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Unformatted text preview: The Henry J. Kaiser Family Foundation: Washington, D.C. Office: Website: THE MEDICARE PRESCRIPTION DRUG BENEFIT June 2006 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) established a voluntary outpatient prescription drug benefit for people on Medicare, known as Part D. The drug benefit, which took effect in January 2006, is available to all 43 million elderly and disabled beneficiaries who enroll in private plans approved by Medicare to offer coverage. Medicare replaces Medicaid as the primary source of drug coverage for low-income and disabled people with both Medicare and Medicaid (dual eligibles). Assistance with drug benefit premiums and cost sharing is available to beneficiaries with low incomes and modest assets. MEDICARE PRESCRIPTION DRUG PLANS The drug benefit is offered through two types of private plans: stand-alone prescription drug plans (PDPs) for people getting other Medicare benefits through the fee- for-service program, and Medicare Advantage prescription drug (MA-PD) plans, such as HMOs or PPOs, that cover drugs and other Medicare benefits. In 2006, a total of 1,429 PDPs and 1,314 MA-PD plans are offered across the 34 PDP regions and 26 MA regions nationwide (excluding the territories). Beneficiaries in most states have a choice of at least 40 stand-alone PDPs and one or more MA-PD plans (Figure 1). PART D ENROLLMENT Enrollment in Medicare drug plans is voluntary for most beneficiaries, with the exception of dual eligibles and certain low-income beneficiaries who are automatically enrolled in a drug plan if they do not choose one on their own. However, unless beneficiaries have coverage that is at least as good as the standard Medicare drug benefit (creditable coverage), they face a penalty equal to 1% of the national average monthly premium for each month they delay enrollment. To encourage employers to offer creditable drug coverage to retirees, Medicare provides employers with tax-free subsidies equal to 28% of costs between $250 and $5,000 in drug expenses per retiree. As of June 2006, HHS reported that 22.5 million beneficiaries enrolled in Medicare Part D plans prior to the 2006 enrollment deadline, and 10.4 million have creditable drug coverage through retiree plans, including FEHB and TRICARE (Figure 2). HHS estimates that another 5.4 million have alternative sources of creditable drug coverage, such as the Veterans Administration....
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- Fall '07