TN 8 (12-10)

Citations:

Sections 1144 and 1860D-1 through 1860D-15 of the Social Security Act

A. Introduction to the Medicare Part D prescription drug program

Public Law 108-173 , the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, also known as the Medicare Modernization Act (MMA), amended Title XVIII of the Social Security Act to establish a Medicare prescription drug coverage program, Medicare Part D, effective January 1, 2006.

B. Policy – Public Law 108-173, Medicare Modernization Act (MMA)

The basic requirements for participation in the Medicare Part D prescription drug program are:

• entitlement to Medicare Part A or Medicare Part B (or both); and

• residence in the service area of the beneficiary’s Medicare prescription drug plan or provider.

Unlike Medicare Parts A and B, SSA does not process Part D enrollments. Medicare beneficiaries enroll in a Part D plan during an enrollment period with a prescription drug provider. Participants in the Part D program must meet deductible, premium, and copayment responsibilities. SSA administers a program to help low-income beneficiaries with their prescription drug coverage costs called Extra Help.

NOTE: An individual who is not a resident of the 50 States or the District of Columbia is not eligible for Extra Help with Medicare Part D prescription drug coverage. Additional information about Medicare Part D Extra Help is found in HI 03001.005 – HI 03001.020.

C. Policy – Public Law 110-275, Medicare Improvements for Patients and Providers Act (MIPPA)

Effective with applications filed on or after January 1, 2010 or redeterminations initiated on or after that date, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), Public Law 110-275:

• Requires SSA to transmit identity and financial data used to determine eligibility and the amount of Extra Help (also known as low-income subsidy, LIS, or subsidy) from the application process to the Medicaid State agency to initiate an application for the Medicare Savings Programs (MSP) unless the beneficiary objects;

• Eliminates counting in-kind support and maintenance (ISM) as unearned income for Extra Help purposes; and

• Eliminates counting the cash surrender value (CSV) of life insurance from resources for Extra Help purposes.

Effective January 1, 2009, MIPPA also eliminates any late-enrollment penalties for individuals eligible for Extra Help or deemed eligibles by statute. Previously the Centers for Medicare & Medicaid Services (CMS) administratively waived late enrollment penalties for this group; the statute eliminates the annual waiver.

NOTE: For information about MSP, see HI 00815.023.

D. Policy – Public Laws 111-148 and 111-152, Affordable Care Act (ACA)

The Affordable Care Act (ACA) addresses the following changes:

• Gradually eliminates the Part D coverage gap popularly known as the “donut hole”;

• Requires that higher-income beneficiaries pay an income-related monthly adjustment amount for their Medicare Part D prescription drug coverage premiums (IRMAA-D); and

• Changes enrollment and disenrollment period rules for Medicare Advantage and Part D.

For additional information regarding the income-related monthly adjustment amount, see HI 01100.000.

E. Facts about the Medicare Part D prescription drug coverage program

Like Medicare Advantage (see HI 00208.066), participation in the Medicare Part D prescription drug program is voluntary. Medicare Part D coverage replaces Medicaid prescription drug coverage for beneficiaries receiving both Medicaid and Medicare. Medicaid beneficiaries have the option to disenroll from the Part D prescription drug program but there is no federal financial participation under Medicaid for prescription coverage for prescriptions available under Part D for Medicare beneficiaries with Part A, Part B or both.

1. Creditable coverage for Medicare Part D

Beneficiaries who have prescription drug coverage through a former or current employer or union are informed annually by the employer or union if the employment-related coverage qualifies as creditable coverage (i.e., prescription coverage at least equivalent to Part D coverage). HI 03001.001J explains further the term “creditable coverage”.

2. The donut hole

Most Medicare drug plans have a coverage gap or “donut hole.” The coverage gap begins after the beneficiary and drug plan have spent a certain amount of money for covered drugs, which results in the beneficiary paying all costs out-of-pocket for prescriptions up to a yearly limit. Starting in 2010, the ACA gradually eliminates the coverage gap in Medicare prescription drug coverage; the gap disappears completely by 2020. Beneficiaries in 2010 subject to the coverage gap who are not paying IRMAA receive a one-time $250 rebate payment. The first decrease in the gap starts in 2011 when beneficiaries who enter the gap will receive a 50% discount when purchasing Part D-covered brand name prescription drugs and a 7% discount for generic drugs. Out-of-pocket costs during a coverage gap will continue to decrease until 2020.

NOTE: There is no coverage gap in Extra Help, so there is no donut hole, and Extra Help beneficiaries will not receive the $250 rebate.

3. Contact information

Refer all questions regarding enrollment or choosing a prescription drug plan (PDP) or Medicare Advantage with prescription drug coverage (MA-PD) to CMS at to http://www.medicare.gov/sign-up-change-plans/get-drug-coverage/get-drug-coverage.html or 1-800-MEDICARE (TTY 1-877-486-2048). Beneficiaries can also obtain assistance selecting a plan through their State Health Insurance Assistance Program (SHIP). SHIP telephone contact information is on the back of the “Medicare & You” handbook or may be obtained by selecting the State at http://www.medicare.gov/contacts/organization-search-criteria.aspx .

Refer all questions regarding premiums to the PDP or MA-PD provider.

4. Deemed Eligibles for “Extra Help” low-income subsidy

Medicare-entitled beneficiaries receiving SSI, full Medicaid coverage, or who participate in a Medicare Savings Program (MSP, as defined in HI 00815.024), except Qualified Disabled and Working Individuals (QDWI), are deemed eligible for a low-income subsidy. This means they do not have to file an application for Extra Help and are auto-enrolled by CMS with a PDP or MA-PD unless the beneficiary selects a specific plan on his or her own. SSA and the States share files with CMS to determine these deemed eligibles and CMS notifies deemed eligibles that they are already eligible for the low-income subsidy and need not file an Extra Help application. CMS also notifies SSA of those who are deemed eligible for Extra Help. This information is available in the Medicare Application Processing System (MAPS).

If there is any doubt about an individual’s deemed status (e.g., there is no record on MAPS), take an Extra Help application.

F. SSA’s Part D roles and responsibilities

We maintain five primary roles in the administration of the Medicare Part D program:

1. Providing general information to the public about the Medicare Part D program;

2. Processing and make initial determinations on Extra Help applications, redeterminations, and appeals;

3. Screening Part D questions for referral to CMS;

4. Deducting Part D (and MA-PD) premiums that do not exceed $300 a month from Title II benefits when the beneficiary requests withholding. (If there is an arrearage, SSA cannot deduct the total of the current premium plus arrearage if it exceeds $300.) PDP or MA-PD premium withholding requests are not made to SSA; the beneficiary requests the PDP or MA-PD to have the premium withheld from the Title II benefit. The PDP or MA-PD transmits that information to CMS, and CMS requests SSA to withhold the Part D premium. SSA only deducts if the monthly premium (or premium plus any arrearage) does not exceed $300 and there are sufficient Title II benefits to pay the premiums; and

5. Determining when IRMAA is applicable and deduct IRMAA-D from Social Security benefits when there are sufficient funds to cover the cost. However, if the Social Security benefit payment is not enough to cover the entire monthly IRMAA-D, CMS will bill the beneficiary for the IRMAA-D. Office of Personnel Management (OPM) annuitants will also have IRMAA-D withheld from their benefit payment. The Railroad Board will bill IRMAA-D separately.

Our responsibilities also include:

• Coordinating Extra Help outreach activities;

• Sending data used to make the Extra Help determination to the States to initiate an application for MSP unless the claimant objects. SSA sends data to the States Monday through Friday, except Federal holidays. Data will not be sent on individuals that are already deemed or where there is a duplicate application;

• Providing the beneficiary with information about MSP and referrals to the State health insurance assistance programs (SHIPs);

• Providing MSP model applications in English and 10 additional languages to beneficiaries upon request. SSA provides those applications as a courtesy; SSA does not complete or help complete MSP applications; and

• Sharing IRMAA data with the Railroad Retirement Board (RRB), Office of Personnel Management (OPM), and Centers for Medicare & Medicaid Services (CMS) when appropriate.

NOTE: To become eligible for an MSP, beneficiaries apply directly with the Medicaid State agency or its designee. Unless the beneficiary declines having information shared with the State, filing an Extra Help application will initiate the State’s MSP application. The State may then contact the beneficiary for any additional information needed. For more information regarding SSA’s role in MSP applications, see HI 00815.024.

G. CMS’ Part D responsibilities

CMS has Federal oversight responsibility for the Medicare program, including Part D and MA-PD.

CMS’ responsibilities include:

• Approving and selecting competitive bids from PDPs and MA-PDs;

• Publishing regulations governing Medicare and State Medicaid agency policies and State agency procedures involving subsidy eligibility;

• Establishing enrollment periods, including Special Enrollment Periods (SEPs--information about various SEPs can be found in HI 03001.001I in this section);

• Determining and notifying those who are deemed eligible for the low-income subsidy;

• Determining the actual dollar value of the subsidy for the beneficiary;

• Enrolling beneficiaries eligible for Extra Help in a Part D plan if they fail to choose a plan on their own;

• Assigning beneficiaries with Extra Help to a new Part D plan when their plan terminates or when an increase in their plan premium would cause them to have a premium liability the next year;

• Sending notices to beneficiaries who lose deemed eligibility. (The notice includes an SSA application for Extra Help); and

• Collecting IRMAA-D for direct-bill beneficiaries and for Social Security, RRB and OPM beneficiaries whose Federal benefits are insufficient to cover the full amount.

H. Medicare prescription drug coverage plans and premium payment

Medicare-approved prescription drug coverage plans are offered by private companies and may cover a range of generic and brand-name prescription medications that vary by provider and plan. Copays, deductibles, premiums, and coverage vary by provider and plan. Medicare beneficiaries who choose to enroll or disenroll in Part D must do so by enrolling or disenrolling with a prescription drug provider; they may also enroll indirectly with CMS through the www.medicare.gov website or by calling 1-800-MEDICARE.

1. Referring all contacts and questions on Medicare Part D

Refer all questions regarding the following Medicare Part D topics to the Medicare toll-free number, 1-800-MEDICARE (1-800-633-4227), or, for TTY users, 1-877-486-2048:

• Enrollment,

• Disenrollment, or

• Choosing a PDP or MA-PD

Refer questions on any of the following Medicare Part D topics to the PDP or MA-PD, or to the Medicare toll-free number:

• Charges,

• Deductibles,

• Copayments,

• Premiums, (not IRMAA)

• Premium withholding, or

• Coverage of drugs or medical supplies under Part D.

NOTE: Although there are certain classes and types of drugs that must be covered by any Medicare-approved PDP or MA-PD, the specifics of which drugs are covered vary from provider-to-provider.

Follow the instructions in HI 01101.040 for screening IRMAA questions or inquiries. If a beneficiary questions an IRMAA determination or decision, see HI 01101.050.

2. Payment options

PDPs and MA-PDs provide payment options to all beneficiaries responsible for paying all or part of their Part D monthly premiums.

Beneficiaries may pay Part D premiums by:

• Direct payment to the PDP or MA-PD,

• Electronic billing (e.g., electronic funds transfer (EFT) or credit card), or

• Deduction from monthly Title II Social Security benefits. SSA will not withhold Part D premiums if there are insufficient benefits available to cover the full premiums after other deductions. If the beneficiary’s Medicare Advantage or Medicare prescription drug coverage premium (or premium plus arrearage) exceeds $300.00, SSA cannot withhold from the benefit check. SSA notifies CMS that the PDP or MA-PD must direct-bill the beneficiary.

NOTE: Currently, Part D premiums are not withheld from OPM benefits. However, RRB members can have their Part D prescription drug plan premiums withheld from their RRB monthly benefit payments and should contact their PDP or MA-PD to request withholding of these premiums.

If the beneficiary pays IRMAA-D, the amount of the IRMAA-D ordinarily is withheld from the Title II, or OPM benefit. (RRB bills separately.) If the amount of the benefit is insufficient to cover the IRMAA-D entirely, CMS will bill for the entire IRMAA-D amount. See HI 01101.001 for more IRMAA-D information.

I. Medicare Part D enrollment periods and coverage effective dates

Beneficiaries who want Medicare Part D prescription drug coverage must enroll during a prescribed enrollment period as explained in the chart below. To enroll with a PDP or MA-PD, the beneficiary must reside within the PDP’s or MA-PD’s service area.

Beneficiaries will also be able to change providers during the Annual Coordinated Election Period (AEP) each year or during an SEP.

Beneficiaries do not enroll in Medicare Part D through SSA. Those who choose to enroll in Part D do so with a prescription drug provider or by joining a Medicare Advantage plan with prescription drug coverage.

Effective January 1, 2011, the Affordable Care Act allows Medicare Advantage plan enrollees to switch to original Medicare during the first 45 days of the year. A beneficiary who is enrolled in a Medicare Advantage plan may disenroll to change their election to coverage under the original fee-for-service program under Medicare Part A and Part B, and may elect creditable prescription drug coverage.

NOTE: An incarcerated individual cannot meet the requirement of residing in the service area of a plan, even if the correctional facility is located within the plan’s geographical service area. For Medicare Advantage and Part D eligibility and enrollment purposes, an incarcerated individual is a person confined to a correctional facility such as a jail or prison.

J. Medicare Part D late enrollment

Failure to enroll with a PDP or MA-PD during the IEP or an SEP without other creditable prescription drug coverage may result in a late enrollment fee. The PDP or MA-PD uses CMS data to set the fee. The penalty fee is 1% of the national base beneficiary premium amount ($35.02 for 2018 and $35.63 for 2017) for each month for which a beneficiary is eligible for Part D coverage but not enrolled. This penalty fee is permanent, like Part B surcharges.

The term “creditable prescription drug coverage” may include:

• Coverage under a PDP or MA-PD;

• Deemed eligibility or Medicaid coverage;

• Group Health Plan (GHP) coverage;

• State Pharmaceutical Assistance Program participation;

• VA coverage;

• Medigap with prescription drug coverage; or

• Military service-related coverage including TRICARE

NOTE: There are no late-enrollment penalties for deemed or Extra Help eligibles.

K. References

• HI 00208.066, The Medicare Advantage (MA) Program

• HI 00815.023, Medicare Savings Programs Income Limits

• HI 00815.024, SSA’s Role in Medicare Savings Programs (MSP) Applications

• HI 00815.025, SSA Outreach to Low-Income Medicare Beneficiaries – Extra Help and Medicare Savings Programs

• HI 01101.000, Medicare Income-Related Monthly Adjustment Amount

• HI 03001.005, Medicare Part D Extra Help (Low Income Subsidy or LIS)

• HI 03020.055, Income Limits for Subsidy Eligibility

• HI 03030.025, Resource Limits for Subsidy Eligibility

• HI 03050.000, Redeterminations