Once again the Medicare Advantage and Part D Annual Coordinated Election Period (ACEP) is upon us; it's time to contemplate Medicare prescription drug and Medicare Advantage choices for another calendar year. The big news is that the ACEP, while one week longer than in the past, starts and ends much earlier this year. The ACEP will begin on October 15 and end on December 7, 2011 for coverage that begins January 1, 2012.
The Annual Coordinated Election Period – October 15 to December 7
During the ACEP, Medicare beneficiaries who do not yet have a Part D plan may enroll in a Prescription Drug Plan (PDP) or a Medicare Advantage Prescription Drug plan (MA-PDs). Those who are already enrolled in a plan may also switch to a different PDP or MA-PD. Even beneficiaries who were satisfied with their plans in 2011 need to review their options to avoid being stuck in a plan that no longer works for them.
Beneficiaries who miss the new ACEP deadline may have to wait until 2013 to enroll in Part D, and may face a "lifetime" late enrollment penalty, unless they qualify for another Medicare enrollment period, or a Special Enrollment Period (SEP). Individuals who qualify for the Part D Low Income Subsidy (including all full and partial dual eligibles) have a continuous SEP that allows them to enroll in or change plans at any time of year, regardless of the ACEP.
The 5-Star SEP
New and notable in 2012 is the "5-star" SEP, which begins on December 8, 2011 and continues through November 30, 2012. This is a one-time SEP that allows beneficiaries to enroll in a PDP or MA-PD that has received an overall 5-star ("excellent") rating from CMS. Individuals who miss the new ACEP deadline may find this is the only way to obtain coverage in a 2012 plan, if they do not qualify for the LIS, or do not meet the conditions for any other type of SEP.
Eligibility for the 5-star SEP presumes the availability of 5-star Part D plans in the beneficiary's state (or for purposes of Medicare Advantage, the plan's service area, which is usually county-by-county).
The plan ratings that appear in the 2012 Medicare & You handbook may not be up-to-date. Official ratings are listed on the Medicare Plan Finder on the Medicare website, www.medicare.gov. For purposes of the 5-star SEP, the plan rating must come from the Plan Finder or 1-800-Medicare.
Please refer to the Center's Alert of September 22, 2011, which provides more details on the 5-star SEP and other SEPs that may provide additional opportunities to enroll in or disenroll from Part D after the ACEP concludes.
Notice of Creditable Coverage – September 30
Medicare beneficiaries who currently have prescription drug coverage through their own or a spouse's employer or union plan should receive an annual Notice of Creditable Coverage telling them whether their prescription drug plan is "creditable," i.e., at least as good as Part D coverage. The timing of the notice of creditable coverage has been adjusted to coordinate with the timing of the new ACEP – it must be received by September 30.
Beneficiaries with creditable coverage should check with their plan's Benefits Administrator before enrolling in Part D. It is generally better for these beneficiaries and their dependents to stay with their existing creditable coverage, rather than enrolling in Part D.
Note that individuals who have Veterans' Administration (VA) or TriCare coverage, or federal employee health benefits, may keep their coverage and join a Part D plan, subject to coordination of benefit rules for those plans.
Annual Notice of Change (ANOC)
Each year many beneficiaries who stay with their current plans are dismayed to learn that some of the drugs they take have been taken off the plan's formulary, or may be subject to new restrictions, or may cost much more.
Annually, plans can and generally do change their premiums, deductibles, co-pays, formularies (list of covered drugs), and utilization management restrictions, such as prior authorization, quantity limits and step therapy. All of these changes must be outlined in the plan's Annual Notice of Change (ANOC), which is mailed to current members prior to the ACEP. The timing of the ANOC is changed to coordinate with the timing of the new ACEP. It must be received by September 30.
We cannot emphasize strongly enough that the primary consideration in choosing a plan is whether or not the drugs taken by a beneficiary are on the formulary, at the dosage s/he takes, with as few restrictions as possible. Beneficiaries are encouraged to read their ANOC to know what to expect in 2012, and to use this document as a basis for comparison to other plans.
Medicare Plan Finder
Medicare Prescription Drug Plans (PDPs), Medicare Advantage Prescription Drug plans (MA-PDs) and Medicare Advantage plans without prescription drug coverage (MA-only plans) may begin to market their plans on October 1, 2011. As of October 6, 2011, the Medicare Plan Finder is "live" with 2012 information on premiums, deductibles, drug co-pays, formularies, and drug utilization management restrictions. Plan star ratings will be available October 12.
For the computer-savvy, the Medicare Plan Finder is an excellent plan comparison tool, allowing users to enter all their drugs and drug dosages, compare up to three plans at a time, save their drug information for later use, and actually enroll in a plan on-line. This is the best – if not only – way to truly compare the many plans available to choose from. People who cannot use the Plan Finder themselves may contact 1-800-Medicare, or their State Health Insurance Assistance Program (SHIP), for assistance to evaluate, select and enroll in a Part D plan.
The 2012 Standard Part D Benefit
The Part D Standard Benefit is the most basic coverage available under Part D. See http://www.medicareadvocacy.org/medicare-info/medicare-part-d/#standard benefit for a description of the standard plan costs and benefits from 2006 through 2012.
Note that many plans offer variations on the standard benefit – such as eliminating or reducing the deductible, or employing tiered drug costs rather than a flat 25% co-insurance during the Initial Coverage Period. These "actuarially equivalent" or "basic alternative" plans still provide only standard coverage, in contrast to "enhanced" plans that may offer coverage beyond the standard benefit, such as coverage of some drugs during the Donut Hole.
In 2012, eligible plan members who purchase formulary drugs during the Donut Hole will receive a 50% discount on brand name drugs and a 14% discount on generics. As in 2011, the full cost (100% of the negotiated price) of brand name drugs will count toward a person's true out-of-pocket expenses (TrOOP). Members will pay a small dispensing fee in addition to the discounted price. For generic drugs, only the actual amount paid will count toward TrOOP.
Individuals who receive "Extra Help" from the Part D Low Income Subsidy (LIS) are not eligible for the discount because they are not affected by the Donut Hole and, in any case, their costs are already below the Donut Hole discount levels.
Low Income Subsidy (LIS) Cost Sharing
Effective January 1, 2012, certain full benefit dual eligibles have $0 co-pays for their Part D drugs. This includes certain beneficiaries who receive Home and Community Based Services (HCBS) in place of institutional care. They may receive this care under certain home and community-based waivers, a state plan amendment, or if enrolled in certain Medicaid managed care organizations.
See http://www.medicareadvocacy.org/medicare-info/medicare-part-d/#LIS for a summary of LIS cost sharing at this time.
Income-Related Monthly Adjustment Amount (IRMAA) – Part D
Medicare Part D beneficiaries with higher incomes pay higher Medicare Part D premiums based on their income, similar to higher Part B premiums already paid by this group. The premium adjustment is called the Income-Related Monthly Adjustment Amount (IRMAA). The IRMAA is not based on the specific premium of the beneficiary's plan, but is rather a set amount per income-level that is based on the national base beneficiary premium, which is recalculated annually. In effect, the IRMAA is a second premium paid to Social Security, in addition to the monthly Part D premium already being paid to the plan.
The IRMAA is withheld from an individual's monthly Social Security payment, even if the beneficiary otherwise makes premium payments directly to the plan. If the beneficiary is not receiving Social Security, or if the Social Security payment is insufficient to cover the IRMAA, the beneficiary will be billed by Social Security for the IRMAA.
While 2012 income thresholds remain the same as 2011, the IRMAA is down slightly in 2012 because of a small decrease in the national base beneficiary premium this year. Single Medicare beneficiaries whose modified income is less than $85,000, and couples whose modified income is less than $170,000, do not pay an IRMAA. See http://www.medicareadvocacy.org/medicare-info/medicare-part-d/#IRMAA for a chart of Adjustment amounts by income level for 2012.
Late Enrollment Penalty (LEP)
Some individuals who do not enroll in Part D when they are first eligible may face a Part D Late Enrollment Penalty (LEP). Beneficiaries who delayed enrollment in Part D because they had creditable coverage, or qualified for the Part D Low Income Subsidy (LIS), or who were eligible for the Hurricane Katrina SEP are not subject to the Late Enrollment Penalty.
The LEP is based on 1% of the national base beneficiary premium, times the number of full months the beneficiary could have been enrolled in Part D. As referenced above, the 2012 national base beneficiary premium is $31.08. Penalties cannot go back beyond June 2006.
Amount in Controversy 2012
In order to pursue a Part D appeal at the Administrative Law Judge (ALJ) level, the amount in controversy must equal at least $130 in 2012. The amount in controversy to pursue a case in federal district court must equal $1350 in 2012.
October is a busy time in the world of Medicare's private plans. Perhaps the most important piece of information for Medicare beneficiaries in private plans – both Medicare Advantage and stand-alone Part D plans – is that they should review their plan's changes for 2012, even if they have been satisfied with the plan in 2011. Even if the plan's premium remains the same or lower than before, beneficiaries should examine the plan's coverage, including formularies and any formulary restrictions for Part D plans.