Module 3 - Medicare Part D Prescription Drug Coverage

Question 1

What are the Part D changes for 2023 and 2023?

Answer 1

As part of the Inflation Reduction Act, Congress made several changes to the Part D program that will be
further addressed in this training. Those changes include:
* Capping beneficiary cost sharing for covered insulin at $35 beginning in 2023
* Eliminating cost sharing for certain Part D covered adult vaccinations beginning in 2023
* Eliminating the 5% coinsurance requirement in the catastrophic coverage phase beginning in
2024
* Expanding eligibility for full low-income subsidies to beneficiaries with incomes up to 150% of
the Federal poverty level beginning in 2023
The legislation also imposed certain requirements on drug manufacturers that may reduce the cost of
Part D drugs

Question 2

Medicare Part D Prescription Drug Program Basics

Answer 2

• Medicare Part D covers certain prescription drugs, diabetic supplies, and vaccines.
• Coverage of Medicare Part D benefits is provided only through private companies. There is no
  fee-for-service Part D benefit.
• The types of Medicare plans that include Part D benefits are:
  o Stand-alone Prescription Drug Plans (PDPs)
  o Medicare Advantage-Prescription Drug (MA-PD) Plans:
  ▪ MA-PDs are MA health plans that also cover Part D prescription drugs.
  o Cost-PD Plans
  ▪ Cost-PDs are Medicare cost plans that cover Part D prescription drugs as an
  optional supplemental benefit.
  o Medicare-Medicaid Plans
  o PACE plans

Question 3

To be eligible for Part D, individuals must be:

Answer 3

• entitled to Part A and/or enrolled under Part B (not including enrollment Part B solely for
  coverage of immunosuppressive drugs); and
• a U.S. citizen or lawfully present in the United States on or before the enrollment effective date.
  (CMS makes this determination).

Individuals meeting the above criteria are generally eligible to obtain Part D benefits through any PDP
offered in the area in which the individual permanently resides, depending on how they receive their
Medicare benefits. PDPs must enroll any eligible beneficiary who applies regardless of health status.

• To obtain Part D benefits from other types of Medicare health plans, such as an MA-PD, Medicare-Medicaid Plan, or PACE Plan, the individual will have to meet the additional eligibility
  criteria for those plans.
  For example, to enroll in an MA-PD, individuals must be both entitled to Part A and enrolled in Part B.

Question 4

Medicare Part D Prescription Drug Eligibility

Answer 4

Individuals’ eligibility to enroll in a stand-alone PDP also depends on how they receive their medical
benefits.
* Generally, only beneficiaries enrolled in Original Medicare, an MA MSA, a PFFS plan or a Cost
plan may enroll in a standalone PDP to receive Part D benefits.

o Beneficiaries enrolled in a MA MSA may only obtain Part D benefits through a standalone PDP.

o Beneficiaries enrolled in a Cost plan or MA PFFS plan may obtain Part D benefits through their plan (if offered) or through a standalone PDP.
* Beneficiaries enrolled in a MA HMO or PPO may only obtain Part D benefits through their HMO
or PPO plan.
o In some cases, employer group plan enrollees may have additional choices.
* Individuals enrolled in a Medicare-Medicaid Plan or PACE plan may only receive their part D
benefits through their plan.

Question 5

Can a beneficiary enrolled in a MA MSA obtain Part D benefits?

Answer 5

Yes. Beneficiaries enrolled in a MA MSA may only obtain Part D benefits through a standalone
PDP.

Question 6

Can beneficiaries enrolled in a Cost plan or MA PFFS plan obtain Part D benefits?

Answer 6

Yes. Beneficiaries enrolled in a Cost plan or MA PFFS plan may obtain Part D benefits through their plan (if offered) or through a standalone PDP.

Question 7

Is it true that Beneficiaries enrolled in a MA HMO or PPO may only obtain Part D benefits through their HMO
or PPO plan?

Answer 7

Beneficiaries enrolled in a MA HMO or PPO may only obtain Part D benefits through their HMO
or PPO plan.

In some cases, employer group plan enrollees may have additional choices.

Question 8

Is it true that Individuals enrolled in a Medicare-Medicaid Plan or PACE plan may only receive their Part D
benefits through their plan?

Answer 8

Yes. Individuals enrolled in a Medicare-Medicaid Plan or PACE plan may only receive their Part D
benefits through their plan.

Question 9

Ms. Singh just became eligible for Medicare. However, she is not eligible for premium-free Part A. She
has chosen not to pay the premium to obtain Part A but will enroll in Part B. She asks her broker
whether she can get coverage for her prescription drugs as well.

Answer 9

Her broker correctly advises her that
she is eligible to enroll in Part D and may choose among the free-standing PDPs available in the area in
which she lives.

Question 10

Mr. Page has Original Medicare and gets his Part D coverage through a standalone PDP. During the
Annual Election Period, he wishes to enroll in an MA HMO.

Answer 10

If Mr. Page chooses an MA HMO, he may no longer get his Part D benefits through a standalone PDP and must choose a plan through the HMO that
includes Part D benefits (an MA-PD) if he wishes to maintain prescription drug coverage.

Question 11

What drugs are covered by Part D?

Answer 11

Part D plans cover:
* Prescription drugs
* Biologics
o Biologics are drugs made from natural sources (human, animal, or microorganism) that are
not chemically synthesized, examples include allergy shots and gene therapies.
* Insulin
* Medical supplies associated with the injection of insulin (e.g., syringes, needles, alcohol swabs,
and gauze) or delivering insulin into the body (e.g., an inhalation chamber)
* Vaccines not covered by Part B

Question 12

What drugs are EXCLUDED from the definition of a Part D covered drug?

Answer 12

The following are excluded from the definition of a Part D covered drug:
* Drugs for weight loss or gain, fertility, cosmetic purposes, symptomatic relief of cough and colds
* Vitamins- Prescription vitamins and minerals with the exceptions of prenatal vitamins and fluoride preparations for certain uncommon Vitamin D analogs (Vitamins D2 and D3 are
excluded from Part D coverage).
* Medical foods formulated to be consumed or administered enterally under the supervision of a physician that are not regulated as drugs under section 505 of the Federal Food, Drug, and Cosmetic Act
* Erectile dysfunction drugs (when used for sexual dysfunction)
* Non-prescription drugs
* Some off-label use drugs
* Drugs covered under Part A and B (even if an individual does not have such coverage).

The following are excluded from the definition of a Part D covered drug:
* Drugs for weight loss or gain, fertility, cosmetic purposes, symptomatic relief of cough and colds
* Vitamins- Prescription vitamins and minerals with the exceptions of prenatal vitamins and
fluoride preparations for certain uncommon Vitamin D analogs (Vitamins D2 and D3 are
excluded from Part D coverage).
* Medical foods formulated to be consumed or administered enterally under the supervision of a
physician that are not regulated as drugs under section 505 of the Federal Food, Drug, and
Cosmetic Act
* Erectile dysfunction drugs (when used for sexual dysfunction)
* Non-prescription drugs
* Some off-label use drugs
* Drugs covered under Part A and B (even if an individual does not have such coverage)
Part D plans are permitted to offer supplemental benefits that cover drugs that otherwise meet the
definition of a Part D prescription drug but are explicitly excluded from coverage, such as certain
prescribed weight loss drugs.

Question 13

Are drugs that are covered under Part A and Part B covered under Part D?

Answer 13

No. Drugs covered under Part A and Part B - even if an individual does not have Part A and Part B coverages - are EXCLUDED from the definition of a Part D-covered drug.

Question 14

Are Part D plans permitted to offer supplemental benefits that cover drugs that otherwise do meet the definition of a Part D prescription drug, but nevertheless are explicitly excluded from coverage?

Answer 14

Yes. Part D plans are permitted to offer supplemental benefits that cover drugs that otherwise meet the
definition of a Part D prescription drug but are explicitly excluded from coverage, such as certain prescribed weight loss drugs.

Question 15

Formularies:

Answer 15

• Part D plans generally do not cover all drugs available in each category of Part D covered drugs because in some cases several similar drugs are available to treat the same medical condition.
• Part D plans include the Part D drugs they will cover on a list known as a “formulary.”
  o Formularies are developed by pharmacists, doctors, and other experts.
• Part D plan formularies must include:
  o At least two drugs in each therapeutic category.
  o Generic and brand-name drugs.

Question 16

Do Part D plans cover all drugs available in each category of Part D covered drugs?

Answer 16

No. Part D plans generally do not cover all drugs available in each category of Part D covered drugs because in some cases several similar drugs are available to treat the same medical condition.

Question 17

Who develops formularies?

Answer 17

Part D plans include the Part D drugs they will cover on a list known as a “formulary.”
o Formularies are developed by pharmacists, doctors, and other experts.

Question 18

What are the 2 requirements for Part D plan formularies?

Answer 18

Part D plan formularies must include:
o At least two drugs in each therapeutic category.
o Generic and brand-name drugs.

Question 19

What does “tiered cost sharing” mean?

Answer 19

A common feature of Part D benefit structures and formularies is cost sharing tiers.
* Tiered cost sharing means grouping Part D drugs into different cost-sharing levels within a Part D sponsor’s formulary. Many plans group drugs into 3 or 4 tiers with lower tiers requiring less
beneficiary cost-sharing than higher tiers, for example:
▪ Tier 1: Generic drugs
▪ Tier 2: Preferred brand-name drugs
▪ Tier 3: Non-preferred brand-name drugs
▪ Tier 4: High-cost drugs or “specialty drugs”

• Thus, in evaluating whether a Part D plan should be recommended to a beneficiary, it is important
  to confirm not only that the beneficiary’s drugs are on the formulary, but to also evaluate which cost
  sharing tier the drugs fall into.

Question 20

Part D Plan Benefits Characertistics:

Answer 20

• All Part D plans must cover at least the Part D standard benefit or meet the requirements for
  “alternative benefits.”

o Benefit structures that are not standard but instead are actuarially equivalent, are
known as “alternative” coverage.

• The standard benefit structure includes several coverage “phases” including:
  o a deductible
  o an initial coverage phase between the deductible and the initial coverage limit
  o A “coverage gap” phase between the initial coverage limit and the out-of-pocket
  threshold (this phase also used to be called the donut hole)
  o a catastrophic coverage phase that applies after the beneficiary reaches the annual out-of-pocket threshold

Question 21

What is considered the First phase of the Part D standard benefit structure?

Answer 21

The deductible phase.

Question 22

What is considered the Second phase of the Part D standard benefit structure

Answer 22

The initial coverage phase between the deductible and the initial coverage limit.

Question 23

What is considered the Third phase of the Part D standard benefit structure?

Answer 23

The “coverage gap” phase between the initial overage limit and the out-of-pocket threshold (this phase also used to be called the donut hole)

Question 24

What is the Fourth phase of the Part D standard benefit structure?

Answer 24

The “catastrophic coverage phase that applies after the beneficiary reaches the annual out-of-pocket threshold.

Question 25

What are the characteristics of Part D Benefits - Alternative Coverage?

Answer 25

• Alternative coverage is prescription drug coverage that is not standard coverage but is at least actuarially equivalent to standard drug coverage.
• Actuarial equivalent means that the value of Part D benefits must be at least the same as the
  standard coverage. Alternative coverage must also:
• not have an annual deductible that exceeds the annual deductible under the standard benefit; and
• impose cost-sharing no greater than the standard benefit once the annual out-of-pocket threshold is met.
• Alternative benefits may also be structured with some or all of the coverage phases that are part of the Part D standard benefits.
• Some Part D plans may offer enhanced coverage for an additional monthly premium (known as enhanced alternative benefits).
• Coverage enhancements may include, for example, a reduction of the deductible; coverage of excluded drugs and/or a decrease in the beneficiary coinsurance amounts.

Question 26

What are the Standard Part D Benefits for 2024?

Answer 26

For 2024, the standard benefit requires the beneficiary to pay:
* a $545 deductible

• 25% of prescription drug costs during the initial coverage phase – that is, between the deductible and initial coverage limit of $5030 or the actuarial equivalent to an average expected
  coinsurance of no more than 25 percent of the actual cost during the initial coverage phase.
• 25% of the cost of generic drugs and 25% of the undiscounted costs of brand name drugs during
  the “Coverage Gap” phase –

o Note that, from a beneficiary perspective, there is no longer a “gap.” However, spending after the initial coverage limit during the so-called coverage gap phase remains relevant, because, during this period of drug spending, drug manufacturers are responsible for 70 percent of the cost of the drug (known as the manufacturer discount). This 70 percent is attributed to beneficiary out-of-pocket costs and counts toward the spending necessary
to reach the catastrophic coverage phase even though beneficiaries do not pay it.

Question 27

What are the Part D Standard Benefits for 2024, Catastrophic Coverage?

Answer 27

Once beneficiary out-of-pocket costs (including the 70 percent drug manufacturer discounts) reach a
total of $8,000, the beneficiary is through the “coverage gap” and reaches catastrophic coverage.

• The out-of-pocket costs that count toward reaching the catastrophic limit are known as “true out-of-pocket” costs or TrOOP. In some instances, amounts not directly paid by the beneficiary, including the manufacturer discounts, count toward TrOOP.

After reaching the annual out-of-pocket threshold, the beneficiary pays nothing.

Question 28

. Applicable Measures to Determine Coverage Phases

Answer 28

It is important to note that there are different financial measures to determine when a new coverage phase is met.

• Progression through the deductible and initial coverage phase is determined by the total gross covered prescription drug costs, which refers to spending on covered Part D drugs by
  beneficiaries or on their behalf by any third party as well as the Part D sponsor.
• Progression through the coverage gap is determined by accumulated true out-of-pocket cost (TrOOP) spending.

Question 29

Special Cost Sharing for Insulin and Vaccines

Answer 29

• There is no cost sharing for Part D adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), even in the deductible phase. This includes, but is not limited to vaccines for:
  o Shingles vaccines
  o Tdap vaccines (tetanus, diphtheria, and pertussis/whooping cough)
  o Hepatitis A
• The cost-sharing for a one-month supply of a covered insulin product cannot be more than
  $35 in any coverage phase.

Question 30

Mr. James is enrolled in a PDP with no monthly premium and a standard benefit structure. He takes
multiple maintenance prescription drugs that are on the plan formulary with a total cost of $6400
annually.

Answer 30

On an annual basis, Mr. James will pay $2008.75 for his drugs ($6400 (total drug cost) - $545
(deductible) = $5855 x .25 (initial coverage cost sharing and coverage gap percentage) = $1463.75 +
$545 (deductible) = $2008.75

Question 31

Mr. Bingham is enrolled in a PDP with a $500 deductible and no premium. His only anticipated need is
his monthly supply of insulin and diabetic supplies.

Answer 31

During the deductible phase, Mr. Bingham will pay no more than $35 a month for his insulin and the full cost of his diabetic supplies until his out-of-pocket reaches $500. After the deductible is met, Mr. Bingham will pay his applicable copayment for insulin
(which can be no more than $35) and his applicable copayment for his diabetic supplies.

Question 32

“True Out-of-Pocket” Costs (TrOOP): What Counts?

Answer 32

Part D True Out-of-Pocket costs or “TrOOP” are out-of-pocket costs that count towards the annual outof-pocket threshold to move into the catastrophic coverage phase.
* TrOOP is calculated on an annual basis.

• Generally, TrOOP includes beneficiary payments for Part D prescription drugs, including:
• The annual deductible, cost-sharing above the deductible and up to the initial coverage
  limit, and above the initial coverage limit up to the annual out-of-pocket threshold.
• After the initial coverage period, a drug manufacturer’s discount for brand name drugs counts
  toward the true out-of-pocket costs.
• Generally, for drug costs to count toward TrOOP, drugs must be on the plan’s formulary and be
  purchased at the Part D plan’s participating network pharmacy.
• Amounts paid or borne by the AIDS Drug Assistance Program and the Indian Health Service also
  count toward TrOOP.
• Amounts paid by or through qualified State Pharmaceutical Assistance Programs (SPAPs), most
  charities, health savings accounts, flexible spending accounts, and medical savings accounts also
  count toward TrOOP.

Question 33

“True Out-of-Pocket” Costs (TrOOP): What is Excluded?

Answer 33

Some costs do not count toward TrOOP costs including:
- costs for drugs not on a Part D plan’s formulary, unless the beneficiary requests and receives a
formulary exception under which the plan covers the drug

-costs for over-the-counter (OTC) and other non-Part D drugs

-costs for covered Part D drugs obtained out-of-network (unless the plan’s out-of-network coverage policy applies)

-costs paid for or reimbursed to an enrollee by insurance, a group health plan, most government-funded health programs, or another third party including:
Medicaid, State Children’s Health Insurance Program (CHIP), Federally Qualified Health
Centers, Rural Health Clinics, Patient Assistance Programs (PAPs) outside the Part D benefit, TRICARE, Federal Employees Health Benefits Program (FEHBP), Black Lung
Funds, and health reimbursement arrangements (HRAs); or
-
costs for drugs purchased outside the United States.

Question 34

Part D Enrollee Costs: “True Out-of-Pocket” Costs (TrOOP), Example 1

Answer 34

Mr. Reynolds takes blood pressure medication. He requested a formulary exception, which
was denied by his plan. He decided to continue taking the non-formulary prescription and pay for it out-of-pocket. The amounts Mr. Reynolds pays for the drug do not count toward his deductible or other out-of-pocket cost.

Question 35

Part D Enrollee Costs: “True Out-of-Pocket” Costs (TrOOP), Example 2

Answer 35

: Ms. Howard has terrible seasonal allergies. To address her allergies, she takes a prescription
drug that is on the formulary and supplements it with over-the-counter drugs to address specific
symptoms, such as a runny nose. Only the amount that Ms. Howard pays for her prescription allergy
medication counts toward her true out-of-pocket costs. Her costs for over-the-counter drugs do not
count toward TrOOP.

Question 36

Part D Pharmacy Networks

Answer 36

• Part D coverage is generally provided through contracted pharmacies (network pharmacies) in the
  Part D plan’s service area, except that PFFS plans are not required to use a pharmacy network but may voluntarily choose to have one.
• Network pharmacies include retail pharmacies, long-term care pharmacies, and may also include
  mail-order pharmacies.
• Within their networks, Part D plans may designate some pharmacies as preferred pharmacies that
  offer lower levels of cost-sharing (“preferred cost-sharing”) than apply at other network pharmacies
  (“standard cost-sharing”).
• Enrollees are generally required to fill prescriptions for covered drugs at network pharmacies.
• Under certain circumstances, enrollees may fill prescriptions for covered drugs at out-of-network
  (non-network) pharmacies, but possibly at a higher cost to enrollees. For example:
• If the enrollee has an illness or loses a drug while traveling outside the service area; or
• If circumstances result in limited drug access through an in-network pharmacy.

Question 37

Part D Premiums

Answer 37

• Part D plans may charge a premium.
  o Typically, a higher premium means lower out-of-pocket costs for the plan.
• Part D enrollees have three options for paying their Part D premium.
  o An automatic electronic monthly mechanism, such as withdrawal from their checking or
  savings bank account or automatic charge against their credit or debit card.
  o Direct monthly billing from the plan.
  o Automatic deduction from their monthly Social Security Administration (SSA) benefit
  check.
  ▪ Typically, it takes 2-3 months for SSA withholding to begin or end.
  ▪ When withholding begins, it will be for the 2-3 months of premiums owed.
• Generally, the beneficiary must stay with the premium payment option they choose for the
  entire year.
• If an enrollee does not choose an option, the beneficiary will be billed by the Part D plan
  monthly

Question 38

Part D Late Enrollment Penalty

Answer 38

• Beneficiaries may have to pay a monthly premium penalty to join a Part D plan if:
  -they do not have creditable drug coverage and do not enroll when first eligible for Part D.
• there have been at least 63 continuous days following a beneficiary’s initial enrollment
  period for Part D during which the beneficiary did not have either Part D or other creditable
  drug coverage.
• The penalty will be 1% of the national average beneficiary premium for each month the beneficiary
  did not have Part D or creditable coverage.
• In general, the penalty is in effect for as long as the beneficiary has Medicare prescription drug
  coverage.
• Beneficiaries who qualify for the low-income subsidy are not subject to the late enrollment penalty

Question 39

Late Enrollment Penalty Example 1

Answer 39

Mr. Russell first became eligible for Part D on December 1, 2021. He did not sign up and has not had
creditable drug coverage. Mr. Russell wishes to obtain drug coverage during the Annual Election Period
to be effective on January 1, 2023. He is not LIS eligible. Mr. Russell will have to pay a penalty of 13% of
the national average beneficiary premium (1% for every month he did not have creditable drug coverage
after becoming eligible) for every month that he stays covered under Part D

Question 40

Late Enrollment Penalty Example 2

Answer 40

Ms. Smith lost the creditable drug coverage that her employer provided when she retired. Ms. Smith
signed up for Part D with an effective date of 60 days after the date she lost her coverage. Ms. Smith will
not be subject to a late enrollment penalty.

Question 41

Part D Drug Management Tools

Answer 41

In addition to formularies and cost sharing tiers, Part D plans use a variety of prescription drug benefit
management tools including:
* Step therapy: One or more similar lower-cost drugs must be tried before other costlier drugs are
covered, if necessary.
* Prior authorization: Requires the doctor to contact the plan and request authorization before
the plan will cover the prescription drug. The doctor must show the plan that the drug is
medically necessary for it to be covered.
* Quantity limits: For safety and cost reasons, Part D sponsors may limit the amount of
prescription drugs they cover over a certain time period.
* Substitution: Part D sponsors may substitute generic drugs for brand name drugs if the generic
drugs have the same or lower cost-sharing and certain conditions are met.
* Comprehensive Addiction and Recovery Act (CARA) programs: Plans may impose certain
limitations on the prescribers or pharmacies a beneficiary can use to manage utilization for
beneficiaries who are at risk of misusing or abusing frequently abused drugs, such as opioids

Question 42

Transition Requirements

Answer 42

• Part D sponsors must provide coverage of at least a one-month fill (unless a lower amount was
  prescribed) of non-formulary drugs to the following individuals prescribed a non-formulary drug,
  including Part D drugs that are on a sponsor’s formulary, but require prior authorization, step
  therapy, or are subject to a quantity limit that is not safety-based:
• beneficiaries initially enrolling in Part D,
• beneficiaries switching plans, and
• current enrollees affected by formulary changes (other than allowable substitutes of a
  generic drug for a brand name drug)
• current enrollees experiencing a level of care change, if the Part D sponsor is notified of the
  change before or at the time of the request for the fill
• Beneficiaries eligible for transition fills must receive coverage of at least a one-month fill (unless a
  lower amount was prescribed) of their non-formulary drugs during the first 90 days after their
  enrollment, the plan switch, or the formulary change.
• To the extent that a current enrollee in a long-term care setting is outside their 90-day transition
  period, the sponsor must still provide a one-month supply of nonformulary Part D drugs while an
  exception or prior authorization request is being processed.
• During the transition period:
  -the Part D plan does not apply prior authorization, non-safety-based quantity limits, or step
  therapy rules.
• the enrollee and their physician can request an exception to the Part D plan’s formulary to continue coverage of the non-formulary drug or can transition to a formulary drug.

Question 43

Enrollee Rights: Requesting Coverage Determinations and Appealing Decisions

Answer 43

.
* Part D Plan Sponsors must provide access via a secure website or secure e-mail address on the website for enrollees to quickly request a determination of whether the plan will cover a drug (a
coverage determination) or appeal a coverage decision.
o Enrollees may appeal coverage determinations, decisions on exceptions, or requests concerning tiering or formularies.
* Plan Sponsors must also require network pharmacies to provide enrollees with a printed notice with the plan’s toll-free number and website for requesting a coverage determination.

Question 44

Enrollee Rights: Requesting Exceptions for Drugs

Answer 44

• Enrollees have the right to request coverage of a drug that is not on the Part D plan’s formulary or to request exceptions from plan rules such as prior authorization, step therapy, or quantity limits. Such requests are known as formulary exception requests.
• Enrollees also have a right to request coverage of formulary drugs at a less costly formulary tier. This is known as a tiering exception.
• Exception requests must be accompanied by a supporting statement by a physician or other prescriber explaining why the exception is necessary.
• A standard form is available on Part D plan websites for enrollees to request a coverage determination, including a formulary or tiering exception. A physician or other prescriber may also request a tiering or formulary exception

Question 45

Enrollee Rights: Filing Grievances

Answer 45

• Beneficiaries may also file complaints about their Part D plan or their pharmacies. These
  complaints are known as grievances.
• Grievances include complaints about issues such as pharmacy wait times, a plan’s failure to mail
  a beneficiary requested material, or the length of hold time on the plan customer service line.
• Grievances do not include complaints about a Part D sponsor’s refusal to cover a drug or
  approve an exception request. Beneficiaries must resolve such issues through the appeals process.

Question 46

Help for Individuals with Limited Income and Limited Resources

Answer 46

If a beneficiary has limited income and resources, they may qualify for a low-income subsidy (LIS) to
cover all or part of the Part D plan premium and cost-sharing. To qualify for the LIS in 2023:
* Beneficiary income may not exceed 150% of the Federal Poverty Level (FPL). The 150% FPL
varies geographically as follows:
-48 states $21,870 (individual)/$29,580 (couple)
- Alaska $27,315 (individual)/$36,960 (couple)
- Hawaii $25,155 (individual)/$34,020 (couple)

• For 2023, beneficiaries’ resources may not exceed $15,160(individual)/$30,240 (couple).
  These limits are increased by $1500 per person if the beneficiary notified the Social Security Administration that they expect to use some of their resources for burial expenses.
• Resource and income limits to qualify in 2024 will be released in the fall of 2023

Question 47

Individuals with Limited Income 2024 Low-Income Subsidy (LIS)

Answer 47

• For 2024, individuals who qualify for full LIS and are Full Benefit Dual Eligibles (FBDEs) with income
  at or below 100% of the Federal Poverty Level (FPL) and resources below the applicable threshold
  have a $0 deductible and cost-sharing of:
  o Maximum cost-sharing up to the out-of-pocket threshold of:
  ▪ $1.55 for generic drugs
  ▪ $4.60 for other drugs
• For 2024, individuals who qualify for full LIS and are FBDEs with (income over 100% of FPL and
  resources below the applicable threshold) have a $0 deductible and cost-sharing of:
  o Maximum cost-sharing up to the out-of-pocket threshold of:
  ▪ $4.50 for generic drugs
  ▪ $11.20 for other drugs
• For 2024, individuals who qualify for LIS but are not FBDEs have a $0 deductible and cost-sharing of:
• Maximum cost-sharing up to the out-of-pocket threshold of:
  ▪ $4.50 for generic drugs
  ▪ $11.20 for other drugs

Question 48

What does “LIS” mean?

Answer 48

Low Income Subsidy (also known as “Extra Help”.)

Question 49

Other Help for Low-Income – Pharmaceutical Assistance Programs

Answer 49

• Some pharmaceutical manufacturers operate programs that assist low-income individuals in
  obtaining drugs at reduced or no costs.
• Some states have assistance programs designed specifically for their residents.
  o Some programs are “qualified” State Pharmaceutical Assistance Programs or SPAPs that
  count towards TrOOP and some do not count towards TrOOP.
  o Becoming familiar with your state’s programs may allow you to help a beneficiary address
  cost-sharing for prescriptions.

Question 50

Encourage Individuals with Limited Income/Resources to Apply to the State Medicaid
Office

Answer 50

• Beneficiaries with limited income and resources should be encouraged to apply for the low-income
  subsidy (LIS) – also called extra help – through the State Medicaid office or the Social Security Administration (SSA). Beneficiaries may apply at any time.
• If beneficiaries apply to the State Medicaid office for Part D help, the State Medicaid office also will check for eligibility for other low-income assistance programs.
• They may also call SSA at 1-800-772-1213 (TTY users can call 1-800-325-0778) or apply
  online at https://secure.ssa.gov/i1020/start for help with Part D costs.
• After SSA or the State approves an application for extra help, it is effective on the first day of the month in which the individual applied.

Question 51

Certain Individuals Automatically Qualify for Extra Help

Answer 51

Individuals automatically qualify for Extra Help if they have Medicare and meet any of these conditions:
* They have full Medicaid coverage
* They get help from their state Medicaid program paying their Part B premiums (in a Medicare
Savings Program)
* They get Supplemental Security Income (SSI) benefits.
Medicare mails these individuals a purple letter to let them know they automatically qualify. They should keep this letter for their records. They do not need to apply for Extra Help if they get this letter.

Question 52

Employer/Union Coverage of Drugs

Answer 52

• Employer or Union Coverage: Employers/unions will notify their employees of whether their Non-Medicare prescription drug coverage is “creditable” (coverage that, on average, covers at least as much as Medicare’s standard Part D covers) via an annual statement.
  -If coverage is creditable and the beneficiary keeps it, the beneficiary will not incur a premium penalty if later they lose or drop the employer coverage and join a Part D plan.
• If coverage is not creditable, the beneficiary will need to enroll in Medicare Part D during their initial eligibility period to avoid the late enrollment penalty.
• If a beneficiary has creditable drug coverage through TriCare, the VA, or the FEHBP, they can compare that coverage with available Part D plans to decide whether to enroll in Part D.

Question 53

Employer Coverage of Drugs, continued

Answer 53

• The beneficiary should check with the employer or union benefits administrator before making
  changes to their employer/union coverage.
  -If a beneficiary drops employer/union prescription drug coverage, they may not be able to
  get it back and may also lose health coverage.
• There will be no late enrollment penalty if the beneficiary retires or otherwise loses employer/union creditable coverage and joins a Medicare Part D plan or otherwise obtains creditable drug coverage within 63 days.

Question 54

Medicaid Drug Coverage

Answer 54

• When a Medicaid beneficiary becomes eligible for Medicare, then Medicare, instead of Medicaid, covers the Part D drugs once the beneficiary is enrolled in a Part D plan.
• If Medicaid beneficiaries don’t choose a plan, Medicare will select one for them.