The Medicare Prescription Drug Improvement and Modernization
Act of 2003 created a new voluntary outpatient prescription drug benefit
beginning in January 2006. Benefits for Medicare Part D (as it is known) will
be provided commercially through either a Medicare Advantage – Prescription
Drug plan (MA-PD), or through a stand-alone Prescription Drug Plan (PDP).
MA-PDs and PDPs will be funded by a combination of monthly
premiums and government subsidies, and should have a dramatic effect on the
cost of employer-provided drug coverage for their Medicare-eligible population.
Employers may select from the following strategies to implement Medicare Part
D. UnitedHealthcare will provide comprehensive administrative support for each
of these strategies.
1. Accept the sponsor subsidy for continuing to provide employer-based prescription drug coverage to retirees.
- Medicare will reimburse plan sponsors a tax-advantaged payment (the subsidy) for offering a benefit plan instead of Medicare Part D, up to 28% of the allowable retiree cost.
- The employer plan must be actuarially equivalent to Medicare Part D.
- Employers must apply for the sponsor subsidy with the CMS (Centers for Medicare and Medicaid Services) by September 30, 2005. Their application must include an attestation of equivalence by a qualified actuary.
- Employers must notify their eligible population whether their plan is creditable, (meaning that the plan design offered is at least as valuable, on average, as Medicare) prior to November 15, 2005.
UnitedHealthcare Support:
- Perform creditable coverage test for a substantial number of our pharmacy benefit designs via Reden & Anders Ltd. Consulting (an Ingenix company affiliated with UnitedHealthcare) at no charge, if included under the "bulk" approach.
- Fees may apply for employers who do not clearly pass the creditable coverage test, or for employer groups with greater than ~200 Medicare eligibles, who may require group-specific testing. (Non-bulk approach.)
- Provide employers with notification of standard benefit designs that meet creditable coverage tests.
- Assist in creditable coverage notification to Medicare eligibles and to CMS.
2. Provide "wrap around" coverage similar to the health care marketplace.
Medicare pays first, and the employer plan follows as a secondary payer. Here employers encourage participation in a Medicare Part D program, while offering additional benefits including:
- Premium subsidies for employees
- Secondary group benefit coverage
- Offer a Part D supplement (available through UnitedHealthcare on a self-funded basis for 2006).
UnitedHealthcare Support:
- Prescription Drug Plan offering to meet employer endorsement.
- Coordination of benefits for secondary coverage benefit.
- Administer a self-funded supplemental benefit.
- Communication tools on how to enroll in a PDP.
- Educational program targeting Medicare eligible consumers.
3. Stop offering drug coverage to Medicare eligible population.
Employers then recommend that retirees enroll in the Medicare Part D drug benefit.
UnitedHealthcare Support:
- Prescription Drug Plan offering to meet employer endorsement.
- Communication tools on how to enroll in a PDP.
- Educational program targeting Medicare eligible consumers.
Please continue to refer to this site for updates on the UnitedHealthcare response to Medicare Part D, or contact your UnitedHealthcare representative.
For general information on the Medicare Modernization Act, visit the site maintained by the CMS:
http://www.cms.hhs.gov/medicarereform/pdbma/employer.asp
For questions related to the actuarial equivalence test, please contact one of the following individuals at Reden & Anders:
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Critical Dates for Employers |
| Now |
Plan communication campaign for eligible population. NOTE:
>Begin well in advance of Nov. 15 deadline.
>Target population includes all Medicare-eligibles – not just retirees.
>UnitedHealthcare to assist. |
Sept. 30
2005 |
File subsidy application with CMS (for option #1).
>Reden & Anders or other vendor to assist |
Oct.
2005 |
Marketing begins by private companies offering Part D plans. NOTE:
>These communications may conflict with employer messaging/plans.
>Be prepared to educate your eligible population.
>UnitedHealthcare to assist. |
Nov. 15
2005 |
Open enrollment begins, runs through May 15, 2006. |
Jan. 1
2006 |
New coverage begins. |
May 15
2006 |
Interim program ends. |
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