Medicare added coverage for prescription drugs effective January 1, 2006. For information on plan design details please go to Medicare.
Employers currently offering Medicare Supplement plans which include prescription drug coverage had to choose how their retiree benefit program was to be modified in light of the new Medicare Pharmacy benefit. Options included:
Terminate the existing Medicare Supplement, and allow retirees to obtain their prescription drug coverage through Medicare only;
Continue the existing plan and accept federal subsidy payments (estimated at $500 - $600 per enrollee, with a stated maximum of $1,330 per enrollee);
Redesign the existing plan to "coordinate" with the Medicare Pharmacy coverage.
The answers to these questions will vary by employers and are dependent on a variety of factors, including the tax status of the entity sponsoring the Medicare Supplement coverage.
The Centers for Medicare and Medicaid services issued final rules for the new Medicare laws; the release is dated January 21, 2005. We have provided a copy for your reference.
The Centers for Medicare and Medicaid have provided a tool to help Medicare beneficiaries find a prescription drug plan Medicare Prescription Drug Plan Finder.
All plan sponsors who offer pharmacy benefits to active and retired Medicare-eligible beneficiaries were required to send a "notice of creditable coverage" to those beneficiaries by November 15, 2005.
The Centers for Medicare and Medicaid also required that all plan sponsors notify CMS by March 31, 2006 whether the "notice of creditable coverage" was sent. Information on this requirement may be found at www.medicare.gov.
Many employers are taking time in 2006 and 2007 to update their retiree benefit strategy. The marketplace has evolved significantly over the last twelve months and affords many employers a chance to lower their health care related liability and even provide savings vehicles to participants. New choices of Medicare Advantage Plans and Regional PPO's offer cost effective solutions to current and future retirees.
Contact John O'Connell joconnell@cmsmith.com to discuss your retiree coverage concerns.
