Episode 48 – Changes to Medicare Part D

Episode transcript:

[music intro]

Jenny

Welcome back to Fund Your Future with DRS. We’re excited to welcome Ellen back to the studio with us from the Washington State Health Care Authority. Ellen works there as the Retiree Benefits Manager. And Ellen’s back to talk about some exciting changes coming to PEBB Medicare plans in 2025. Welcome, Ellen.

Ellen

Thank you.

Jenny

So, Ellen, the last time you visited us, you kind of helped explain the alphabet soup that is Medicare with parts A, B, and D. And for our listeners who aren’t familiar with Medicare, there is that episode number 31 that you can go back and listen, to get all up to date. Today we’re going to focus on part D, which is drug coverage.

So, starting in 2025, some of the PEBB retiree Medicare plans will include a part D. So why are PEBB Medicare plans going to include Medicare Part D prescription drug coverage?

Ellen

So that’s a great question. There are two main reasons that we switched to part D. One is to lower premiums because the federal government picks up more of the cost of prescription drugs, and that savings relates directly to premium savings. And the other is we could do this with minimum disruption for members. So, their benefits are pretty much exactly the same in the way that they use them are the same. So, there’s very little change going on for that side.

Seth

That sounds like relatively good news. Maybe less cost and kind of the same plan. So, retirees who are over 65 and eligible for PEBB have a number of different insurance options. Which PEBB plans are going to include part D starting in 2025?

Ellen

Well, the easy answer is all of them, except for plan G and plan F. So, plan F is closed to new enrollments. Plan G is a Medicare supplement plan, and it does not include prescription drug coverage at all. So, all the other plans, which means UMP Classic Medicare, Kaiser Northwest, Senior Advantage, Kaiser Washington, Medicare Advantage, UnitedHealthCare, PEBB balance, and PEBB complete all of those plans will include part D going forward.

Seth

So, what does part D cover for a retiree, generally speaking?

Ellen

So, it’s all of the prescription drug coverage. And because our plans are specially negotiated it also includes some additional things. The basic understanding is: your retiree coverage for prescription drugs will now be paid for mostly by the federal government. So, it’s really a change in payer, not a change in benefits.

Seth

Who was paying before?

Ellen

So, for UMP Classic, it was the plan. So actually the state which is responsible because it’s the self-insured plan for the Medicare Advantage plans. It was the carriers paying for the prescription drug coverage.

Seth

Okay. So, you kind of answered this. I think, make sure I understand when part D is added to these plans in 2025. As a retiree, do I have to pay for them separately on top of my insurance, or is it all included? How does that work?

Ellen

So, for all of the plans, the part D is included in the premium that you pay to HCA. So, the only possible difference is if there is an income adjustment amount, meaning that you have higher than expected income — according to the centers for Medicare and Medicaid Services, according to the federal government.

Then there’s an assessment called an IRMAA. It’s an Income Related Monthly Adjustment Amount, and that amount applies to your part B like “boy” Premium and part D like “drugs” premium, but otherwise your part D premium is included in your HCA premium.

Jenny

Yeah, I’m sure that folks are concerned about if this will have an impact on their ability to get prescriptions. Can they still use the same pharmacy?

Ellen

So, in almost all cases, they can continue to use whatever pharmacy they’re using. For some plans, there will be more pharmacies available for mail order prescriptions, and they get their prescriptions basically the same way they do now. But members should also know that it is easier. There are fewer restrictions in terms of prior authorizations that are needed or step therapy that’s needed under part D than there were before and when the plans were paying for the coverage themselves.

Seth

So, this might be an incorrect assumption, Ellen, but I think I understand that prior to 2025, people might have had to buy their own part D plan. Is that right? No.

Ellen

So only for plan F or plan G did people have to get a standalone part D plan. For the other plans, the coverage was called creditable drug coverage. And what that means is, is it was at least as cost effective as part D. So, it had restrictions on quantity limits, prior authorization, step therapy. All of those things consistent with part D plans, but maybe more restrictive than part D plans.

So, what we’re finding is there’s actually some improvement for people in terms of coverage. Part D plans have to cover more drugs than were necessarily covered before under creditable drug coverage. And it is, generally speaking, a little bit easier to get part D coverage. So there’s an improvement on that side.

Seth

Okay. So that’s sort of how part D being in PEBB will be different than if a person had a standalone part D. absolutely.

Ellen

So standalone part D plans which is what you have to get if you’re on plan F or plan G. Generally speaking those are individual plans. And what we have in PEBB are employer group waiver plans. So that means that we as the employer group can negotiate for better terms. We can have lower co-pays, we can have more drugs covered.

We can have a bonus drug list, which is drugs not necessarily covered by part D, but covered by the plan. We can allow for over-the-counter products to be covered as well. So, in virtually every case, even though the premium might be different for standalone part D plans, the coverage that we have in terms of the number of drugs that are covered and the amount of the copays is better with PEBB than off of PEBB.

Jenny

Yeah. So, if someone is currently in UMP Classic Medicare or one of the Kaiser Medicare Advantage plans, do they need to take action during open enrollment?

Ellen

So that’s a great question. The UMP Classic Medicare is changing to be UMP Classic Medicare with part D PDP. And the Kaiser Medicare Advantage plan, so, that’s Kaiser Northwest Senior Advantage and Kaiser Washington Medicare Advantage. Those plans are also changing to be Medicare Advantage with part D. So, a Medicare advantage that includes part D is sometimes referred to as an MAPD Medicare Advantage Prescription Drug or Medicare Advantage Part D.

If somebody is currently enrolled in either UMP Classic or one of the Kaiser Medicare Advantage plans, just like today, if you’re not making any changes to your account, you do not have to do anything during open enrollment. So, for the plans that are changing, specifically the Kaiser plans and UMP, we will automatically migrate people to the new plan.

They don’t have to take any action. They don’t have to fill out forms. They don’t have to register in benefits 24/7. In fact, we would prefer if they not fill out forms because that would make more work for us to be sure that we haven’t double entered their account. So, per the general rule, if you’re not making any changes in your account for open enrollment, you do not need to do anything.

Seth

So, you hinted at this already, but open enrollment is coming up, and this could be a time where people are going to evaluate the costs of their plans and in the comparisons. And we’ve had previous episodes about open enrollment and the things you should think about, and certainly would encourage people to go back and listen to those episodes if they want to take a deeper dive into the open enrollment process. But could you tell us when open enrollment is going to be for retirees?

Ellen

Sure. So open enrollment will be the same for everybody, retirees and active employees as well. And there’s a change this year usually open enrollment was the month of November. But because we had received complaints that people had trouble getting help, especially during the Thanksgiving holiday weekend. And they had trouble getting forms to us on time so that we received them by the end of the month, especially because of the Thanksgiving holiday, a decision was made to change open enrollment.

So, it will begin on the last Monday in October. And this year that is October 28th, and it will end on the Monday before the Thanksgiving holiday. So, this year that’s November 25th. So again, for 2024, open enrollment will run October 28th through November 25th.

Seth

That makes a lot of sense. So, it’s going to start a little bit earlier and end a little bit earlier. We’ll get to avoid Thanksgiving in that process. So, make all your decisions before you go on holiday.

Ellen

Exactly. And just a reminder that if you are submitting forms, HCA has to receive those forms by November 25th. They can’t be postmarked by then. They have to be received by then.

Seth

Received before the last day. Not in the mail. That makes sense as well. Ellen, I know HCA is doing a lot of education around this change. I expect there’s going to be some things that go out in the mail to people. There’s probably a lot of information on the HCA website on what the costs are going to be of these plans for next year, and the different benefit structures. Could you just remind listeners where they can go to do all of that research?

Ellen

So, the most important piece is the mailing of the October newsletter, which is retiree specific. And that will include all the dates and information on benefit fairs. And all of the benefit fairs are in person. And we encourage retirees who have questions to come and ask. There will be HCA staff available and we will have information on the HCA website.

Over the fall, we will start putting up more information about open enrollment. The premiums will be posted, the plan benefits will be posted. All of that information will be available as well as people even now can send questions to HCA PEBB Medicare, so that’s P-E-B-B Medicare and all of that is all one word HCAPEBBMedicare@hca.wa.gov. And that’s a good way for them to get questions answered prior to the open enrollment period.

Seth

And Ellen, I saw you and your team give a presentation about this. I think it was a few months ago now, and you can tell me where I’m wrong, but my summary is that this is close to no change for retirees as far as what drugs are covered, what pharmacies they can use. And it’s anticipated that for most retirees, this is going to be a cost savings for their budget.

Ellen

Absolutely. Especially for people in UMP Classic Medicare, the premium is going to drop very significantly around $100 a month. So that, plus their copays for their drugs are going to drop. And I know that I’ve heard from lots of retirees who say, “well, I only pay $0.72 for my drug or $0.37 for my drug.” But going forward, those drugs are going to be zero. So, zero is less than $0.32. You know, every nickel counts I think at some point.

So, there will be cost savings for everybody. There is the potential that some people will need a new prior authorization or that their drug currently will have some other restrictions. And they will hear from Moda, who is the benefit administrator for the prescription drug coverage under UMP Classic Medicare. And they’ll have information available to them on what they need to do, what steps they need to take.

Seth

That’s really helpful. So generally, very few changes for most people and very generally a cost savings for most people because of this change, which is just really good work that HCA has done.

Ellen

Right. And one of the biggest benefits for the people on Kaiser is Kaiser had under creditable drug coverage, no upper limit, no cap on the maximum out-of-pocket that one would pay. With the part D plan, part of the Inflation Reduction Act is all part D plans, whether they are standalone or embedded, like our plans, whether they are commercial individual plans or employer group waiver plans like our plans, all of the part D plans will have a $2,000 maximum out-of-pocket cap, so nobody on a PEBB retiree plan is going to pay more than $2,000 out of pocket for their prescription drug coverage in 2025, and going forward.

Seth

That seems like a really, really big win across the board for people. So, thanks for coming to the studio and sharing this information with us. It’s hopefully really exciting for our retiree listeners, for folks who are approaching retirement and thinking about insurance coverage, knowing that they’re going to have this drug option to cover prescription drugs as well as is really excellent. Thanks for coming in.

Ellen

Thank you so much for having me.

[music outro]

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