Drug Program Choices: Employer Paid Benefits or Pharmaceuticals’ Charity Programs

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Retirees currently covered by employer-sponsored health plans will receive letters by November 15 that tell how their coverage compares with the new Medicare Part D, and how their current health benefits may change, a requirement of the federal government, says the New York Times. In many cases, the letters will say that if a retiree signs up for the Medicare Prescription Drug program, all of their health care benefits will be cancelled, the Times says.

Most employers with retiree health plans, 82 percent, are expected to keep their existing drug coverage, the Times reports, but “more so than not, plan sponsors are saying if you join Medicare Part D, you will be out of our plan,” said Edward Kaplan a senior health care consultant at the Segal Co.

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Employers generally offer health benefits in a single package, including drug benefits, and do not want the administrative burden of separating them, according to the Times. In addition, the government will pay a subsidy equal to 28 percent of the retiree's drug costs, to companies offering prescription drug benefits as good or better than Medicare. The subsidy will average $668 for each qualified retiree, the Bush administration estimates, according to the Times.

The Congressional Budget Office has estimated that Medicare will pay $71 billion in employer subsidies from 2006 through 2013, but some beneficiaries worry that the program may be subject to cuts, the Times says. Small employers say the subsidy program is not worth the trouble, at least for the first year. In some cases, paying for consultants to help with the application is too expensive, in others, existing benefits may not meet the federal minimum, the Times reports.

Another group that may face a benefit loss if they enroll in Medicare Part D is retirees who participate in charity prescription drug programs sponsored by pharmaceutical companies, the New York Times says in a separate report. Bristol-Myers Squibb has sent letters to beneficiaries saying that their program will end if the retiree signs up for Medicare Part D. Merck has said it will send similar notification to its beneficiaries soon. Eli Lilly will end its program in May, the Times says.

Pharmaceutical companies are concerned that the Medicare law prevents them from giving something of value to Medicare and Medicaid participants, the Times report says. Dr. Mark McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said that the programs were legal as long as the free or subsidized drugs were not counted toward Medicare co-payments or deductibles.

For Walter Bach of Queens, who has been getting his $125 per month brand name blood thinner free from the Bristol-Myers program, staying with that program is a better choice than signing up for the Medicare Prescription Drug Program, even though he pays for three additional generic drugs, the Times reports.

Retirees who choose to sign up for the Medicare Drug program may now consult Medicare's Web site for helping in choosing a plan that suits their needs, the Associated Press reports. The government announced Monday that it has set up a computer program that will allow beneficiaries to input the drugs they and the amount of money they want to spend on coverage. Individuals who are not comfortable with computers may call 1-800-MEDICARE. Last week 800,000 people called for help, AP reports.

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