Ridge prescription drug coverage is
  creditable coverage, which is defined by CMS as
  being on average at least as generous as the
  standard benefit
• Protects your right to leave the Oak Ridge
  retiree medical plan and join another certified
  plan or Medicare prescription drug plan within 63
  days without incurring a penalty on the Medicare
  Part D premium for coverage
• Those without creditable coverage are penalized
  1 of the monthly Medicare Part D premium for
  each month enrollment is delayed past their
  initial enrollment period

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2006 Prescription Drug Coverage for Oak Ridge
Retirees

• The Oak Ridge Prescription Drug Plan through
  Medco
• You pay a percentage of the cost for prescription
  drugs purchased at a participating pharmacy or
  through the mail-order program
• For retail
• 150 deductible
• Coinsurance amount based on whether
• Brand or generic
• In-network or non-network pharmacy
• For mail
• No deductible
• Copayment amount based on whether
• Brand or generic
• No out-of-pocket maximum limits each
  prescription requires coinsurance or a copayment

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2006 Prescription Drug Coverage for Oak Ridge
Retirees Snapshot of Benefits under the Retiree
Medical Plan
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Lets stop for a minute to see if there are any
questions?
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• Whats Next?

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Upcoming Communications
Heres what you can expect to be receiving over
the next few months.
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Key Points to Remember

• The Oak Ridge retiree medical plan includes
  prescription drug coverage. This means anyone
  whos enrolled in an Oak Ridge retiree medical
  plan receives prescription drug coverage
  automatically
• Medical and prescription drug coverage are
  combined and a person cant enroll in one without
  the other
• For 2006, your Oak Ridge coverage is at least as
  generous as private Medicare prescription drug
  coverage
• Your Oak Ridge prescription drug coverage does
  not coordinate with private Medicare prescription
  drug coverage
• This means you do not need to enroll in Medicare
  Part D to keep your Oak Ridge coverage
• In fact, if you enroll in Medicare Part D, you
  will lose your Oak Ridge retiree medical coverage

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• Thanks for Coming!