Medicare Part D
What approach to Medicare Part D is right for your retirees?
Medicare Part D is a drug benefit designated to help seniors pay for a significant share of the cost of their prescription medications. The program is part of the Medicare Prescription Drug Improvement and Modernization Act of 2003. With Medicare Part D, Medicare shares the cost of the prescription drug benefit with the retiree. As of Jan. 1, 2006, Medicare Part D replaced the current Medicare-approved drug discount card program and employers may receive varying financial savings, depending on the option selected.
Offering Employers Choices
The introduction of Medicare Part D impacts all groups that cover Medicare-eligible retirees under their plans. The program encourages employers to continue offering retiree prescription coverage by allowing them to choose the option that best meets their needs and budgets.
Employers may also save money on their retiree prescription coverage by properly integrating the new Medicare Part D benefit solutions into their current plans. With some of these plan options, employers become eligible for government subsidies.
Employers may choose one of the following retiree prescription benefit solutions:
- Provide a standard or equivalent prescription drug benefit.
- Employers may be reimbursed for 28 percent of their Medicare Part D retiree drug expenses by filing for a tax-free subsidy from Medicare, estimated at approximately $600 per retiree.
- This option may allow employers to maintain their current retiree prescription coverage, as long as the coverage is equivalent to Medicare Part D benefits.
- This option may or may not be cost effective for you depending on the number of Medicare eligible individuals covered under your program. - Provide prescription drug coverage that is secondary to (or “wraps around”) Medicare (BCBSKS does not offer wrap coverage).
- This option does not require filings, as with Option 1. - Provide prescription drug coverage by contracting to enroll retirees in an approved Prescription Drug Plan or Medicare Advantage plan (not currently available from BCBSKS).
- Employers may maintain their current retiree prescription coverage and be reimbursed for offering the underlying Medicare Part D benefit.
- For added ease, the PDP sponsor handles all administration and paperwork.
- This option requires a waiver from Medicare. - Employer converts prescription drug coverage to Medicare Part D and pays the premium.
- The employer potentially pays retirees the amount of their monthly Medicare Part D premium.
- This option may benefit employers aiming to phase out retiree coverage.