The Patient Protection and Affordability Act addresses the gap in coverage Medicare Part D enrollees experience when they exceed the initial coverage limit of $2,840. Prior to 2011, most* Medicare Part D enrollees were required to pay 100 percent of prescription drug costs once expenses exceeded the initial coverage limit and until they reached $4,550 (catastrophic coverage). This gap in coverage is often referred to as the "donut hole."
This provision includes a structured plan to fill the "donut hole" gap.
Beginning in 2011, Part D enrollees who reach the gap will receive a 50 percent manufacturer discount on the total cost of their brand-name medications.
Beginning in 2013, in addition to the 50 percent discount, a portion of the cost of brand-name medications in the gap will be covered. By 2020, this will reach an ultimate benefit of 75 percent coverage, including manufacturer discount.
Beginning in 2011 through 2020, Part D will also cover a portion of the cost of generic medications in the gap, reaching 75 percent by 2020.
The actual out-of-pocket amount paid to become eligible for catastrophic coverage will be reduced by the amount of current manufacturers' discounts.
In addition to the Part D gap adjustments, the Retiree Drug subsidy paid to employer plan sponsors becomes taxable income beginning in 2013.
Frequently Asked Questions
What impact will these changes have on employer-sponsored Retiree Drug subsidy eligible plans?
In combination the new law will enable employers to deliver prescription drug benefits to Medicare retirees more cost effectively through Part D plans than though Retiree Drug subsidy eligible plans. The majority of employers are expected to convert to Part D programs between now and 2013.
How will the 50 percent manufacturer's discount program apply to employer Part D plans that provide brand name drug coverage in the gap?
The employer plan pays primary, so the 50 percent discount applies only to the remaining balance after the employer plan pays its applicable share of the cost. By combining a Part D plan and a secondary wrap plan an employer can capture the full 50 percent discount while providing additional coverage to its retirees. UnitedHealthcare offers a combined PDP and secondary wrap product for groups with 1,000 or more eligible members.
What is the Medicare Part D Creditable Coverage notice and who must provide it?
The Medicare Modernization Act mandates that certain entities offering prescription drug coverage, including employer and union group health plan sponsors, disclose to all Medicare-eligible individuals with prescription drug coverage under the plan whether such coverage is "creditable." Creditable means that the plan is at least actuarially equivalent to the Medicare Part D coverage. This information can be essential to an individual's decision whether to enroll in a Medicare Part D prescription drug plan since only individuals with creditable coverage will be able to enroll in Part D at a later date without incurring late enrollment penalties. The creditable coverage notice (sometimes referred to as an attestation letter) applies to individuals who are NOT in a Part D plan, but are in an employer plan. It's important to note that it is the plan sponsor's responsibility to communicate to its members if its plan is creditable or non-creditable. While this requirement is not related to health reform, many customers have inquired about it.
Annually, UnitedHealthcare requests OptumInsight to perform bulk testing of our standard benefit designs to satisfy the actuarial value test of the creditable coverage determination. See our listing of health plans.