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• • About the Part D Benefit
  • Education and Counseling
  • Medicare Advantage
  • Extra Help
  • General Medicare

Part D Beneficiary Costs

In This Article:

• 2009 Extra Help Eligibility and Cost-Sharing
• 2009 Parts A and B Costs
• 2009 Standard Part D Plan Costs
• Coverage Gap (Doughnut Hole) Tips
• Late Enrollment Penalty Premiums
• Premium Withholding Developments (last update, 2007)
• Prescription Assistance (PAP) Options for People with Medicare Part D

2009 Parts A and B Costs

We've updated the ABC Coalition chart detailing the amounts paid out-of-pocket by Medicare beneficiaries for Medicare Parts and B coverage and services in 2009. Remember the Medicare Savings Programs pay some of all of these costs on behalf of qualified beneficiaries. See more information on Medicare Savings Programs.

2009 Standard Part D Plan Costs

• Deductible: $295
• Initial Coverage Limit: $2,700 (This is the amount expended by both the beneficiary and the Part D plan before the coverage gap (doughnut hole) begins.)
• Out of pocket threshold: $4,350 (This is the total costs expended out-of-pocket by the beneficiary on plan-covered drugs through the coverage gap (doughnut hole) before the catastrophic benefit begins.)
• Total expenditures by both the beneficiary and the Part D plan before the catastrophic benefit begins: $6,153.75
• Catastrophic Benefit Cost Sharing: $2.40 for generics or $6.00 for brand or non-preferred drugs

Here are standard Part D plan costs for 2009 (32Kb Word file).

 

2009 Extra Help Eligibility and Cost-Sharing

A Summary of 2009 Part D Extra Help Co-Payments

• Full duals with income under 100 percent of the Federal Poverty Level (FPL): $1.10 for generic or preferred drugs and $3.20 for brand or non-preferred drugs
• Beneficiaries with income between 100 percent and 135 percent of FPL and resources of less than $8,100 for individuals or $12,910 for eligible couples: $2.40 for generic or preferred drugs and $6.00 for brand or non-preferred drugs.
• Extra Help–eligible beneficiaries whose income is between 135 percent and 150 percent of FPL, or whose resources exceed $8,100 for an individual or $12,910 for a couple: must pay a $60 deductible and may pay up to $15 percent cost-sharing for covered drugs up to the catastrophic limit, after which they pay $2.40 for generic or preferred drugs and $6.00 for brand or non-preferred drugs.

Important Reminder About the Extra Help Income Limits

For purposes of determining Extra Help eligibility, the 2009 Federal Poverty Levels are applied to new applications for Extra Help filed at any point after January 1, 2009.

Extra Help Out-of-Pocket Costs and Financial Eligibility Limits

Here are 2009 Extra Help Out of Pocket Costs.

Here is a chart explaining Extra Help eligibility and subsidies (18Kb PDF file).

Late Enrollment Penalty Premiums

CMS determines when and how much of any late enrollment penalty to be imposed on Part D plan members.  CMS requires Part D plans to obtain information about any lapses of credible drug coverage that lasted more than 63 days after the end of the member’s Initial Enrollment Period so that late enrollment penalty calculations may be made. This requirement is in a guidance that CMS updated in June 2007 (81Kb PDF file).

We thought a brief case study might help you can think about how to talk with people about their options. While no case study can cover every situation, many parts of Ms. Jones’s predicament have wide applicability.

1. Ms. Jones turned 65 in April 2007. Her Initial Enrollment Period began in January 2007 and ended in July 2007.
2. Ms. Jones didn’t sign up for a Medicare Part D plan before the end of July 2007. Moreover, she doesn’t enroll in a Part D plan during the 2008 Annual Enrollment Period, November 15 - December 31, 2007.
3. In April 2008, she finally meets a knowledgeable benefits counselor and after being educated decides she should join a Part D plan, but she couldn’t do that until the 2009 Annual Enrollment Period, from November 15, 2008 through December 31, 2008.

What does Ms. Jones need to know about the consequences of enrolling late, that is after her Initial Enrollment Period ended?

When Ms. Jones is finally able to joins a Part D plan during the 2009 Annual Enrollment Period, her coverage will be effective January 1, 2009. At that time, the plan must verify her prior creditable drug coverage status. The plan may do this by asking her to attest to her drug coverage prior to her Part D plan enrollment. She must respond within 30 days.

The plan uses the information it receives to determines the number of months during which she had no credible drug coverage. The plan begins looking at lapses in October 2007 because the law gives Ms. Jones and others like her 63 days following the end of the Initial Enrollment Period to get creditable drug coverage—if they can. However because there is a lapse the plan then counts all of the months during which Ms. Jones lacked creditable drug coverage, starting with August 2007, the month after her Part D Initial Enrollment Period ended and ending in December 2008, which will be her last month without creditable drug coverage.

The Part D plan must report to CMS that Ms. Jones had no drug coverage for the 17 months between August 2007 and December 2008. The plan tells CMS that Ms. Jones lacked creditable drug coverage for CMS calculates a late enrollment penalty premium. The calculation is based on the total number of months between the end of Ms. Jones’ Initial Enrollment Period and when she signed up for coverage. In this case the months between August 2007 and December 2008 are used in the calculation. Ms. Jones had no creditable drug coverage for 17 months.

The late enrollment penalty is a monthly add-on premium in the amount of 1 percent of the national base Part D plan premium for the current year, and is re-calculated each year. For example, in 2009, the national base premium is $30.36 and the late enrollment penalty premium is 1 percent of the national base premium multiplied by the total number of uncovered months. This add-on premium of 17 percent will be charged by the plan for the duration Ms. Jones is in the plan. In 2009, she pays a penaltry premium of $5.20, or 17 months multiplied by .30 (1 percent of $30.36), rounded to the nearest 10 cents.  If she changes plans, her new plan must also collect her late enrollment penalty premium from her. Ms. Jones’ Part D plan must allow her to pay the extra charges on a monthly basis.  In 2010, Ms. Jones's late enrollment penalty premium will be recalculated using the 2010 base national premium. The 2010 national base premium should be announced in August 2009.

CMS calculates Ms. Jones's late enrollment penalty premium and tells the Part D plan to notify Ms. Jones by sending her a letter that explains the penalty premium. The letter also explains how Ms. Jones can appeal a decision if she does not agree with the calculation.

Late Enrollment Penalty Premium Appeals

Part D plan members have a right to appeal decisions they believe to be incorrect about the imposition of late enrollment penalty premiums. The letter they receive from the plan telling them about imposition of the late enrollment penalty premium explains how to appeal. It also includes a form that may be used to file the appeal.

How to appeal a late enrollment penalty premium

Appeals are called Reconsiderations and must be requested by filing with the Medicare Independent Review Entity (IRE), currently an organization called Maximus, within 60 days from the date on the letter from the plan telling members about a late enrollment penalty premium. Reconsideration requests regarding late enrollment penalty premiums are filed sat different addresses depending upon whether the individual is enrolled in a free-standing prescription drug plan (PDP) or a Medicare Advantage plan offering prescription drug coverage (MA-PD).

For PDP Reconsiderations

File with:

MAXIMUS
1040 First Avenue, Suite 200
King of Prussia, PA 19406
Fax: (484) 688-5601
Toll-free Fax: (866) 589-5241

For MA-PD Reconsiderations

File with:

MAXIMUS
50 Square Drive, Suite 120
Victor, NY 14564
Fax: (585) 425-5301
Toll-free Fax: (866) 825-9507

Maximus is required to make a decision within 30 days of receiving the request for Reconsideration and to notify the member of the decision, which is final and cannot be appealed.

Grounds for appealing a late enrollment penalty premium

Plan members might want to contest a plan decision – and benefits counselors can help them to sort through the events that transpired and the evidence that beneficiaries might have to support their claims - if they believe:

• A member promptly submitted information about other creditable drug coverage, but the information was not taken into consideration;
• The plan miscalculated the number of months without creditable drug coverage;
• The end date of the Initial Enrollment Period was not correctly identified;
• An Extra Help member’s late enrollment penalty premium was not correctly waived in 2006 and 2007;
• The member failed to enroll in a Part D plan sooner in reliance upon not receiving adequate notice that other drug coverage was not creditable.

See the CMS guidance on appealing late enrollment penalty premiums decisions (54Kb PDF file).

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Coverage Gap (Doughnut Hole) Tips

As some of your clients enter the Part D coverage gap (doughnut hole) and must pay the full cost of the medications covered by their Part D plan, here are some tips to help them oafford their prescriptions.

As a refresher on the costs (87Kb Word file) associated with being in a Part D plan, in 2009, your clients enter the doughnut hole when they have paid their way through any plan-imposed annual deductible, plus the 25 percent co-payments or co-insurance on the next $2,700 on covered drugs and they won’t exit the doughnut hole to enter the catastrophic benefit until they’ve expended another $4,350 on their plan-covered drugs. In general beneficiaries do not pay more than the out-of-pocket threshold ($4,350 in 2009) before reaching the catastrophic benefit.

Many who enter the coverage gap will remain there for the rest of 2009, so helping these clients to understand how they can afford their prescriptions at this time is an important role you can play.

To assist your efforts, we’ve updated the ABC Tips to Help People in the Coverage Gap (187Kb Word file). Related information includes our Patient Assistance Program Tip Sheet and excerpts from the CMS Part D Manual on True Out of Pocket Costs (TrOOP) (86Kb Word file).

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Premium Withholding Developments (2007)

• Background

  Medicare beneficiaries in Part D plans may choose to have the Social Security Administration withhold their plan premiums from their Social Security checks and send that amount to their plans. This option was intended by Congress to simplify the logistics of the drug benefit for people with Medicare.

  Since implementation of Part D in 2006 there have been ongoing and longstanding problems with Part D plan premium withholds. Some of these issues involve:

  • People who did not request premium withholding but have nevertheless had amounts withheld from their Social Security benefits.
  • People who asked for premium withholding and never had premiums withheld. In other cases, the wrong amounts were withheld, resulting in either overpayment or underpayment of Part D plan premiums.
  • People who switched plans during enrollment periods but discovered that premiums continued to be withheld for the plan they had left.

  While the number of beneficiaries affected by these premium withholding issues is not publicly known, many benefits counselors affiliated with State Health Insurance Assistance Programs, Access to Benefits Coalitions, and Area Agencies on Aging continue to report large numbers of requests for help in resolving these premium withhold problems.

  These problems affect people eligible for Extra Help as well as those with higher income and resources. Some Extra Help beneficiaries report having premiums withheld from their Social Security benefits even though the Extra Help should have completely covered their premiums, leaving them with no premium obligation.

• How You Can Help with Premium Withhold Issues

  There are tools and strategies that benefits counselors can use to protect their clients who are experiencing these dilemmas. While these suggested steps may seem time consuming (especially because they may not result in an immediate and complete resolution of the problem), helping beneficiaries in these ways can make a tremendous difference. These strategies preserve the records needed to ensure the ultimate resolution of these problems.

1. Explain to your clients that in situations where a person’s premiums are being withheld from their Social Security checks, Part D plans cannot involuntarily disenroll someone from their plan because of non-payment of premiums.
2. Work with your clients to help them gather evidence of premium withholding. In many cases this can be accomplished by getting paper or electronic bank account statements, and retaining copies of those in a safe place, along with letters and notices from the plan, CMS and SSA. You can set your clients up with large envelopes labeled with your contact information and ask them to store their papers in the envelope.
3. Help your clients to keep a record of the premiums they should be responsible for and maintain a record of actual premium withholds by referring to banking transaction records.
4. Make sure every case has been reported to the CMS Complaint Tracking Module (CTM), either through 1-800-MEDICARE or through contact with your CMS Regional Office. Be sure you know who in your program communicates with CMS. For example, in many SHIP Programs, the state office has taken on this responsibility and you would send your case data to the state office for reporting.
5. Ask your CMS Regional Office if they are recording premium withhold cases. Be sure to follow your program protocol as to how such matters should be communicated to CMS. For example, in many SHIP programs the state office has assumed responsibility for managing all contacts with CMS and you would send your case data to the state office. Remember you would need authorization from your client to disclose personal information to any party, including CMS.

Below is a detailed history of CMS efforts to address and remedy premium withhold issues:

• 2007 Developments
  
  

• Direct Billing Encouraged (January 2007)

  During 2006, CMS encouraged premium withholding. Beginning in 2007, CMS changed this policy. Premium withholding is no longer the default option for beneficiaries who enroll in Part D plans using the online Plan Finder Enrollment Center.

  Moreover, when beneficiaries opted through the online Plan Finder Enrollment Center for premium withholding for 2007, they had to read a warning about possible delays in the payment of their Part D premiums and were urged to select direct billing.

  Many benefits counselors also recommend the direct billing option in light of the serious and seemingly intractable problems with premium withholding method of paying Part D premiums.

• Plans Are Not Allowed to Disenroll Members Affected By Premium Withhold Problems

  In March 2007, CMS issued a Memorandum (58Kb PDF file) emphasizing that Part D plans are not allowed to disenroll, or to raise the possibility of disenrollment of any member affected by premium withholding problems. CMS reiterated three important groups of beneficiaries that plans may not disenroll:

  • Group 1: Beneficiaries who can demonstrate that premiums are being withheld from their Social Security checks. In these cases, even if the plan has not received payment, the plans must look to CMS and SSA to resolve the problem and may not hold the member liable for the missing premiums.
    
    
  • Group 2: Beneficiaries for whom CMS has notified the plan that a systems or funds transfer problem has delayed premium transmittal to the plan.
    
    
  • Group 3: Beneficiaries on whose behalf a State Pharmacy Assistance Program (SPAP) or other party, such as a retiree health plan, has stated it will pay the full premium. (CMS Memorandum, 4.4.06; CMS Part D Manual, Ch 14, Section 50.6 (48Kb PDF file)
    
    
  • January 2007

    In January 2007, CMS issued a Memorandum (32Kb Word file) and a Partner Tip Sheet explaining the results of a reconciliation of CMS Part D plan payment and enrollment records with SSA premium withholding files.

    According to the Memorandum, the results indicated that 200,000 beneficiaries were affected by the three types of Part D plan premium withholding errors in 2006. Two of these groups did not have enough money withheld from their Social Security benefit to fully pay their 2006 Part D plan premiums, while the third group had too much money withheld and those in this group were due a refund. Ongoing efforts are underway to remedy these problems for affected beneficiaries. The three groups were:

• Group 1: Beneficiaries who owed their plan less than $200 for their 2006 Part D plan premiums. CMS reported that 68,000 beneficiaries had been identified in this group. In January 2007, they received a letter from CMS explaining how the error would be fixed: their January 2007 Social Security benefit (received generally by direct deposit to the beneficiary’s bank account on February 3, 2007) would have the proper amount – up to $200 – withheld and transmitted to their Part D plan in order to adjust for the underpaid premiums during 2006. For those beneficiaries who opted to continue premium withholding in 2007, a correct one-month premium withhold was programmed starting with the March 2007 Social Security benefit, received on April 3, 2007.
  
  
• Group 2: Some beneficiaries owed more than $200 in 2006 Part D plan premiums. In some of these cases, the premiums were never actually withheld despite beneficiary request for premium withholding. In other cases, an incorrectly small withholding was effected. CMS stated that 21,000 such beneficiaries had been identified. CMS directed Part D plans to send bills or payment instructions regarding their 2006 premiums to these individuals. Plans were instructed to afford affected beneficiaries a proper grace period, as required by CMS guidance. For those who opted for premium withholding in 2007, their January and February 2007 premiums were withheld from their January 2007 Social Security benefits, received on February 3, 2007. Effective with the March 2007 Social Security benefit, received on March 3rd, one month’s premium was to be withheld each month in 2007.
  
  
• Group 3: Some beneficiaries had more than the correct amount of premiums withheld during 2006. These beneficiaries, 28,000 in number, should have received a refund in January 2007. If they chose premium withholding in 2007, the correct premium amount for 2007 was to be withheld from their Social Security benefits starting with their February 2007 benefit, received on March 3, 2007.

CMS indicated that other beneficiaries affected by other types of premium withholding issues would have their cases reconciled in the spring of 2007. CMS stated that it would eventually conduct a reconciliation process for all Part D plan members.

• Summer 2007 Premium Withhold Update

  In July 2007, 92,000 Medicare beneficiaries received refunds on Part D plan premiums erroneously withheld by Social Security. Another group of 85,000 had requested that the Social Security Administration withhold their Part D premiums, but SSA did not in fact withhold their premiums. CMS has directed the Part D plans to contact these beneficiaries to arrange payment plans.

  These 85,000 beneficiaries were due to receive a mailing from CMS in September 2007. Of these 85,000, 16,000 owe less than $10 in premium payments for 2006. While CMS did not plan to send these 16,000 a letter, plans may contact them about repayment.

  An additional unspecified number of beneficiaries had an insufficient amount of money withheld by Social Security in 2006. Those who still owe less than $200 are subject to Social Security withholding of the amount still owed. Those who owe more than $200 should be contacted by their plan to arrange payment of the outstanding premium. CMS was scheduled to send letters to these individuals in late August 2007.

  Source: CMS MMA Forum Conference Call, August 7, 2007

• Only Full-Premium Withholding By SSA

  CMS clarified in Withholding and Secondary Coverage 3-8-07 (50Kb PDF file) that Social Security can only deduct full Part D plan premiums. Part D plan members whose premiums are partially paid by a State Pharmacy Assistance Program (SPAP) or by a former employer should not opt for Social Security premium withholding.

  If they do ask Social Security to deduct their premium, the full premium will be withheld, and they may experience significant delays in obtaining refunds. Since the option of Social Security premium withholding was written into the Medicare Modernization Act, neither Part D plans nor CMS may preclude any beneficiary from choosing withholding. Therefore it is important for benefits counselors to be ready to explain the consequences of premium withholding to Medicare consumers.

  In August 2007, CMS issued more Partner Tip Sheets:
  2006 Premium Withholding Reconciliation (32Kb PDF file)
  

This Tip Sheet explains current CMS activities related to correcting Part D and Medicare Advantage premium errors made in 2006 for three groups of affected beneficiaries:

• Beneficiaries who are still owed a refund because too much money was withheld from their Social Security benefits to pay plan premiums for 2006.
• Beneficiaries who had too little money withheld from the Social Security benefits who still owe plan premiums.
• Beneficiaries who had incorrect amounts withheld from their Social Security benefits. These cases include situations in which the wrong plan was paid with monies withheld from Social Security benefits or not enough money was withheld to pay the correct plan premium.

CMS states in the Tip Sheet that 1-800-MEDICARE operators are equipped with both data and scripts to assist affected beneficiaries with their questions. Associated with the Tip Sheet is a template letter (42Kb PDF file) being sent by CMS to beneficiaries with premium errors dating back to 2006 who did not opt for premium withhold by Social Security but rather chose to receive bills and pay their plan directly. The letter informs these beneficiaries that their plan will arrange a payment plan and bill them for premiums owed for 2006.

Late Enrollment Penalty Premiums

CMS determines when and how much of any late enrollment penalty to be imposed on Part D plan members.  CMS requires Part D plans to obtain information about any lapses of credible drug coverage that lasted more than 63 days after the end of the member’s Initial Enrollment Period so that late enrollment penalty calculations may be made. This requirement is in a guidance that CMS updated in June 2007 (81Kb PDF file).

We thought a brief case study might help you can think about how to talk with people about their options. While no case study can cover every situation, many parts of Ms. Jones’s predicament have wide applicability.

1. Ms. Jones turned 65 in April 2007. Her Initial Enrollment Period began in January 2007 and ended in July 2007.
2. Ms. Jones didn’t sign up for a Medicare Part D plan before the end of July 2007. Moreover, she doesn’t enroll in a Part D plan during the 2008 Annual Enrollment Period, November 15 - December 31, 2007.
3. In April 2008, she finally meets a knowledgeable benefits counselor and after being educated decides she should join a Part D plan, but she couldn’t do that until the 2009 Annual Enrollment Period, from November 15, 2008 through December 31, 2008.

What does Ms. Jones need to know about the consequences of enrolling late, that is after her Initial Enrollment Period ended?

When Ms. Jones is finally able to joins a Part D plan during the 2009 Annual Enrollment Period, her coverage will be effective January 1, 2009. At that time, the plan must verify her prior creditable drug coverage status. The plan may do this by asking her to attest to her drug coverage prior to her Part D plan enrollment. She must respond within 30 days.

The plan uses the information it receives to determines the number of months during which she had no credible drug coverage. The plan begins looking at lapses in October 2007 because the law gives Ms. Jones and others like her 63 days following the end of the Initial Enrollment Period to get creditable drug coverage—if they can. However because there is a lapse the plan then counts all of the months during which Ms. Jones lacked creditable drug coverage, starting with August 2007, the month after her Part D Initial Enrollment Period ended and ending in December 2008, which will be her last month without creditable drug coverage.

The Part D plan must report to CMS that Ms. Jones had no drug coverage for the 17 months between August 2007 and December 2008. The plan tells CMS that Ms. Jones lacked creditable drug coverage for CMS calculates a late enrollment penalty premium. The calculation is based on the total number of months between the end of Ms. Jones’ Initial Enrollment Period and when she signed up for coverage. In this case the months between August 2007 and December 2008 are used in the calculation. Ms. Jones had no creditable drug coverage for 17 months.

The late enrollment penalty is a monthly add-on premium in the amount of 1 percent of the national base Part D plan premium. This add-on premium of 17 percent will be charged by the plan for the duration Ms. Jones is in the plan. If she changes plans, her new plan must also collect her late enrollment penalty premium from her. Ms. Jones’ Part D plan must allow her to pay the extra charges on a monthly basis.

CMS tells the Part D to notify Ms. Jones by sending her a letter that explains the penalty premium. The letter also explains how Ms. Jones can appeal a decision if she does not agree with the calculation.

Late Enrollment Penalty Premium Appeals

Part D plan members have a right to appeal decisions they believe to be incorrect about the imposition of late enrollment penalty premiums. The letter they receive from the plan telling them about imposition of the late enrollment penalty premium explains how to appeal. It also includes a form that may be used to file the appeal.

How to appeal a late enrollment penalty premium

Appeals are called Reconsiderations and must be requested by filing with the Medicare Independent Review Entity (IRE), currently an organization called Maximus, within 60 days from the date on the letter from the plan telling members about a late enrollment penalty premium. Reconsideration requests regarding late enrollment penalty premiums are filed sat different addresses depending upon whether the individual is enrolled in a free-standing prescription drug plan (PDP) or a Medicare Advantage plan offering prescription drug coverage (MA-PD).

For PDP Reconsiderations

File with:

MAXIMUS
1040 First Avenue, Suite 200
King of Prussia, PA 19406
Fax: (484) 688-5601
Toll-free Fax: (866) 589-5241

For MA-PD Reconsiderations

File with:

MAXIMUS
50 Square Drive, Suite 120
Victor, NY 14564
Fax: (585) 425-5301
Toll-free Fax: (866) 825-9507

Maximus is required to make a decision within 30 days of receiving the request for Reconsideration and to notify the member of the decision, which is final and cannot be appealed.

Grounds for appealing a late enrollment penalty premium
Plan members might want to contest a plan decision – and benefits counselors can help them to sort through the events that transpired and the evidence that beneficiaries might have to support their claims - if they believe:

• A member promptly submitted information about other creditable drug coverage, but the information was not taken into consideration;
• The plan miscalculated the number of months without creditable drug coverage;
• The end date of the Initial Enrollment Period was not correctly identified;
• An Extra Help member’s late enrollment penalty premium was not correctly waived in 2006 and 2007;
• The member failed to enroll in a Part D plan sooner in reliance upon not receiving adequate notice that other drug coverage was not creditable.

See the CMS guidance on appealing late enrollment penalty premiums decisions (54Kb PDF file).

back to top

Premium Withholding Developments (2007)

• Background

  Medicare beneficiaries in Part D plans may choose to have the Social Security Administration withhold their plan premiums from their Social Security checks and send that amount to their plans. This option was intended by Congress to simplify the logistics of the drug benefit for people with Medicare.

  Since implementation of Part D in 2006 there have been ongoing and longstanding problems with Part D plan premium withholds. Some of these issues involve:

  • People who did not request premium withholding but have nevertheless had amounts withheld from their Social Security benefits.
  • People who asked for premium withholding and never had premiums withheld. In other cases, the wrong amounts were withheld, resulting in either overpayment or underpayment of Part D plan premiums.
  • People who switched plans during enrollment periods but discovered that premiums continued to be withheld for the plan they had left.

  While the number of beneficiaries affected by these premium withholding issues is not publicly known, many benefits counselors affiliated with State Health Insurance Assistance Programs, Access to Benefits Coalitions, and Area Agencies on Aging continue to report large numbers of requests for help in resolving these premium withhold problems.

  These problems affect people eligible for Extra Help as well as those with higher income and resources. Some Extra Help beneficiaries report having premiums withheld from their Social Security benefits even though the Extra Help should have completely covered their premiums, leaving them with no premium obligation.

How You Can Help With Premium Withhold Issues

• There are tools and strategies that benefits counselors can use to protect their clients who are experiencing these dilemmas. While these suggested steps may seem time consuming (especially because they may not result in an immediate and complete resolution of the problem), helping beneficiaries in these ways can make a tremendous difference. These strategies preserve the records needed to ensure the ultimate resolution of these problems.

1. Explain to your clients that in situations where a person’s premiums are being withheld from their Social Security checks, Part D plans cannot involuntarily disenroll someone from their plan because of non-payment of premiums.
2. Work with your clients to help them gather evidence of premium withholding. In many cases this can be accomplished by getting paper or electronic bank account statements, and retaining copies of those in a safe place, along with letters and notices from the plan, CMS and SSA. You can set your clients up with large envelopes labeled with your contact information and ask them to store their papers in the envelope.
3. Help your clients to keep a record of the premiums they should be responsible for and maintain a record of actual premium withholds by referring to banking transaction records.
4. Make sure every case has been reported to the CMS Complaint Tracking Module (CTM), either through 1-800-MEDICARE or through contact with your CMS Regional Office. Be sure you know who in your program communicates with CMS. For example, in many SHIP Programs, the state office has taken on this responsibility and you would send your case data to the state office for reporting.
5. Ask your CMS Regional Office if they are recording premium withhold cases. Be sure to follow your program protocol as to how such matters should be communicated to CMS. For example, in many SHIP programs the state office has assumed responsibility for managing all contacts with CMS and you would send your case data to the state office. Remember you would need authorization from your client to disclose personal information to any party, including CMS.
   

2007 Developments

• Direct Billing Encouraged (January 2007)

  During 2006, CMS encouraged premium withholding. Beginning in  2007, CMS changed this policy. Premium withholding is no longer the default option for beneficiaries who enroll in Part D plans using the online Plan Finder Enrollment Center.

  Moreover, when beneficiaries opted through the online Plan Finder Enrollment Center for premium withholding for 2007, they had to read a warning about possible delays in the payment of their Part D premiums and were urged to select direct billing.

  Many benefits counselors also recommended the direct billing option in light of the serious and seemingly intractable problems with premium withholding method of paying Part D premiums.

  • Premium Withhold Reconciliation (January 2007)

• In January 2007, CMS issued a Memorandum (32Kb Word file) and a Partner Tip Sheet explaining the results of a reconciliation of CMS Part D plan payment and enrollment records with SSA premium withholding files.

According to the Memorandum, the results indicated that 200,000 beneficiaries were affected by the three types of Part D plan premium withholding errors in 2006. Two of these groups did not have enough money withheld from their Social Security benefit to fully pay their 2006 Part D plan premiums, while the third group had too much money withheld and those in this group were due a refund. Ongoing efforts are underway to remedy these problems for affected beneficiaries. The three groups were:

Group 1: Beneficiaries who owed their plan less than $200 for their 2006 Part D plan premiums. CMS reported that 68,000 beneficiaries had been identified in this group. In January 2007, they received a letter from CMS explaining how the error would be fixed: their January 2007 Social Security benefit (received generally by direct deposit to the beneficiary’s bank account on February 3, 2007) would have the proper amount – up to $200 – withheld and transmitted to their Part D plan in order to adjust for the underpaid premiums during 2006. For those beneficiaries who opted to continue premium withholding in 2007, a correct one-month premium withhold was programmed starting with the March 2007 Social Security benefit, received on April 3, 2007.


• Group 2: Some beneficiaries owed more than $200 in 2006 Part D plan premiums. In some of these cases, the premiums were never actually withheld despite beneficiary request for premium withholding. In other cases, an incorrectly small withholding was effected. CMS stated that 21,000 such beneficiaries had been identified. CMS directed Part D plans to send bills or payment instructions regarding their 2006 premiums to these individuals. Plans were instructed to afford affected beneficiaries a proper grace period, as required by CMS guidance. For those who opted for premium withholding in 2007, their January and February 2007 premiums were withheld from their January 2007 Social Security benefits, received on February 3, 2007. Effective with the March 2007 Social Security benefit, received on March 3rd, one month’s premium was to be withheld each month in 2007.
  
  
• Group 3: Some beneficiaries had more than the correct amount of premiums withheld during 2006. These beneficiaries, 28,000 in number, should have received a refund in January 2007. If they chose premium withholding in 2007, the correct premium amount for 2007 was to be withheld from their Social Security benefits starting with their February 2007 benefit, received on March 3, 2007

CMS indicated that other beneficiaries affected by other types of premium withholding issues would have their cases reconciled in the spring of 2007. CMS stated that it would eventually conduct a reconciliation process for all Part D plan members.

• Only Full-Premium Withholding By SSA (March 2007)

CMS clarified in Withholding and Secondary Coverage 3-8-07 (50Kb PDF file) that Social Security can only deduct full Part D plan premiums. Part D plan members whose premiums are partially paid by a State Pharmacy Assistance Program (SPAP) or by a former employer should not opt for Social Security premium withholding.

If they do ask Social Security to deduct their premium, the full premium will be withheld, and they may experience significant delays in obtaining refunds. Since the option of Social Security premium withholding was written into the Medicare Modernization Act, neither Part D plans nor CMS may preclude any beneficiary from choosing withholding. Therefore it is important for benefits counselors to be ready to explain the consequences of premium withholding to Medicare consumers.

• Plans Are Not Allowed to Disenroll Members Affected By Premium Withhold Problems (March 2007)

In March 2007, CMS issued a Memorandum (58Kb PDF file) emphasizing that Part D plans are not allowed to disenroll, or to raise the possibility of disenrollment of any member affected by premium withholding problems. CMS reiterated three important groups of beneficiaries that plans may not disenroll:

• Group 1: Beneficiaries who can demonstrate that premiums are being withheld from their Social Security checks. In these cases, even if the plan has not received payment, the plans must look to CMS and SSA to resolve the problem and may not hold the member liable for the missing premiums.
  
  
• Group 2: Beneficiaries for whom CMS has notified the plan that a systems or funds transfer problem has delayed premium transmittal to the plan.
  
  
• Group 3: Beneficiaries on whose behalf a State Pharmacy Assistance Program (SPAP) or other party, such as a retiree health plan, has stated it will pay the full premium. (CMS Memorandum, 4.4.06; CMS Part D Manual, Ch 14, Section 50.6 (48Kb PDF file)

• Summer 2007 Premium Withhold Update (July 2007)

  In July 2007, 92,000 Medicare beneficiaries received refunds on Part D plan premiums erroneously withheld by Social Security. Another group of 85,000 had requested that the Social Security Administration withhold their Part D premiums, but SSA did not in fact withhold their premiums. CMS has directed the Part D plans to contact these beneficiaries to arrange payment plans.

  These 85,000 beneficiaries were due to receive a mailing from CMS in September 2007. Of these 85,000, 16,000 owe less than $10 in premium payments for 2006. While CMS did not plan to send these 16,000 a letter, plans may contact them about repayment.

  An additional unspecified number of beneficiaries had an insufficient amount of money withheld by Social Security in 2006. Those who still owe less than $200 are subject to Social Security withholding of the amount still owed. Those who owe more than $200 should be contacted by their plan to arrange payment of the outstanding premium. CMS was scheduled to send letters to these individuals in late August 2007.

Source: CMS MMA Forum Conference Call, August 7, 2007

In August 2007, CMS issued more Partner Tip Sheets:
2006 Premium Withholding Reconciliation (32Kb PDF file)


• Additional Premium Withold Reconciliation (August 2007)

This Tip Sheet explains current CMS activities related to correcting Part D and Medicare Advantage premium errors for three groups of affected beneficiaries:

• Beneficiaries who are still owed a refund because too much money was withheld from their Social Security benefits to pay plan premiums for 2006.
• Beneficiaries who had too little money withheld from the Social Security benefits who still owe plan premiums.
• Beneficiaries who had incorrect amounts withheld from their Social Security benefits. These cases include situations in which the wrong plan was paid with monies withheld from Social Security benefits or not enough money was withheld to pay the correct plan premium.

CMS states in the Tip Sheet that 1-800-MEDICARE operators are equipped with both data and scripts to assist affected beneficiaries with their questions. Associated with the Tip Sheet is a template letter (42Kb PDF file) being sent by CMS to beneficiaries with premium errors dating back to 2006 who did not opt for premium withhold by Social Security but rather chose to receive bills and pay their plan directly. The letter informs these beneficiaries that their plan will arrange a payment plan and bill them for premiums owed for 2006.

Prescription Assistance Options for People with Medicare Part D

This recent educational session is for Medicare counselors and community educators helping people with Medicare enroll for prescription coverage. Experts from CMS, RxAssist.org, a Medicare Senior Health Insurance Assistance Program (SHIP), and AstraZeneca shared information and answered questions about people with Part D who still have trouble affording their medicines. Learn more about:

• Qualifying for the Low Income Subsidy (LIS), often called Extra Help
• Patient/prescription assistance programs (PAPs)
• Other options available for patient/prescription assistance

See even more detailed information about Extra Help.

• Transcript of the educational session
• Questions and Answers
• How the LIS affects enrollment in other PAPs
• How PAPs can work with Medicare Part D
• What assistance options are available for people with Part D
• How one manufacturer's Part D PAP works and who uses it
• Practical tips on how to identify and help enroll patients in a PAP