This section provides an overview of the Medicare Prescription Drug Benefit, referred to as Medicare Part D, and Medicare Advantage Prescription Drug plans.

• 2009 Medicare Part D Prescription Drug Benefit
• Part D Benefit Options
• Stand-Alone PDP Overview
• Medicare Advantage Overview
• Low-Income Subsidy
• Part D Enrollment
• Frequently Asked Questions (FAQs)

2009 Medicare Part D Prescription Drug Benefit

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) established a voluntary outpatient prescription drug benefit, known as Part D, for people on Medicare. As of January 1, 2006, all 44.8 million elderly and disabled beneficiaries have access to the Medicare drug benefit through private plans approved by the federal government. The Part D benefit continues in 2009 with few changes to the program.

Part D Benefit Options

There are two ways that beneficiaries can get prescription benefits under Medicare. Patients with traditional fee-for-service Medicare may add a stand-alone Part D plan (PDP). Alternately, patients may choose to enroll in a Medicare Advantage (MA) plan, in which private health plans provide basic Medicare services in place of traditional Medicare. Many MA plans also offer prescription benefits, called Medicare Advantage Prescription Drug Plans (MA-PDs). Eighty percent of Medicare beneficiaries are enrolled in traditional Medicare, and 20% of Medicare beneficiaries receive their benefits through MA plans.

Stand-Alone PDP Overview

MMA defined the standard benefit, which is adjusted annually by the rate of per capita Part D spending growth.

PDPs may offer either the defined standard benefit or alternative plan designs. Below is an overview of the three types of stand-alone PDPs:

Medicare Advantage Overview

Beneficiaries enrolled in MA-PD plans obtain an integrated benefit consisting of inpatient (Part A), outpatient (Part B), and prescription drug coverage (Part D) offered through a commercial insurer. MA-PD plans are required to offer basic drug coverage, but may also offer plans with supplemental coverage for an additional premium. Certain MA plans may also offer Special Needs Plans (SNPs) that serve special-needs individuals, including end-stage renal disease (ESRD) patients.

Low-Income Subsidy

Effective January 1, 2006, Medicare replaced Medicaid as the primary source of drug coverage for beneficiaries with coverage under both programs (“dual eligibles”).

Beneficiaries with low incomes and modest assets are eligible for assistance with premiums and cost-sharing under PDPs, and are not subject to the coverage gap. There are 3 categories for low-income subsidy recipients:

The most recent data available indicate that an estimated 12.5 million beneficiaries are eligible for the low-income subsidy in 2008; of those, 9.4 million actually are receiving it. Almost 8 million patients receive the low-income subsidy automatically because they are Medicare/Medicaid dual eligibles, enrolled in a Medicare Savings Plan, or are Supplemental Security Income recipients. Other beneficiaries must apply for the subsidy. Therefore, it is important for patients to contact their local Social Security office or visit socialsecurity.gov/prescriptionhelp to see if they may qualify for extra help.

Part D Enrollment

The Annual Coordinated Election Period runs annually from November 15 through December 31 of the year preceding the one for which coverage will become active. Individuals who become eligible for Medicare during 2009 or thereafter should enroll in Part D immediately upon eligibility. Late enrollment will result in a penalty of 1% per month of eligibility for which the patient waits to enroll. However, the late-enrollment penalty is waived for beneficiaries who apply for and receive the low-income subsidy.