Medicare beneficiaries can expect drug plan marketing onslaught

Michelle Swafford

Friday, Sept. 2, 2005 | 11:04 a.m.

Get your mailboxes ready.

Starting Oct. 1, health insurers can start marketing their prescription drug plans to the 42 million people who are eligible next year for prescription drug coverage through Medicare.

Medicare beneficiaries -- mostly age 65 or older -- will need to make major health care decisions in the coming months, and there will be no shortage of direct mailings trying to persuade them so they are not penalized with higher premiums for missing the May deadline.

Unofficially, marketing has already begun through informational meetings, bus tours and community events. The Medicare changes approved in December 2003 are a lot to digest.

The biggest change is prescription drug coverage, which is a voluntary program, but Medicare beneficiaries pay a higher premium if they do not sign up when they are eligible.

It's uncertain which companies will offer drug plans in Nevada, but 19 companies have applied with the Centers for Medicare & Medicaid Services, or CMS, to offer standalone prescription drug plans.

That means a private company would manage a senior's prescription coverage, while Medicare would continue providing doctor and hospital coverage.

Companies that have announced intentions to offer plans in Nevada include Aetna, Cigna Corp., PacifiCare Health Systems, Sierra Health Services, UnitedHealth Group and WellPoint. In mid-September those companies will learn whether their plans are approved by CMS.

Enrollment for Medicare Part D plans begins Nov. 15 and ends May 15 at the premium rates that will be announced in the coming month. After May 15, Medicare beneficiaries will be assessed a cumulative 1 percent increase in their premiums for each month they wait to sign up.

The penalty will be assessed based on the national average premium at the time the person signs up -- Nov. 15, 2006 being the first open enrollment date after May 15 -- and the penalty is retroactive to Jan. 1, meaning beneficiaries would pay a rate that is 11 percent higher than the initial national average premium, CMS Region IX spokesman Jack Cheevers said.

There is no limit on how long the 1-percent-per-month penalty will keep adding up, he said.

There are a few exceptions to the May 15 deadline such as if beneficiaries move out of their plan's approved area or they involuntarily lose coverage.

Seniors who have Medigap supplemental insurance can maintain that coverage, but new plans will not be offered in 2006. The plans prevent Medicare beneficiaries who switch to a Part D plan from being penalized with higher premiums.

The Medigap plans have to be approved by CMS and offer less drug coverage than the Part D plans at a higher cost, said Jackie Kosecoff, executive vice president of PacifiCare's specialty companies.

On Monday the Centers for Medicare & Medicaid Services announced that three Nevada plans that were submitted offer monthly premiums of $20 or less and at least one would be approved.

CMS said in its Monday statement that 29 drug plans with varying premiums were submitted for Nevada's seniors, including six with monthly premiums between $20 and $24.99, six plans with premiums of $25 to $29.99 and 14 plans with monthly premiums of $30 to $34.99.

Financial assistance may be available for low-income seniors. Medicare beneficiaries who earn $14,355 annually as an individual or $19,245 annually as a married couple living together may be eligible for drug coverage with no monthly premiums or deductibles and co-payments as low as $3 for brand name drugs and $1 for generics.

There are a few other qualifications that make financial assistance available to seniors who earn more than the income guidelines. Beneficiaries who think they may qualify should apply for assistance with the Social Security Administration.

About 90,000 Clark County seniors would potentially qualify for low-income assistance, said Marilyn Wills, director of Nevada's Health Insurance Assistance Program.

People who are on Medicare and Medicaid would receive their prescription drug coverage through Medicare next year and need to select a drug plan to receive discounted prescriptions. Those who do not sign up will be automatically enrolled in a plan, Medicare officials say.

Once a senior selects a drug plan, they cannot sign up for an additional one or a different one until the following year, said Shelley Wike Cranley, vice president of government affairs of Sierra Health.

While the biggest Medicare change will be drug coverage for seniors on traditional Medicare, seniors insured by private Medicare plans such as Sierra's Senior Dimensions and PacifiCare's Secure Horizons will see enhanced options, which will be announced in the coming months. Those plans offer coverage for doctors and hospitals within an assigned network and some prescriptions.

Private Medicare policyholders do not need to do anything to receive their Part D coverage because it will be included as part of their current plans, said Dave Allazetta, director of senior product sales of Senior Dimensions.

If Senior Dimensions policyholders choose a standalone Part D plan, they would have to use traditional Medicare for their doctor and hospital coverage, he said.

The same would hold true for Secure Horizons' policyholders.

Starting Thursday, Sierra Health began marketing a local preferred-provider organization health plan to seniors called Sierra Spectrum. The plan's coverage would take effect Oct. 1 and is available in Nevada and in parts of Utah and Arizona.

It offers low co-payments on doctors' visits that are in the provider network, does not require primary-care physicians' referrals to see specialists and has the added option of partial coverage for providers outside of Sierra's network, Allazetta said.

The monthly premium for 2005 is $39, and it will have a generic drug benefit until 2006, he said.

Seniors who have health plan coverage through their employers would likely maintain that coverage, which would have to be deemed by CMS as credible coverage.

Employers will receive federally funded financial incentives -- about 28 percent in tax credits each year -- to maintain retirees' prescription drug coverage, Cranley said.

Companies that do not pay taxes would not receive tax breaks, she said.

Retirees can choose a stand-alone prescription drug plan in lieu of employer coverage, but "if they drop their retiree drug benefit, they will not be able to go back to that benefit," said David Spivack, senior vice president of PacifiCare's Medicare prescription drug program. "In most cases retiree drug benefit plans are pretty good."