June 2005 Bulletin, "Medicare Part D Guidance Addresses Employer-Paid Rx Coverage for Retirees"

Abstract

Employer-sponsored plans, including multiemployer plans, have a variety of options for addressing retiree prescription drug programs in light of Part D - the outpatient prescription drug benefit that begins on January 1, 2006 - including taking a subsidy on allowable prescription drug costs or coordinating coverage with the Medicare program. The Centers for Medicare & Medicaid Services (CMS) has issued the following guidance to implement the employer aspects of Medicare Part D:

  • Taking the Subsidy This guidance addresses how actuarial equivalence calculations are made. While the guidance offers some help in simplifying the actuarial equivalence calculation for more generous plans, in many ways it makes calculation more complicated for other plans
  • Contracting with CMS to "Become" a Prescription Drug Plan (PDP) or a Medicare Advantage-prescription drug (MA-PD) plan This guidance provides additional waivers that apply to private PDPs that can contract with employer-sponsored plans. In this guidance, CMS extended certain deadlines for employer PDPs. This CMS guidance also provides extensive detail regarding plan design, payment and premium rules that apply to employer-sponsored group PDPs. Further, it permits employer-sponsored plans to automatically "group enroll" their Medicare-eligible population in their Part D plan. The enrollees must be told that they will be enrolled into the Part D plan and must be given the right to opt-out of the plan.

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