MEDICARE PART D: HOW YOUR SCHOOL CAN COMPLY

The new Medicare Part D prescription drug benefit begins January 1, 2006. This new program will affect the group health plans of most school corporations - even if the group health plan does not cover retirees. In some cases, it will also impact voluntary employee beneficiary associations, or VEBAS, which many school corporations sponsor to help retirees pay for health care coverage, including prescription drug expenses, during retirement. Read on to see what you must do as an employer about this new program.

Our group health plan offers prescription drug coverage, but it only covers active employees. How is it impacted by Medicare Part D?

If your group health plan covers employees who are over age 65, or if it covers any employees or dependents who receive Medicare benefits because of a disability or end stage renal disease (ESRD), then you need to:

•Decide if your plan's prescription drug coverage is "creditable." For purposes of Medicare Part D, coverage is "creditable" if on average it is at least as good as Medicare Part D coverage. If your school has a fully insured plan, contact your insurer and ask if it has made this determination for your plan. You can also look at http://www.cms.hhs.gov/medicarereform/CCGuidance.pdf for information regarding the creditable coverage test provided by the Centers for Medicare and Medicaid Services (CMS).

•By November 15, 2005, send a written "creditable coverage notice" to your Medicare-eligible employees and their dependents informing them whether or not your plan's prescription drug coverage is "creditable." You can access a model CMS notice at www.cms.hhs.gov/medicarereform/CCguidances.asp. If you have a fully insured plan, you should not count on your insurer sending this notice - contact the insurer and make sure.

•By November 15, 2005, tell CMS if your plan's prescription drug coverage is "creditable."

Our group health plan also covers retirees and their dependents. What does Medicare Part D mean to us?

•In addition to the steps outlined above, you must also send the "creditable coverage notice" to Medicare-eligible retirees and their dependents.

•If your plan covers retirees who are age 65 or older, you should decide whether to apply for the retiree subsidy (estimated to be worth $660 per retiree) - but you must apply for the 2006 subsidy by September 30, 2005.  Applying for the subsidy is a complex and time consuming process.  If you are considering it, you should not delay in getting started.

•You should decide how to coordinate retiree benefits with Medicare Part D, and, if necessary, update your plan documents and notify retirees of any changes made.

This is a very brief summary of a complicated program. You can expect questions from plan participants once Medicare and the Part D plans begin distributing information about these programs, beginning October 1. For more information, or for assistance with the decisions you need to make and the actions you need to take, contact your Ice Miller benefits attorney, or Tara Schulstad Sciscoe, Chris Sears, Stephanie Smithey, or Linda Rowings.