The Centers for Medicare & Medicaid Services (CMS) has published a Tip Sheet & Issue Paper About Retirees Automatically Enrolled In Medicare Part D (zipped file containing two Word documents). Included among the provisions of the Medicare Part D prescription drug coverage introduced by the Medicare Modernization Act (MMA), all dually eligible Medicare and Medicaid beneficiaries were to be automatically enrolled in a Medicare prescription drug plan by 12/31/05 to ensure continuation of prescription drug coverage when Medicaid coverage expired on 12/31/05. Under some retiree drug plans sponsored by employers or unions, a retiree loses coverage under the plan if the individual enrolls in a Medicare drug plan, in large part because a Part D subsidy is not paid with respect to any individual who is enrolled in a Medicare drug plan. Notwithstanding the subsidy implications, the CMS tip sheet and issue paper seek to encourage employers to adopt “best practices” aimed at reducing the potential adverse consequences for individuals facing the complicated decisions arising from automatic enrollment.
Although not explicitly required to do so under the law or regulations, CMS suggests that employers and unions that would eliminate coverage under their plans for individuals who enroll in a Part D plan should consider taking the following steps -
- Flexible Transition and Correction Period. Some retirees who wish to opt out of part D coverage in order to retain employer/union coverage may have been unable to do so in a timely manner. CMS suggests that employer/union plans consider -
- Deferring permanent changes in retiree’s plan eligibility, enrollment, or covered benefits for a transition period.
- Providing a special enrollment period for plan re-enrollment.
- Coordinating benefits with Medicare drug plans for a transition period.
- Split Retiree/Family Enrollment. For a plan where a retiree’s Part D enrollment would put the employer/union plan’s coverage of spouses and dependents at risk, CMS suggests the employer/union plan be modified to permit continued coverage of spouses and dependents despite the retiree’s Part D enrollment.
- Supplemental Coverage Option. CMS suggests addition of supplemental coverage under an employer/union plan to minimize adverse consequences to retirees who have been automatically enrolled under Part D.
- Assisting Retirees in Choice to Opt Out of Part D. CMS suggests that employers and unions provide educational materials and other assistance that can help individuals understand their choices and explain how to disenroll from a Medicare drug plan.
