States’ Obligations and Benefits of Medicare Part D

Prescription drug or Part D plan came into effect in the year 2006 to provide prescription drugs at subsidized costs. Medicare prescription drug, improvement and modernization act established some standards on benefits that Medicare Part D must offer. The standard benefits details about the benefits of Medicare Part D and not the drugs that are to be covered.

Benefits of Medicare Part D Include:

• Offer assistance to people with limited means with various levels of premiums and deductibles.
• Offer an option to enroll in two drug plans that covers both generic drugs and brand names.
• Access to pharmacies is convenient.
• Guarantee new benefits to Medicare beneficiaries living in nursing facilities.
• People having full Medicaid and Medicare coverage are automatically enrolled in drug plan.

Cost Sharing under Medicare Part D:
The estimated premium for Medicare Part D is $35 per month; however, premium amount depends on the plan selected. Some beneficiaries of Medicare will also have co-payments and deductibles. As per the standard benefit, Medicare Part D enrollees will:

• The initial $250 is paid towards deductible drug costs.
• Pay 25% of the drug expenditure between $250 and $2,250.
• Pay 100% of drug expenditure between $2,250 and $5,100.
• After reaching out of the pocket limit of $3,600 pay the greater of $5 for brand drugs, $2 for generics, or 5% coinsurance.

People falling under low income beneficiaries are eligible for low income subsidies that will reduce their responsibility for cost sharing. Mentally retarded institutionalized individuals in an intermediate care or nursing facilities having Medicare coverage has nothing to pay out of their pocket.

Low Income Subsidy:
Benefits of Medicare Part D reach out to assist low income beneficiaries through subsidies designed specifically for them. Depending upon the income and resources / asset level of individuals; Medicare Part D provide premium subsidies and cost sharing on a sliding scale basis.

• Medicare beneficiaries who are also enrolled under Medicaid coverage, known as “dually eligible”, are not required to pay any monthly premium or deductibles.
• Medicare beneficiaries whose income is below 150% of poverty level ($1,604/couple or $1,197/single per month in 2005) may be eligible for premium subsidies at various levels depending on the assets.

Who Determines Eligibility for Subsidy?
Eligibility for low income subsidy is determined either by the state or by Social Security Administration. States are encouraged to use the application and eligibility determination process developed by Social Security Administration.

This application from SSA is simple and can be filled in on paper and mailed in, over telephone or on internet.

States’ Obligation under Medicare Part D:
States needs to take care of several aspects of Medicare Part D program:

• States are required to pay a monthly “clawback” to the federal government which is around 90% of amount which states would have paid dual eligible minus the Medicare Part D program. This percentage will go down to 75% by calendar year 2015.
• States must determine eligibility for low income subsidy as and when requested. The eligibility is also determined by Federal Social Security Administration.
• Monthly data containing information of dual eligible population must be shared with Federal government.

Part D Statistics for 2012