Two months ago, a significant deadline came for Medicare recipients looking to enroll in the government’s Part D prescription drug plan. Thanks to the Medicare Modernization Act, passed into law in 2003, those eligible for Medicare were given until May 15, 2006 to enroll and take advantage of the new program without having to pay penalties.
Companies that have Medicare-eligible employees and retirees should be aware of these and other new developments, says Cathy Batteer, vice president of Medicare for UPMC Health Plan in Pittsburgh. From “dual eligibles” to “open enrollment” and other key terms, companies either need to stay on top of the latest news or turn to a knowledgeable third party to help walk them through the basics.
Smart Business spoke with Batteer about how companies can most effectively work with their employees and retirees to ensure that they receive the maximum benefits from Medicare.
What types of trends are we seeing right now with Medicare?
The big news in Medicare right now is the Part D prescription drug benefit. The enrollment period for the Part D program began in January and wrapped up in May. And while eligible individuals can still enroll, they can only do so by paying a premium penalty unless they have ‘creditable coverage’ for prescription drugs from another source, such as an employer group plan. (If a Medicare beneficiary loses their creditable coverage they can enroll in Part D without a premium penalty being applied.)
Medicare Part D is a program through which Medicare beneficiaries can voluntarily sign up for, and that ‘dual eligibles’ (those eligible for both Medicare and Medicaid) will enroll in as well.
Many employers offer health care coverage that supplements their retirees’ Medicare coverage, and those employers who contribute have traditionally covered prescription drug coverage for their retirees. Medicare Part D presents an opportunity for the employers to be subsidized for that coverage, with companies making a choice between whether they wanted to receive the federal subsidy for their coverage or wrap their coverage into a Part D plan. In the last year they’ve had to make that choice, and then they will have to choose again for 2007.
Why should employers be thinking about these Medicare trends?
Employers need to think about what type of medical and pharmacy coverage they want to offer retirees. Right now, employers can either do what is called a contributory plan, meaning that the employer pays in part or in full for the retirees’ health care coverage. Or they can do a sponsored plan, through which the employer negotiates a plan package for the retirees and then communicates to their retirees the information about the premium that those retirees pay for themselves.
What Medicare-related challenges do employers typically run into?
The first issue concerns retirees, and the financial responsibility — if any — of the employer as it relates to whether they’re going to offer ongoing retiree coverage. The other challenge surrounds the issues an employer faces in dealing with the fact that many American workers have aging parents. Employers have focused in years past on child-care-related issues, for example, with not as much thought given to elder care. Whether someone is in Pittsburgh or another area of the country, they’re likely to have an aging parent who needs an increasing level of care. That takes people away from the workplace and results in lost work time and productivity. It’s going to become an increasing challenge for everyone who wants to make sure that the elder parents needs are met from an economic, health care and care management standpoint.
What benefits can Medicare-savvy employers expect?
Whether an employer has financial responsibility for retirees’ health plans or offers a sponsored plan, it is likely the company is looking for a cost-effective, quality product that works well for the consumer. Plans that can offer well-priced products and that include components that control health care cost inflation are appealing both to an employer who is paying the bill and/or the retiree who may be paying an increasing portion of the bill.
What future trends do you see when it comes to Medicare?
The Part D implementation was the biggest piece of social legislation since Medicare was introduced back in the 1960s. Whether it has staying power legislatively remains to be seen, as it may dependent on the next administration. With a high number of baby boomers on the cusp of retirement, Medicare issues will only increase. And with fewer and fewer people working and supporting those age 65 and over from a tax base standpoint, employers are sure to be impacted.
CATHY BATTEER is vice president of Medicare at UPMC Health Plan in Pittsburgh. Reach her at (412) 454-2909 or [email protected].
