Frequently Asked Questions on the Medicare Prescription Drug Benefit (Part D)

As part of this complicated process, most seniors are only given six weeks each year to make difficult decisions about their prescription drug coverage, and are then locked into the plans they select for an entire year. This year's Annual Coordinated Election Period (ACEP) begins on November 15, 2007 and lasts until December 31, 2007. It is only during this open enrollment period that most seniors are permitted to enroll in a Part D plan, drop Part D coverage, or switch to a different plan. While most seniors will be locked into the plans they select for all of 2008, plans are allowed to make significant changes to their prices, formulary, and benefits throughout the year, and many have announced significant changes to their coverage for next year. Because of this, we strongly encourage you to closely examine how your current coverage will change in 2008. It might be to your advantage to choose another plan that better matches your prescription needs and your cost expectations.

We believe it is essential for seniors to be given the most accurate information possible about Part D so they can make informed decisions about whether to enroll in the prescription drug benefit program and how to pick a plan that best serves their needs. For this reason, we have compiled the best answers available today to the questions most frequently asked by seniors and their caregivers in order to help the American public better understand this new law. As new information becomes available, we will continue to update this material.

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1. What is the Medicare Drug Benefit?
The Medicare prescription drug benefit - also known as Medicare Part D - is voluntary insurance that Medicare beneficiaries can purchase to help cover the costs of a portion of their prescription drugs. Only private insurance companies can offer Part D plans. It is up to you to decide which plan best fits your needs. Like other insurance plans, you are responsible for paying a deductible, monthly premium, and co-payments. Unlike other insurance plans, you also will likely be exposed to a large coverage gap or donut hole, where you continue paying monthly premiums but receive no help with the costs of your prescription drugs.

You can join a Medicare Part D private plan and continue to receive your traditional Medicare benefits for hospitalization (Part A) and doctors' visits (Part B) directly through the federal government. Or you can join a private insurance Medicare Advantage plan, such as a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO), which will provide all of your Medicare benefits, including prescription drug coverage.

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2.What are some key dates to remember?
The timeline below provides a summary of key milestones in signing up for Part D coverage for 2008.

October 1, 2007: Plans begin marketing their Part D prescription drug benefits for 2008. Also, plan termination notices are sent. If your prescription drug plan is terminating being terminated, you will receive a letter notifying you know that you will have to choose a new plan for 2008 .

Mid-October 2007: Starting October 11, you will be able to find and compare plans online at www.medicare.gov or by calling 1-800-MEDICARE. This is also when the Centers for Medicare and Medicaid Services (CMS) begin reassigning new plans to certain beneficiaries who are eligible for "extra help." You will only be reassigned to a new plan if you are enrolled in a plan that is terminating in 2008, or if your premium increased above the regional low-income premium subsidy amount by mor ethan $1.00..

October 15, 2007: The Medicare & You 2008 Handbook is mailed to all Medicare beneficiaries. This handbook contains important information on the Medicare program for 2008.

October 31, 2007: CMS stops mailing the Medicare & You 2008 handbook. Also, if you are currently enrolled in a Part D plan, you will receive a letter from your plan notifying you of any changes to the plan for 2008. The letter explains how your benefits, premiums, and co-payments will change next year. It will also inform you of the upcoming open enrollment period so you can change plans.

Early November: If you are automatically reassigned to a new prescription drug plan, you will receive a blue letter from the CMS. Beneficiaries who are receiving "extra help" with their drug costs will only be reassigned to a new plan if they are enrolled in a plan that is terminating in 2008 or if their premium increased above the regional low-income premium subsidy amount by more than $1.00.

November 15, 2007: The official open enrollment period for Medicare Part D begins on November 15, 2007. You will able to enroll in a Part D plan, drop your Part D coverage, or switch to a different Part D plan. If you want to remain in your current prescription drug plan, you do not have to do anything during the open enrollment period. Your prescription drug coverage will continue with its new benefit and cost design for 2008.

December 7, 2007: It is best to enroll in a Part D plan by December 7, 2007 to ensure that your coverage will go into effect on January 1, 2008. If you wait until later in December to enroll, you may end up without coverage at the beginning of the year until your enrollment is processed.

December 31, 2007: The open enrollment period for Medicare Part D ends. Failure to enroll in Part D by December 31, 2007 could increase the late penalties that you pay in Part D premiums in the future.

January 1, 2008: Part D coverage for the new 2008 plan year begins.

January 31, 2008: New prescription drug plans must have sent evidence of coverage, including "extra help" information, to beneficiaries.

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3. Who is eligible to enroll in Part D?
Any senior who has either Part A or Part B of Medicare is eligible, regardless of health or income. An exception is made for beneficiaries who are incarcerated - they are not eligible to participate in Part D.

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4. Do I have to enroll?
No, the Part D benefit is completely voluntary, except for certain very low-income seniors who receive Medicaid benefits and are automatically enrolled in a Medicare prescription drug program. These low-income seniors are given the option to opt-out of Part D, but are not allowed to return to Medicaid for their prescription drug needs. In most cases, seniors who delay enrollment will be subject to penalties when they do sign up. The penalties do not apply if you have other drug coverage that is at least as good as Medicare's(see question # 41)

Note: Most people have to sign-up if you want coverage.

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5. What will Part D cost?
Your costs will depend on the plan you choose. The law outlined a standard plan that is used as the yardstick to measure the overall value a private plan must offer in order to be approved by Medicare. The private insurers participating in the program may structure their benefit differently, as long as the overall value is at least as good as the Medicare basic plan. For example, a plan may have higher premiums but cover more drugs, or offer reduced co-payments, as long as the overall package of benefits is comparable to the standard plan outline. Regardless of their structure, plans may not impose a higher deductible ($275 in 2008) or require a higher out-of-pocket limit ($4,050 in 2008) than required by the standard benefit.

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6. What is the Standard Part D Plan?
The standard plan requires seniors to pay an estimated monthly premium of about $28 per month - if you remain in your current plan - or $336 in 2008. In addition:

• You will be subject to a deductible of up to $275 per year, plus
  
• You will pay 25 percent of the cost of the next $2,235 in qualified drug expenses (meaning seniors will be responsible for an additional $558.75 in out-of-pocket costs).
  
• Next, you fall into what is known as the "donut hole" or "coverage gap". This requires that you pay out-of-pocket 100 percent of the next $3,216.25 in covered drug costs. In addition, you must also continue to pay your monthly premium. This brings you to a total of $5,726.25 in qualified drug expenses, $4,050 of which will be out-of-pocket for you and $1,676.25 of which will be paid by your Part D plan.
  
• Once you reach $4,050 in out-of-pocket expenses, catastrophic coverage begins and you pay only 5 percent of qualified costs, or a co-payment of $2.25 for a generic or preferred drug and $5.60 for other drugs, whichever is greater, for the remainder of the year.

A few points to remember:

• Only qualified drug expenses count, so if you're importing drugs from Canada or using prescriptions not covered by the plan you signed-up for, none of those expenses count toward any of the limits;
  
• All of the dollar amounts are tied to drug cost inflation, so they will go up from year to year;
  
• All of the dollar amounts are annual, so CMS will begin counting from zero each year;
  
• Premiums will change from year to year, and will vary from plan to plan and region to region;
  
• If your income is limited, you may be eligible for "extra help" to pay these costs.
  

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7. How much will I save on prescription drugs?
The majority of low-income beneficiaries will experience significant savings by enrolling in Part D. The Social Security Administration estimates that "extra help" could be worth an average savings of $3,660 a year on prescription drugs. Effective January 1, 2008, in order to avoid a premium and any gap in coverage for low-income enrollees, around 1 in 6 beneficiaries will be assigned, on a random basis, to a new plan in their coverage area by CMS. Low-income seniors who live in states with generous Medicaid programs could end up with higher out-of-pocket costs in Part D, but they have no choice about switching from Medicaid to Medicare Part D for prescription drug coverage. Some of these states are covering the extra costs these low-income seniors would otherwise pay by providing coverage to "wrap around" the federal benefit.

Savings are much smaller for beneficiaries with middle and high incomes. Medicare estimates that the prescription drug benefit saves seniors an average of $1,200 a year. Out-of-pocket costs for those who do not qualify for the subsidies can be steep, and they will inevitably rise annually at the rate of drug cost inflation. Studies by FamiliesUSA as well as AARP show that drug costs rise faster than health care inflation overall, and both rise faster than general inflation. For seniors relying primarily on Social Security benefits to cover their expenses, Medicare Part D out-of-pocket increases could rapidly outpace the Social Security Cost of Living Adjustment (COLA), which keeps pace with general inflation.

Unlike the Part B program, in which premiums cannot exceed the annual Social Security COLA (except for higher income beneficiaries), the new Part D benefit is not subject to any limits. According to forecasts by the actuaries at the Centers for Medicare and Medicaid Services (CMS), Part D premiums, deductibles, and the donut hole will nearly double in size between 2008 and 2016. Because the program does not contain any meaningful cost containment of prescription drug costs, Part D may do very little over time to make prescription drugs more affordable for the average senior.

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8. What are my plan choices?
There are two types of Part D plans:

Stand-alone Prescription Drug Plans (PDP): "Stand-alone" plans only offer prescription drug coverage. If you sign up for one of these, you continue to get all your other medical services, such as doctor visits and hospital stays, through the traditional Medicare program or through some Private Fee-for-Service (PFFS) plans if they do not offer drug coverage.

Medicare Advantage Plans (MA): "MA" plans are private health plans such as Health Maintenance Organizations or HMOs, Preferred Provider Organizations or PPOs, and Private Fee-for-Service or PFFS plans. These plans provide all your Medicare-covered services, including prescription drug coverage.

If you are in a Medicare cost program or a PFFS plan that does not offer drug coverage, you can enroll in a stand-alone prescription drug plan. However, if you are in an HMO or PPO, you must receive your entire medical and drug coverage through that plan. You cannot enroll in a separate stand-alone plan.

There are 17 national stand-alone plans, and dozens of local or regional plans, both stand-alone and managed care. Your number of choices depends on how many plans are approved to offer the drug benefit where you live.

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9. Will all the prescription drugs I take be covered?
Not necessarily. Each plan has its own list of covered drugs, called a formulary, that includes both brand-name and generic drugs. Many plans have "tiers" of drugs, which determine how much you will pay for each drug.

Plans are allowed to change the drugs on their formulary, as well as their prices throughout the year. If a plan decides to remove a drug from its formulary, move it to a more expensive tier, or add utilization management requirements (such as step therapy, quantity limits, or prior authorization), they are encouraged by Medicare to continue providing the drug at the same cost-sharing level for the remainder of the plan year to those enrollees who were taking the medication at the time of the change. Plans are required to provide beneficiaries currently taking the prescription with a 60-day notice of the formulary change. All other enrollees who may be prescribed the drug in the future would be subject to the new formulary and drug prices. These enrollees will not receive individual notice of the plan changes, but will be subject to the coverage limits and prices listed on the plan website.

Plans may replace brand-name drugs on their formularies with new generic drugs at any time. Plans are required to provide enrollees who are taking the brand-name drug at that time with a written notice at least 60 days before the change. If you receive such a notice, you should talk to your doctor to see if you can take the generic drug or need to stay on the brand-name version. If you need to take the brand-name drug instead of the generic drug, you or your doctor should request an exception to the formulary. Every plan must have a process in place for you to request an exception to the formulary limits when your plan does not cover a drug, requires trying another drug first, or places a limit on the drug prescribed (see question #28).

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10. What drugs will Part D cover?
All plans must cover at least two drugs from each therapeutic class of drugs. A therapeutic class contains drugs that are similar based on the disease they treat or on the way they affect the body. Biological products, including insulin and insulin supplies, and smoking cessation drugs are covered under Part D. In addition, plans must cover substantially all of the drugs in certain classes: antidepressants; antipsychotics; anticonvulsants; antiretrovirals; anticancer; and immunosuppressants.

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11. Which drugs are not covered by Part D?
There are some drugs that are excluded from Medicare coverage by law. These include drugs for anorexia, weight loss or weight gain; fertility; cosmetic purposes or hair growth; relief of the symptoms of colds; prescription vitamins and minerals (except prenatal vitamins and fluoride preparations); over-the-counter drugs; and certain anti-anxiety and anti-seizure drugs including barbiturates and benzodiazepines.

Some plans may offer enhanced coverage that includes these excluded drugs. If you have full Medicaid, your state may also cover them. However, the amounts you pay for these drugs will not count toward meeting any of your Part D out-of-pocket cost limits.

If drugs are covered by Medicare Part A or Part B, then they are not covered by Part D. Drugs not covered include some oral cancer drugs, immunosuppressants, antivirals, antigens and anti-emetics. This exclusion applies whether or not you are actually enrolled in either Part A or Part B. The cost of these drugs is not counted toward your out-of-pocket limits under Part D.

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12. What costs count as out-of-pocket expenses?
Only payments for drugs on your plan's formulary count towards your out-of-pocket maximum, unless you have received an exception to the plan's formulary (see question # 29). Medicare refers to these as True Out-of-Pocket (TrOOP) Costs. Some examples of payments that DO count toward your out-of-pocket limits are:

• payments you make yourself, or that are made on your behalf by family or friends as long as you are not reimbursed by an insurer. These include your deductible, co-payments, and what you spend out-of-pocket when you are in the "donut hole";
• a qualified State Pharmacy Assistance Program (SPAP), but only to the extent the money is used to purchase drugs covered by your plan;
• a charitable organization that is not associated with an insurer or your employer;
• health savings, flexible spending or medical savings accounts.

Remember - only payments for drugs your plan covers (including any "exceptions" you receive) count toward the limits. Your out-of-pocket costs will be calculated by calendar year, and your drug plan will keep track of your expenses for you. If you change your drug plan, your old plan must transfer this information to your new plan.

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13. What costs do NOT count as out-of-pocket expenses?
Some examples of drug costs that do not count include:

Any payments made by:

• group health plans (such as retirement coverage provided by a former employer or union
• government programs such as TRICARE, Black Lung, Veterans health benefits and Indian Health Services
• Workers' Compensation;
• Automobile, no-fault, or liability insurance;
• AIDS Drug Assistance Programs (ADAPs);
• Any other third-party payment arrangement;
• Drugs purchased outside the United States ;
• Drugs not on the plan's formulary (unless you have received an exception);
• Drugs explicitly excluded from Medicare drug coverage, even if your plan has enhanced coverage to include them.

Note also - the amount you pay for your monthly Medicare Part D premium does NOT count as an out-of-pocket expense.

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14. When can I enroll?
If you currently have Medicare, you may enroll in a prescription drug plan from November 15, 2007 until December 31, 2007. The new benefit begins on January 1, 2008. The Centers for Medicare and Medicaid Services is encouraging beneficiaries to enroll before December 7, 2007 to reduce any potential problems with drug coverage beginning on January 1, 2008. You may be subject to a penalty premium if you were previously eligible for prescription drug coverage and did not enroll (see question # 41).

If you are not yet eligible for Medicare, your timeframe for enrolling in the new Part D is the same as Part B - a seven month period that includes your birth month, plus the three months immediately before and after your birth month. Your benefit begins on your 65th birthday or the first day of the month following enrollment, whichever comes later.

If you are in a stand-alone plan, you can enroll or disenroll from Part D once a year during the Annual Coordinated Election Period (ACEP), which runs from November 15th to December 31st. If you are in a managed care plan, in addition to the ACEP, you can also switch to a similar plan once a year from January through March (see question # 15).

During calendar years 2006 and 2007, the Centers for Medicare and Medicaid Services (CMS) created a Special Enrollment Period to encourage those with low-income to apply for the "extra help" beneits and enroll in a Part D plan without experincing a late enrollment penalty. As of October 2007, CMS has not created a Special Enrollment Period for low-income beneficiaries in 2008, nor have they waived the late enrollment penalty or those receiving extra help in 2008. If you think you may be eligible for "extra help", we encourage you to apply to it as soon as possible to avoid any late penalties. We also encourage you to check with CMS to see if their policies have changed by the time you're ready to enroll in a plan (see question # 42).

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15. When can I change plans?

Most seniors may only switch plans during two periods each year.

Annual Coordinated Election Period (ACEP)

During the Annual Coordinated Election Period (ACEP), which runs from November 15th through December 31st each year, you can enroll in or drop Part D, or change from one stand-alone plan to another, or to a managed care plan.

Open Enrollment Period (OEP)

Each year there will also be an Open Enrollment Period, from January through March. During the Open Enrollment Period you can move between the different types of plans. For example, you can move from a stand-alone plan to a managed care plan, or from a managed care plan to a stand-alone plan, or from a managed care plan to another managed care plan. However, you may not move from one stand-alone plan to another or enroll in Part D for the first time.

Special Enrollment Period (SEP)

There are special time periods during which you may join or change Part D plans outside the ones specified above. Some examples of reasons you might qualify for an SEP include if you:

• move out of your plan's service area;
• lose your non-employer drug coverage (such as your State Pharmaceutical Assistance Program or SPAP) through no fault of your own;
• lose your employer (current or retiree) coverage for any reason;
• enter, reside in, or leave a long-term care facility;
• lose full Medicaid coverage;
• enroll in a Program of All-Inclusive Care for the Elderly (PACE).

In many of the above cases, if you had drug coverage comparable to Part D, you will be given 63 days to enroll in a Part D plan before a penalty applies.

Institutionalized seniors can change plans once a month while they remain institutionalized. Once you leave an institution, you have 63 days to enroll in a plan without penalty (see question # 64).

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16. How do I sign up for Part D?
You can join a Part D plan by calling 1-800-MEDICARE; by completing an online application on Medicare's website at www.medicare.gov; or by contacting the plan of your choice at its website or at the phone number provided in its brochure or on Medicare's website. You may only enroll during certain time periods (see question # 15).

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17. How do I disenroll from a Part D plan?
You may also disenroll from your plan by calling Medicare or contacting your plan directly. If you disenroll from your plan, you cannot enroll in another plan until the next enrollment period. You may be subject to a late enrollment penalty for not maintaining coverage (see question #32)

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18. What if I accidentally sign up for more than one plan?
During an enrollment period, if you already have a plan and sign up for a new one, you will be automatically disenrolled from the first plan. If you make multiple plan selections during a month, the last one you make will become effective on the first day of the following month.

However, you must be in an enrollment period to join a plan or change plans. If you try to do either outside of an enrollment period, you will be denied.

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19. Will I need to reapply every year?
No. If you do nothing, your current plan will continue. However, because both the plan you are enrolled in and your drug usage and needs may change, you should re-evaluate your Part D plan every year to make sure you are receiving the best coverage for your needs. By October 31st, you should have received the Annual Notice of Change from your plan. That notice will explain the prescription drug benefit and formulary being provided in 2008, as well as any changes to premiums, co-payments, and coinsurance the plan has made to the coverage it provided in 2007. You should review this notice to make sure your prescription drug plan still meets your needs.

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20. How do I pay my premium?
You can either have your premium automatically deducted from your Social Security, Railroad Retirement, or Office of Personnel Management check monthly (in the same way your Part B premium is currently deducted), or you can pay it directly to the plan in which you have enrolled. Should you choose to have your premium deducted from your Social Security check, your first two months' premiums will be combined. However, this year the Centers for Medicare and Medicaid Services (CMS) is encouraging beneficiaries to pay their Part D premium directly to their plan, rather than having it deducted from their monthly Social Security check. There were a number of problems with Part D premiums being accurately deducted from Social Security check in 2007. To help prevent these problems in the future, CMS is making the direct plan payment option the default setting on its website. While this will reduce payment problems that result from government inadequacies, it also leaves beneficiaries on their own to deal with complicated payment issues, frequently with multiple insurance companies at the same time.

Employers, State Pharmaceutical Assistance Programs (SPAPs), state Medicaid agencies, and charitable organizations can also pay the Part D premium for you.

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21. Once I enroll in Part D, when does the coverage begin?
If you join before December 31, 2007, your drug coverage will begin on January 1, 2008. However, the Centers for Medicare and Medicaid Services suggests that you enroll in a plan by December 7, 2007 to minimize any potential problems with your coverage beginning on January 1st. If you are currently enrolled in a different plan, that drug coverage will last through December 31st and your new coverage will begin on January 1, 2008.

If you enroll or change coverage during a Special Enrollment Period (SEP), the effective date of your coverage will depend on the reason for the SEP.

If you first become eligible for Medicare Part D at any other time - for example, if you turn 65 part way through the year - your coverage will start on the month you become eligible if you joined in the first three months of your Initial Enrollment Period, or the month after the one in which you joined, if you sign up during the last four months of your Initial Enrollment Period.

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22. Can my application be rejected?
Yes, your application can be denied in a few circumstances, such as if:

• you are not eligible for Medicare drug coverage;
• you are not in the plan's coverage area;
• you have End-Stage Renal Disease and you are attempting to enroll in a managed care plan;
• you are not eligible for either Medicare Part A or Part B;
• the plan is not accepting new members;
• you are enrolled in a managed care plan while attempting to also enroll in a stand-alone drug plan;
• your application is incomplete and you fail to contact your plan within 30 days after it notified you by mail;
• you are incarcerated.

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23. What can I do if my application is denied?
You can call the plan and attempt to clarify the rejection directly, or you can contact Medicare for assistance. However, beneficiaries who are denied enrollment, lack adequate appeal rights to challenge the decision made by private plans. In lieu of appeal rights, beneficiaries can go through a Medicare grievance process which is controlled by the private plans and not subject to independent review.

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24. Where can I get my prescriptions filled?
Most pharmacies, including both independent and chain pharmacies, are participating in Part D, but not necessarily with all plans. Each Part D plan contracts with a network of pharmacies to provide the drugs it covers, and you must use one of these pharmacies to fill your prescriptions. Plans are required to provide pharmacies within a reasonable distance from your home, but those who live in rural areas may find themselves traveling considerable distances to reach the pharmacy of a particular plan. If the choice of pharmacies is important to you, or particularly if transportation is an issue, you should make sure to pick a plan that will allow you to use the pharmacies you prefer. If you regularly spend part of the year in another state, you should consider enrolling in a national drug plan that includes pharmacies across the nation. Many plans also offer mail order services.

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25. Can I use a pharmacy outside my plan's network?
Under limited circumstances, you may be allowed to use a pharmacy that is not part of your plan's network. This exception cannot be used on a regular basis, and you will need to show that you cannot reasonably get the necessary drugs from a pharmacy that is in your network - for example, if you need an emergency prescription when you are traveling outside your plan's service area. You may be required to pay more for drugs purchased at an out-of-network pharmacy, and the plan may also require you to pay for the prescription yourself at the pharmacy and file for a reimbursement.

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26. Can network pharmacies charge different prices for the same covered drug?
Yes. What you pay for drugs may vary, depending upon how the plan sets up its network. Plans are allowed to have preferred and non-preferred network pharmacies, and they are allowed to charge more for drugs purchased at the non-preferred locations. They may also charge less if you use a mail order pharmacy.

The pricing difference will be very limited if you are receiving a low-income subsidy. In that case, you will pay no more than $5.60 for your name-brand drugs ($2.25 for generics) as long as you go to a pharmacy that is in the plan's network.

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27. Who keeps track of how much I spend on drugs?
As long as you are using a pharmacy in your plan's network, the plan will keep track of the amount you spend on your prescription drugs. When you enroll in a plan, you will receive a drug card to use when you fill your prescriptions, and the plan will use the card to keep track of your expenses. Your plan is required to send you a statement each month showing how much you have spent up to that point, whether or not you are in the "donut hole," and how close you are to reaching the catastrophic benefit trigger ($5,726.25 in 2008) (see question #34). You can also request this information from your plan at any time, and many will make this information available on their websites.

If you use out-of-network pharmacies, you will need to send your receipts to your plan so they can credit your account. You can likely do that at the same time that you ask to be reimbursed for the cost of your prescription.

If you change plans, your old plan is required to transfer your spending information to your new plan. Because your out-of-pocket maximum is calculated by calendar year, any amounts you have spent will be carried-over to your new plan, and will count toward your out-of-pocket maximum.

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28. What if the drug I need is not covered by my plan?
You may request an exception to the formulary limitations if you are using a drug that is subsequently removed from your plan's formulary, or if your doctor prescribes a drug not on the formulary because he believes the drugs on the formulary will not work for you.

Your plan must respond to your request for an exception within 72 hours. If your life, health, or ability to regain maximum function is at risk, you may file an expedited request. Plans must respond to an expedited request within 24 hours. If a plan denies your request, you may appeal the plan's decision
(see question # 29). A plan cannot give an exception for drugs specifically excluded from Medicare coverage (see question # 11).

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29. Where do I go to appeal a decision by my plan not to cover a needed drug?
When you are unable to get needed medication, you should contact your plan and request a coverage determination. You, your appointed representative, or your doctor can request a coverage determination by phone or letter. The plan then has 72 hours to respond to your request (24 hours for an expedited appeal). Plans are expected to provide temporary supplies of non-covered drugs to affected beneficiaries when a plan is unable to meet the imposed timeframes for coverage determinations, redeterminations, or in forwarding cases to the Independent Review Entity. If you disagree with the outcome of coverage determination, there are several levels of appeals that can help you obtain your medication.

Redetermination by Plan

The first step in the appeals process is to ask the plan to reconsider its coverage determination. You, your appointed representative, or your doctor can appeal your plan's decision by phone or letter. Your appeal must be requested within 60 calendar days of the plan's coverage determination. The plan then has seven days to respond to your request (72 hours for an expedited appeal). Plans are expected to provide temporary supplies of non-covered drugs to affected beneficiaries when a plan is unable to meet appeal timeframes.

Independent Review Entity (IRE)

If your plan again denies coverage, you can appeal to an Independent Review Entity (IRE). An IRE is an independent agency that contracts with Medicare to handle these appeals and is not connected to any private drug plan. An appeal to an IRE must be made within 60 days from the date of the redetermination. The IRE has seven days to respond to your request (72 hours for an expedited appeal). You can find more information on appeals to the IRE and relevant forms at http://www.medicarepartdappeals.com/.

Administrative Law Judge (ALJ)

If you are dissatisfied with the reconsideration by the IRE, you can request a hearing with an Administrative Law Judge (ALJ) from the Department of Health and Human Services. The ALJ hearing request must be made within 60 days of the IRE decision. You can only receive an ALJ hearing if the value of denied coverage exceeds a minimum amount ($110 in 2007). The ALJ is supposed to make a decision within 90 days, but extensions of the time limit can be granted. ALJ hearings are generally conducted over the phone or through videoteleconference. (Note: The 2008 minimum denied coverage amount for an ALJ hearing has yet to be released at the time of this booklet's publication.)

Medicare Appeals Council (MAC)

If you disagree with the ALJ decision, you can request a review by the Medicare Appeals Council (MAC), which is part of the Department of Health and Human Services. Your request to the MAC must be made within 60 days of the ALJ decision. The MAC will generally decide on your appeal within 90 days.

Judicial Review

If all else fails, and the amount in question exceeds a minimum amount ($1,130 in 2007), you may request judicial review in federal district court. Your request for judicial review must be made within 60 days of the MAC decision. (Note: The 2008 minimum denied coverage amount for judicial review in federal district court has yet to be released at the time of this booklet's publication.)

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30. What restrictions may a plan impose on my drug coverage?
Plans may implement a wide range of restrictions to attempt to reduce utilization and lower costs. For example, many plans will arrange the drugs they cover in a "tiered" formulary. This means some drugs (typically generics) will cost the least, with preferred drugs costing somewhat more, and non-preferred drugs the most expensive. If you need a drug on a high tier, you will pay more for it unless your doctor can show that you need the more expensive drug and the plan grants an exception to its formulary limits.

Another common restriction is a "step" requirement. Such a limit would first require you to try the least expensive drug in that category and show that it does not work before you can move to a more expensive drug. Again, you may be able to secure an exception to the step requirement if your doctor can show you tried the similar and less expensive drug previously and it did not work.

Some plans may limit the number of pills you can buy at one time, or may require your doctor to get permission from the plan before a drug is prescribed. Plans may also encourage you to use mail order pharmacies.

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31. What happens if my plan leaves the area?
You will have a Special Enrollment Period (SEP) to find another drug plan that suits your needs. If you do not sign up for a new plan within 63 days of losing your drug coverage, a late penalty will apply and you will pay higher Part D premiums in the future (see questions #15 and 41)..

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32. What happens if I lose my current drug coverage and I want to enroll in Part D?
If your current coverage is not creditable, that is it is not as good as Medicare's, you can enroll in Part D during the next enrollment period (see question #15), but you will have to pay a late enrollment penalty for each month that you did not enroll after you were first eligible (see question # 41).

If your current coverage is creditable, meaning it is as good as Medicare's, and you lost your coverage through no fault of your own, you will be given a Special Enrollment Period (SEP) in which to enroll in a Part D plan. You will not pay a premium penalty unless you take more than 63 days to enroll. If your current coverage is creditable but you dropped it voluntarily, you will not get a Special Enrollment Period. In this case, you must wait until the next enrollment period to sign up. To avoid paying a premium penalty, make sure you do not voluntarily drop your coverage more than 63 days before you can enroll in Part D.

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33. What happens if my health changes and I need a drug not on my plan's formulary?
Generally, you are not allowed to change plans between enrollment periods if your health condition changes. You can request an exception to the plan's formulary, but if it is denied, you are still locked into your plan until the next ACEP enrollment period. None of the money you spend on the non-covered drugs counts toward your out-of-pocket limits.

On the other hand, if you are receiving Medicaid or living in a long-term care facility, you can switch plans at any time.

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34. What is the coverage gap or "donut hole" in a Part D plan?
When the Medicare Modernization Act of 2003 (MMA) established the Medicare Part D prescription drug benefit, it deined a standard benefit that includes a gap in coverage as a way of limiting federal spending. When beneficiaries fall into this so called "donut hole," they are responsible for the full cost of their prescription drugs plus they must continue paying their Part D Premiums even though they are not receiving benefits.

Under the standard benefit in 2008, you must pay a $275 yearly deductible and then 25 percent ---- or $558.75----- of the next $2,235 in covered drug costs, while your private plan will pay 75 percent --- or $1,676.25. Once total spending reaches $2,510, you fall into the donut hole; prescription drug coverage stops, but monthly Part D premiums must still be paid. Many beneficiaries are shocked at how quickly they reach the coverage gap because they don't realize the $2,510 spending limit includes both the money they spend out of their own pockets as well as the portion of drug costs paid by the private plan.

In 2008, once you are in the donut hole, you are responsible for paying the next $3,216.25 of drug costs out-of-pocket. When you reach the catastrophic threshold, your prescription drug plan will pay 95 percent of your covered drug costs until the end of the year. The entire process starts from the beginning each calendar year, and receiving the benefit of catastrophic coverage will become increasingly harder as the thresholds rise to reflect continued increases in drug costs. Because the Medicare Modernization Act failed to adequately contain drug costs, the donut hole will keep getting larger every year --- it is expected to almost double in eight years.

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35. What can I do to minimize my out-of-pocket spending in the "donut hole"?
Over one third of people enrolled in Part D are exposed to a gap in coverage, also called a "donut hole", whether they are in stand-alone prescription drug plans or Medicare Advantage plans.

Since falling into the donut hole may be unavoidable, there are some ways you may be able to reduce your out-of-pocket costs during the large coverage gap. For example, you may wish to talk to your doctor about the drugs you are currently taking to find out if there are generic or less-expensive brand-name drugs that would work just as well as the ones you’re taking now. You may also be able to save money by ordering your drugs through mail order pharmacies. It may also be possible to "split pills, " if you are taking a medication that is less expensive in higher dosage pills. It is extremely important if you use this option, however, to make sure you are taking the full dosage of medication prescribed by your doctor. "Pill splitting" that results in lower dosages of needed drugs could be hazardous to your health.

Another way to reduce your out-of-pocket costs is to find out if you are eligible to participate in any national or community-based charitable programs that help pay for drug costs. Pharmaceutical Assistance Programs run by many of the major drug manufacturers represent another way to receive help with paying for your prescriptions, though the number of these plans has decreased since Part D began. In addition, 21 states and one territory offer State Pharmaceutical Assistance Programs which may provide you with help paying drug plan premiums and/or other drug costs. And finally, if you have Medicare and have limited income and resources, you may qualify for “extra help” paying for your prescription drugs. If you qualify, you could pay between $1.05 and $5.60 for each drug. For more information on ways to save money during the donut hole, visit Medicare’s website at http://www.medicare.gov/bridging-the-gap.asp or call 1-800-633-4227> or call 1-800-Medicare (TTY users should call 1-877-486-2048).

36. How can I avoid Part D scams and protect my identity?

Part D plans may market themselves in several ways, including direct mail, radio, television, print and internet ads and telemarketing. Scammers may pretend to be from a Part D plan in order to get your financial information. In either case, there are marketing restrictions in place to help protect you.

• If someone says you must join or you'll lose your other Medicare benefits, it's a scam. The Medicare prescription drug benefit is voluntary. It supplements your other Medicare benefits.
  
  
• Guard your personal infomation from identity thieves posing as sales people. Legitimate plans may ask for your Social Security number, but only when you are actually enrolling. And they may only ask for your credit card or bank account information if you are arranging to make automatic payments for your drug coverage from that account.
  
  
• If someone claims to be calling from Social Security Administration(SSA) and asks for your bank account, credit card, or life insurance policy numbers, it's a scam. SSA will never ask for that information, and the only time someone calling from SSA will ask for the Social Security number is if you apply for low-income assistance and the number you put on your application isn't correct.
  
  
• Know the law on how Medicare prescription drug plans can be marketed. It's illegal for companies or organizations marketing Medicare drug plans to come to your door uninvited or to send you unsolicited emails. Companies and organizations can call to promote their drug plans, but it's illegal for them to sign people up during those calls. They must also obey telemarketing laws: it's illegal to call before 8am or 9pm; call people whose telephone numbers are on a state or the federal "do not call" registry (with some exceptions); or call people who have asked not to be called again. For more information about your telemarketing rights and to put your phone number on the federal "do not call" registry, go to www.donotcall.gov or call 1-888-382-1222.
  
  
• Medicare prescription drug plans should come with no strings attached. Companies and organizations can offer modest prizes or gifts (but not cash) to promote their Medicare prescription drug plans --- for instance, to people who attend a sales presentation --- but it's illegal to require anyone to join a drug plan in order to get a prize or gift.
  
  
• Don't be fooled by sales materials that look like they're from the government. Con artists often try to impress consumers wtih official-looking sales materials that look like they're from a government agency. Because it is private companies who are offering the plans, be skeptical about promotional materials claiming to come from the government.
  
  
• Don't confuse other types of drug coverage with Medicare prescription drug plans. Only plans approved by Medicare can be marketed as Medicare prescription drug plans. Approved plans will have a seal on their materials wtih "Medicare Rx" in large letters and "Prescription Drug Coverage" underneath in small letters. Check with Medicare to make sure that the plan you're considering is approved.

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37. Do I really need Part D coverage?
Only you can decide whether or not to sign up for the new benefit. The complexity of comparing dozens of private plans with different drug coverage and costs certainly makes the decision process much more difficult than if the government had provided a single benefit plan through traditional Medicare. At this time, however, the design of the program is not likely to change dramatically, so seniors will need to decide for themselves whether or not the cost is worth it for them.

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38. What if I have limited income and assets?
If you qualify for the program's low-income subsidies (see question # 48), it is very likely that you will benefit from Part D, and you should seriously consider enrolling. The only complication is that Part D might affect the amount of food stamps, subsidized housing, or other low income benefits you may be receiving (see question # 55 and 56). According to the Centers for Medicare and Medicaid Services (CMS), even if other benefits are reduced, you will end up better off overall.

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39. What if I don't qualify for any low-income subsidy and I have no other drug coverage today?
You should probably start by calculating your current drug expenses. The break-even point is about $723 per year, assuming monthly premiums of $28 and a $275 deductible. The break-even point is about $723 per year if your monthly premium is $28 and a $275 deductible.

If your expenses are higher than the break-even point, you may benefit by enrolling in Part D. Remember these thresholds are for the 'standard' benefit plan - some companies will be offering lower premiums and deductibles, though they will compensate with higher costs (or lower benefits) elsewhere.

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40. What if I don't spend much money on prescription drugs today?
If your expenses are under the break-even point (roughly $723 per year under the standard benefit structure), it may still make sense to sign up for a plan in order to avoid the late enrollment penalty. In this case, your decision will likely be based on your ability to pay and your willingness to take the risk that your expenses will stay low. Statistics show that millions of Medicare beneficiaries have low prescription drug expenses, especially seniors under age 70. However, if health problems do appear, prescription drug costs can rise quickly.

Unless you already have drug coverage that is at least as good as Medicare's, you will be subject to a late enrollment penaltyu if you delay signing up for a plan when you are eligible to do so. You will pay this increased premium amount as long as you remain in the program (see question # 41).

For seniors in this situation, it may make sense to enroll in a very inexpensive plan, if one is available in your area, even if you don't receive an extensive benefit from the plan today. By doing so, you have insurance coverage in case your health needs change suddenly, plus you won't be subject to any late enrollment penalties. You can always switch to a more comprehensive plan during the next available enrollment period.

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41. What is the late enrollment penalty?
Although enrollment in Part D is voluntary, you may be subject to a late enrollment penalty. If you do not have drug coverage that is at least as good as Medicare's, you will pay a penalty if you do not enroll when you first become eligible for coverage, or within 63 days of losing your comparable coverage (see question # 14) . This penalty is 1 percent of the national average premium at the time you enroll for each month you delay enrollment, and you will pay it every month you remain in the program. Because the penalty is calculated at the time you enroll, and premiums are expected to keep rising to reflect inflation in drug costs, it can result in a significant cost increase for Part D coverage over time. Although initially it is not a large amount, it grows quickly, and within 8 years it will have doubled the national average Part D premium. If you enroll in a less expensive plan, the penalty will represent a higher percentage of your payment, because the penalty is based on the national average premium, not on the premium of the plan you have selected.

Example :

John waits until Nov 2008 to enroll for 2009 coverage (31 months)

• At enrollment, national average premium is $40
• His penalty is 1 percent of $40 x 31 months = $12.40

John waits until Nov 2010 to enroll for 2011 coverage (55 months)

• At enrollment, national average premium is $45
• His penalty is 1 percent of $45 x 55 months = $24.75

John waits until Nov 2014 to enroll for 2015 coverage (103 months)

• At enrollment, national average premium is $60
• His penalty is 1 percent of $60 x 103 months = $61.80
• His premium payment is now doubled because of the penalty
• If he enrolls in a plan with a $30 premium , his payment is tripled because of the penalty

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42. How does the late enrollment penalty affect beneficiaries with low income?
According to the Medicare Modernization Act, low-income individuals are required to pay the late penalty. If you are eligible for a full low-income subsidy and your income is below 135 percent of the federal poverty level, you will only be required to pay 20 percent of the otherwise applicable penalty, and you will only have to pay it for five years. However, if you are eligible for a partial low-income subsidy and have income between 135 percent and 150 percent of the federal poverty level, you will pay the same late penalty as everyone else.

During calendar years 2006 and 2007, CMS waived the late enrollment penalty for the low-income beneficiaries. As of October 2007, CMS has not created a Special Enrollment Period for low-income beneficiaries in 2008, but this could change by the time you attempt to enroll. If you are eligible for Part D but have not signed up for a plan by January 1, 2008, you may not be able to immediately take advantage of the valuable "extra help" assistance unless CMS has made this change. (see questions # 14, 41, and 48).

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43. How will I know if my current coverage is as good as Medicare's?
Your current insurer, whether employer, union, or insurance company, is required to send you a letter by November 15, 2007 to let you know whether the coverage you have is "creditable" - or at least as good as Medicare's. If the answer is yes, you can switch to Part D at a later date without paying a penalty. Keep the letter in a safe place, because you may need it to avoid the penalty if you do decide to enroll. You may still want to compare the cost and coverage of your current plan (including premiums, co-payments, and covered drugs) to see which offers you the best coverage. Keep in mind, however, that if you drop your current coverage, you may not be able to get it back. If your current coverage is not "creditable," that is, it is not as good as Medicare's, you will be subject to the penalty if you wait until later to enroll in Part D.

Your current provider should also send you information on any plan changes that will be made in response to Part D. For example, some employers may opt to replace your current coverage with "wrap around" benefits in which you are required to enroll in Part D, but your plan provider supplements the benefit by subsidizing premiums, deductibles, or other out-of-pocket expenses. Keep in mind, amounts paid by your plan provider will not count toward your out-of-pocket costs, even for covered drugs.

You are allowed to give up your current coverage in exchange for enrolling in Part D, but be very careful to check the impact on the rest of your health insurance coverage with your provider. Some employers, unions, or other insurance providers may disenroll you from all of your health care coverage if you disenroll from their drug plan.

The legislation implementing Part D included significant incentives to employers and unions to continue offering drug coverage to their retirees. While it appears that few of them are dropping their plans in response to the availability of Part D, it is not clear whether that will continue to be the case once the subsidies are phased-out.

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44. Should I enroll in a stand-alone plan or a managed care plan?
If you are already in a Medicare Advantage plan such as an HMO or local Preferred Provider Organization (PPO) that offers a drug benefit, you must use that plan's drug benefit or drop out of the Medicare Advantage plan if you want to enroll in another prescription drug plan.

If you are not currently in a Medicare Advantage plan, you have a choice. You can remain in traditional Medicare and enroll in a stand-alone drug plan, or you can choose among a range of new Medicare Advantage plans (HMOs and PPOs).

There are both pros and cons to joining a managed care plan. On the positive side, a good managed care plan might coordinate your care better than you can on your own if you are seeing multiple doctors, especially if you have a chronic disease. The drug benefit is integrated into their coverage of other medical services, such as hospital care and doctors' visits, and you pay only one premium for all your health care needs. On the negative side, managed care plans restrict your choice of hospitals and doctors, and you have to pay more (sometimes a lot more) to see a doctor that isn't in the plan's network.

It is also important to recall the history of managed care plans in Medicare. Right now, the federal government is providing generous subsidies to managed care plans in order to entice them into the Medicare market. Because of this, many plans are able to offer very attractive benefit packages, with lower premiums and co-payments for some services. Unfortunately, it can be very hard to accurately compare benefits provided by managed care plans, many are trading-off increased benefits in some areas for sharp decreases in benefits in others. This is because managed care plans are required to offer all of the same services offered by Medicare, but they are not required to offer them in the same way. So, for example, a plan might provide reduced premiums and free eyeglasses, but significantly reduced coverage for more expensive services such as chemotherapy, extended hospital stays, and home health care.

Seniors frequently are unaware of the restricted coverage until they become sick and require the services, at which point they are already responsible for significant out-of-pocket costs. In addition, the subsidies provided to the managed care companies are not intended to last forever. In 2007, Congress began revisiting whether it is appropriate to overpay private companies an average of $1,000 each year more than it would cost traditional Medicare to cover the same beneficiary. In response, the managed care companies have spent millions of dollars in lobbying expenses to convince Congress to continue these unwarranted subsidies. If Congress does not, the companies have threatened to cut their benefits or discontinue offering benefits completely. This situation is not unlike what happened with Medicare+Choice in the late 1990s, when many seniors were left scrambling to find alternative doctors and replacement medical care.

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45. How do I pick a drug plan?
If you have access to the Internet, or have friends or family who have access, there are a number of plan comparison tools available on Medicare's website at www.medicare.gov that are intended to help you pick the best plan.

If you do not have access to the Internet, you may call Medicare at 1-800-MEDICARE, or your local SHIP (State Health Insurance Program) office for assistance. You can find contact number for your local SHIP at http://www.medicare.gov/contacts/static/allStateContacts.asp.

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46. What is the National Committee's checklist for making decisions about Medicare Part D?
Medicare prescription drug plans vary in the drugs they cover, their cost-sharing structure and amount, and pharmacy access. It is important that you choose a plan that best meets your needs. Thorough review of available plans is critical and this checklist can assist you in choosing a Medicare prescription drug plan if you decide that Part D prescription drug coverage is a good option for you. If you are already enrolled in a plan, you will likely only need to compile the last few items on the checklist to confirm it is still the best plan for you.

Compile the following information in preparation for evaluating Medicare prescription drug plans:

• Your personal information such as Medicare claim number, full name, date of birth, effective date for Medicare Part A or B, zip code, and county of residence
• Type(s) and name, if any, of prescription drug coverage that you currently have:
  o No prescription drug coverage
  o Prescription drug coverage through Medigap (Medicare supplemental insurance)
  o Prescription drug coverage through an employer or union retiree health plan
  o Prescription drug coverage through a stand-alone Prescription Drug Plan (PDP)
  o Prescription drug coverage through a Medicare Advantage plan, such as an HMO, PPO, or Private Fee-For-Service Plan
  o Prescription drug coverage through TRICARE (military retiree benefits), Department of Veterans Affairs, or FEHBP (Federal Employees Health Benefits Program)
  o Other
  
  
• If you currently have prescription drug coverage, gather the letter that you received from your plan explaining what benefits the plan will cover in 2008 and whether the plan is at least as good as the standard Medicare prescription drug coverage in 2008
  
  
• A letter from either the Centers for Medicare and Medicaid Services (CMS) or Social Security Administration (SSA) about the low-income subsidy ( "extra help"), if applicable
  
  
• Name and dosage of medications that you are currently taking
  
  
• Total cost of medications taken
  
  
• Names of pharmacies you use regularly
  
  
• Mail order information, if applicable

Consider the following questions to compare Medicare prescription drug plans:

• What if I am happy with my current coverage? Should I keep it or should I switch to a different plan?
  
  
• What if I don't take any medications? Should I still sign up for a plan? What would the penalty be if I don't sign up until later?
  
  
• Do I want to keep my original Medicare and add a stand-alone Medicare prescription drug coverage or should I consider joining a Medicare Advantage plan (like an HMO or PPO) that includes a prescription drug benefit?
  
  
• Will the Medicare drug plan work with my current drug coverage?
  
  
• Is the plan offered by a well-known company?
  
  
• Does the plan I am considering include all medications or the most important medications I take?
  
  
• Does the plan offer alternative medications that would work for me (after consulting my physicians)?
  
  
• Does the plan require prior authorization for drugs I need?
  
  
• Does the plan require that I try different medications before giving me needed drugs, so-called step-therapy?
  
  
• Will drugs in the same category require different co-payments, known as tiered cost-sharing?
  
  
• Will I be limited to the number of prescriptions or the quantity of pills I can get each month?
  
  
• What will be my monthly premium?
  
  
• What will be my yearly deductible?
  
  
• How much will I pay at the pharmacy for each drug (co-pay or coinsurance)?
  
  
• Will I have to pay the full cost of my drugs at some point after I have met my deductible, that is, does the plan have a gap in coverage (the so-called donut hole)? If so, how much will I be required to pay out-of-pocket before coverage begins? Are any drugs (such as generics) covered while I'm in the donut hole?
  
  
• Can I fill my prescriptions at the pharmacies I use regularly?
  
  
• What happens if I go to pharmacies that are not in the network?
  
  
• Will the plan cover medications when I travel?
  
  
• Does the plan offer a mail order program?
  
  
• Should I apply for the low-income subsidy ("extra help")?
  

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47. How do I decide whether or not to renew my Part D plan in 2008?
Insurance companies are allowed to make changes to their Part D plans from year to year and throughout the year. If you are currently enrolled in a Part D plan, you will receive a letter from your plan notifying you of the changes in coverage the plan currently intends to make for 2008. The letter will explain how your benefits, premiums, and co-payments will change in 2008. It will also inform you of the upcoming open enrollment period so you can change plans. You should carefully review that letter and consider the following questions to decide whether or not to renew your Part D plan in 2008:

• How will the Part D benefits in my current plan change for 2008? How much will I pay for a monthly premium, deductible, and co-pay or coinsurance?
  
  
• Does my current Part D plan still cover the drugs I need?
• Does my plan have a coverage gap (also known as a "donut hole")? Did I fall into it in 2008? Have my drug needs changed or am I likely to fall into it again in 2008? Are any drugs covered in the gap? (Some plans will cover generics.) Are there plans with affordable premiums in my area that have no coverage gap?
  
  
• Will my current drug plan honor the exceptions I received in 2007 to non-formulary drugs or will I have to file a new exception request in 2008?
  
  
• Did my current plan add any utilization management tools (prior authorization, step-therapy requirements, or quantity limits) which make it difficult to get the drugs that I need?
  
  
• Are my local pharmacies still in the plan's network?

Although your plan can make changes to your coverage throughout the year (see question # 9), most seniors will be locked into the plan they select until 2009. We encourage you to carefully review the plan's significant anticipated changes in the letter they are required to send current enrollees prior to October 31st. This letter will help you make the best decision about your Part D coverage in 2008 based on the most recent plan information.

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48. What is the low-income benefit (also known as “extra help”)?

The Part D benefit provides financial assistance known as "extra help" to those with limited income and assets. If you are eligible for "extra help" your Part D premiums, deductibles, and co-payments can be eliminated or significantly reduced. In addition, you will not be exposed to the gap in coverage - the period in which seniors must pay for 100 percent of their drug costs - also known as the "donut hole." About one-third of all Medicare beneficiaries (13.2 million people) are likely to be eligible for the low-income subsidy. The Social Security Administration estimates that this "extra help" could be worth an average of $3,660 per year. The National Committee strongly encourages all seniors who think they might be eligible for the "extra help" to apply for this valuable assistance with their drug expenses.

You must have limited income and may have to pass an asset test to be eligible for "extra help." Medicare Part D provides different levels of financial assistance based on income and asset limits. In general, you are eligible for some type of assistance if your income is less than $15,315 for an individual and $20,535 for a couple, and your assets are less than $11,710 for an individual and $23,410 for a couple, including burial expenses. If you become eligible for Medicare Part D during 2008, you will be subject to a slightly higher set of income thresholds. We will publish the new income thresholds as an addendum to this booklet after the data is released in January 2008.

Generally, income such as wages, earnings from self-employment, Social Security benefits, and pension payments count for the purpose of determining eligibility for "extra help." Examples of income that does not count include income tax refunds and foster care payments.

Examples of resources that count toward determining eligibility for "extra help" include stocks, bonds, and savings bonds. The home you live in and the land it is on, family heirlooms, and wedding or engagement rings do not count as resources.

The table below provides the specific requirements to qualify for the varying levels of assistance.

Overview of “Extra Help” in Part D (2008)

Notes: Dual eligible individuals are Medicare beneficiaries who also receive the full range of Medicaid benefits offered in their state. "FPL" is the federal poverty level which is used to determine the annual income limits for the low-income subsidy. *Those who become eligible for Medicare for the first time in 2008 will be subject to slightly higher allowable resource dollar limits. We will publish the new thresholds as an addendum to this booklet following their release. Asset limits include $1,500 per person burial expenses.

Sources: National Committee to Preserve Social Security and Medicare summary of information on low-income subsidies from the Social Security Administration and the Centers for Medicare and Medicaid Services.

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49. What if I have Medicare and Medicaid?
You automatically qualify for the low-income subsidy known as "extra help." If you received "extra help" in 2007, you should automatically receive it again in 2008 without having to fill out any additional paperwork. If for some reason you are not deemed automatically eligible for "extra help" in 2008, you will receive a letter from Medicare informing you of this fact. If you get this letter, you should still apply for "extra help" at the Social Security Administration because you may still be eligible for some "extra help" even if you were not granted eligibility automatically (see question # 54).

You may be able to stay in the Part D plan you joined in 2007. However, many plans that qualified for the low-income subsidy in 2007, will no longer qualify in 2008. Review your plan materials to be sure it still qualifies as a low-income subsidy plan. You will be automatically reassigned to a new prescription drug plan in 2008 if your plan is terminating or if your plan's monthly premium is increasing above the regional low-income premium subsidy amount by more than $1.00.

You will not be reassigned to a new plan if you select your own plan voluntarily or if you are currently enrolled in a plan with monthly premiums that are between $0.01 and $1.00 of the regional average premium. If you are assigned to a new plan by Medicare, you will be randomly assigned to a basic plan that works with the "extra help" so that you do not have to pay a monthly premium. This random assignment means the plan you are assigned to may not cover all the drugs you need. If none of the plans with low premiums cover your medications, you may decide to sign up for a more expensive plan (plans with premiums higher than the regional average rate or those that offer enhanced coverage) which does cover your medications. If you sign up for an enhanced plan, you will have to pay a premium equal to the difference between the basic plan premium and the enhanced plan premium.

If you don't like the plan that you chose or that was chosen for you by CMS, you can switch to another plan. You have the ability to switch plans as often as you like, with the new plan becoming effective the first day of the following month.

If you are enrolled in a basic plan, you will pay no monthly premium, no annual deductible, and experience no gap in prescription drug coverage. If you have income at or below 100 percent of the federal poverty level ($10,210/individual and $13,690/couple in 2007), you will be responsible for a $1.05 co-pay for generic drugs and a $3.10 co-pay for brand name drugs. If you have income above 100 percent of the federal poverty level, you will be responsible for a $2.25 co-pay for generic drugs and a $5.60 co-pay for brand name drugs. Once you have over $5,726.25 in covered drug costs, you will no longer have any co-pays for prescription drugs for the rest of 2008.

If you have both Medicare and Medicaid and are also living in a nursing home or other long term care facility, you will pay no monthly premium, will have no annual deductible, and will experience no gap in prescription drug coverage. Further, you will never have a co-payment on any of your prescription drugs. You are also able to switch drug plans at any time.

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50. What if I have Medicare and a Medicare Savings Program?
Medicare Savings Programs help people with Medicare who do not qualify for Medicaid pay some of the costs of Medicare. There are three Medicare Savings Programs