Medicare Part D is coming to an FEHB plan near you
The prescription drug benefit is being automatically added to many of the FEHB program options for the 2024 plan year.
This week, I want to introduce you to some new acronyms that you may need to understand if you are near age 65 or older and covered by one of the 156 plan choices that will be available in 2024. Open Season 2023 begins on Nov.13 and federal employees as well as retirees, survivor annuitants and eligible former spouses will be analyzing their options for the Federal Employees Health Benefits program and Federal Employees Dental and Vision Insurance Program as well as how much to set aside in a health care or dependent care FSA.
A new benefit is being automatically added to many of the FEHB program options for the 2024 plan year for retirees who are also enrolled in Medicare Part A and/or Part B: Medicare Part D, the prescription drug benefit under the government's national health insurance program. This benefit has been previously included in the Medicare Advantage options that have been added to many FEHB plans over the past few years and will also be available for some plans without the additional Medicare Advantage benefit. For plan year 2024, plans offering this benefit will automatically coordinate with FEHB through an Employer Group Waiver Plan. EGWPs are offered either as a standalone Prescription Drug Plan or a Medicare Advantage Prescription Drug plan.
You may find that if your plan is offering this benefit for 2024, they may provide separate brochures detailing these benefits which may have been mailed to you prior to open season. For example, BC/BS has published a brochure titled, "Get to know the FEP Medicare Prescription Drug Program." You can also find information on how your plan coordinates with Medicare on your plan websites. GEHA, like many FEHB plans, has a Medicare and a new Medicare Advantage link on their website where you will find explanations of the options that are available for members who want to add the Medicare Advantage option and for those who have Medicare A and B and prefer not to add the Medicare Advantage enhancement benefit. You can also learn more about how your FEHB plan coordinates with Medicare by checking Section 9 of the 2024 FEHB plan brochure.
It is not surprising that retirees have questions about these new benefits. Here are some that have come from members of the National Active and Retired Federal Employees Association over the past few weeks:
Q: Will the MA-PD or PDP have the same formulary as before or will it use a different formulary?
A: This is from Rick Tapnio, senior account manager for Aetna Federal Plans: Prescription drug benefits are improving in 2024 for members with Medicare. Eligible members will see lower copays and a lower limit on out-of-pocket costs with Aetna Medicare RX® offered by SilverScript®. The same drugs are covered but the formulary list is different. Therefore, some drugs could be covered under a different tier. However, it doesn't necessarily mean members will pay more because copays and coinsurance may be lower even if drugs move to a higher tier.
Q: Will the coverage be less restrictive with lower copays?
A: The greatest impact for members will be lower copays and less coinsurance coming out of their pocket.
Q: Which one of these two would someone use if covered under Aetna Direct as a retiree?
A: The PDP formularies will be on our website once they become available. Members can also connect with their plan's Member Services to research specific drugs thoroughly. After you reach your individual maximum out-of-pocket costs of $2,000, Aetna FEHB Plan will pay the rest of your annual drug costs.
Q: Am I correct in thinking that if I don't opt out of this drug enhancement I will be ineligible for drug coupons from manufacturers because I will have drug benefits from Medicare?
A: In general, most manufacturer's discount programs exclude those who are enrolled in a Part D program. To know for sure, you must check the eligibility requirements for the copay card/program. Below is a sample of the wording for one of the cards that is often asked about: Eliquis. Enrollment in the enhanced Medicare Prescription Drug Program (MA-PD or PDP) is a Part D plan and a member would not meet the requirements for eligibility for this copay card. However, members enrolled in MA-PD or PDP can get a 90 day supply of Eliquis for a very low rate.
ELIQUIS copay card has the following eligibility requirements:
- You are insured by commercial insurance and your prescription insurance coverage does not cover the full cost of your prescription, that is, you have a co-pay obligation for ELIQUIS;
- You do not have prescription insurance coverage through a state or federal healthcare program, including but not limited to Medicare Part D, Medicaid, Medigap, Veterans Affairs Department or Defense Department programs; patients who move from commercial plans to state or federal healthcare programs will no longer be eligible;
- You are 18 years of age or older; and
- You are a resident of the United States, Puerto Rico, or other select U.S. Territory.
Q: Does the out-of-pocket expense ceiling under the Medicare PDP enhancement take into account my out of pocket expenses incurred under my overall FEHB Plan catastrophic spending cap AND those incurred under the new Medicare PDP?
A: If you are enrolled in both Parts A and B of Medicare, there should be no, or very little, out-of-pocket medical expenses incurred as many plans (but not all) will waive your deductible, copays and coinsurance for both inpatient and outpatient medical services (not pharmacy) when Medicare A and/or B are the primary payer. The only way to reach the catastrophic out-of-pocket maximum with your FEHB plan when you have Medicare A and B as primary payer (with plans that wrap around Medicare by waiving your cost-sharing including deductible, copays and coinsurance) is by having extremely large prescription drug expenses. One of the benefits of the MA-PD and PDPs is a lower cap on out-of-pocket prescription drug expenses. If you don't enroll in Part B of Medicare, you will be required to pay cost-sharing for outpatient care which can add up to a much higher catastrophic cap on your out-of-pocket costs. See Section 4 of your plan brochure, Your Cost for Covered Services and also Section 9 of your plan brochure, Coordinating Benefits with Medicare and Other Coverage.
For example, according to Jennifer Vendur, account manager for the federal employee BC/BS Program, BC/BS Standard option will have a $2,000 Rx out-of-pocket max for 2024 and for Basic Option there will be a $3,250 Rx out-of-pocket max. Using Standard option self-only numbers as an example: The overall BC/BS Standard Option out-of-pocket maximum is $6,000. The PDP has a limit within that $6,000 that says you don't have to pay more than $2,000 toward prescription drugs. The $2,000 is part of the $6,000 – not in addition to it. If you have Medicare A and B as your primary coverage, regardless of your prescription drug copays, you would not spend more than $2,000 out-of-pocket in 2024 since your inpatient and outpatient medical cost-sharing is waived when Medicare is the primary payer. Every time you pay a copay or coinsurance (%) for a prescription on the PDP, this counts toward the Rx out-of-pocket max. Once you hit the $2,000 max, you don't pay any more Rx copays or coinsurance for the remainder of the calendar year. These amounts also count toward the overall out-of-pocket maximum of $6,000. The only people who will continue to pay medical copays are those without both parts of Original Medicare (A and B). If you opt out of PDP, your prescription drugs still count toward your out-of-pocket max, you just don't get the $2,000 Rx cap – everything applies to the $6,000 out-of-pocket max, just like it does now.
Vendur further explained that under the BC/BS PDP, the formularies are expanded. They include all Medicare Part D drugs PLUS everything on the traditional formulary for that plan. For example, if a drug is on the traditional formulary for Standard Option, it will also be on the PDP Standard Option formulary. If the drug is on the traditional formulary for Basic Option, it will also be on the PDP Basic option formulary. However, just like now, the Standard Option prescription drug formulary is different from the Basic Option formulary.
Here are some benefits under the Inflation Reduction Act of 2022 that apply to MA-PDs and PDPs available in many FEHB plans for 2024:
- You will not pay a separate premium for your prescription drug coverage although some higher income participants may need to pay a Part D Income-Related Monthly Adjustment Amount (IRMAA). If your income is above a certain limit (in 2024, above $103,000 if you file individually or $206,000 if you're married and file jointly), you'll pay an extra amount in addition to your plan premium (sometimes called "Part D-IRMAA"). If you are subject to the Part D IRMAA surcharge, you are permitted to opt-out of the PDP and MA-PD, but doing so will result in a loss of the other benefits of this coverage.
- Beginning in 2023, Part D enrollees will pay no more than $35 per month for covered insulin products in all Part D plans.
- There is no cost sharing (i.e., copay) for adult vaccines covered under Part D.
- Drug manufacturers will be required to pay rebates for drug prices that rise faster than the rate of inflation, which could impact costs for Part D enrollees.
- There is a maximum out-of-pocket spending cap on prescription drugs under Part D (MA-PD and PDP). See your FEHB plan for additional details.
Here are some additional things to know about these new benefits designed to make prescription drugs more affordable:
- If you or someone you know struggles to pay for their healthcare expenses, there is Extra Help (sometimes called Low Income Subsidy or LIS) that Medicare offers to people with low incomes and limited assets. If you qualify, you'll get help with drug costs that Medicare doesn't cover including your plan premium, drug deductible and prescription copays. Depending on your income and resources, you could save an average of $5,000 per year. Less than half of the people eligible for Extra Help sign up.
- If you decide you no longer wish to be enrolled in the PDP or MA-PD, you may contact your FEHB plan to cancel your enrollment at any time. You may re enroll during a subsequent open season period.
- The PDP plans have automatic enrollment, so the only thing you may need to do if you don't want this coverage is to opt-out. However, if you are interested in a MA-PD option under one of the many FEHB plans offering this Part C / Medicare Advantage benefit, you will need to "opt-in" to receive these benefits. Contact your FEHB plan for additional information.
Remember, Open Season will run from Nov. 13 to Dec. 11, 2023.
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