Beneficiaries with LIS receive many notices both from CMS and from Part D plans. Most CMS notices about Extra Help are specific to those with LIS. However, Part D plans are not required to tailor their general notices, like the Annual Notice of Change (ANOC) and the Explanation of Benefits (EOB), specifically to LIS beneficiaries. Often, plans will mail a separate LIS-specific addendum with each notice.

The deemed-eligible notice, which explains the process of auto-assignment, includes the following information:

• Who gets the notices
• When they get the notices
• Explanation of Medicare drug coverage
• Costs associated with the Part D plan
• Explanation of auto-enrollment process
• What to do if they are enrolled in a Part D plan
• What to do if they are not enrolled in a Part D plan
• Where to go for more information

CMS mails these deemed notices on a monthly basis to dual-eligible beneficiaries.

Those who are auto-enrolled into Part D plans get an auto-enrollment letter with information about the plan they were assigned.

Others who are facilitated into plans also receive notices about the facilitated-enrollment process. There are two versions of this notice: one for full subsidy and one for partial subsidy.

CMS’s Call Letter for the plans has an EOB template that plans may use. However, plans also may use a design they create, as long as the required information is included. EOBs, which are post-enrollment materials, are subject to CMS approval.

CMS has created a fact sheet with more information about EOBs.

Part D plans are allowed some flexibility in the structure of their cost-sharing strategies. Throughout the plan year, enrollees may pay some amount (as low as zero and as high as 100 percent) of the plan's negotiated price. Plans negotiate prices with drug manufacturers in order to establish the cost they will charge for drugs in the upcoming plan year.

Plans are permitted to have a deductible—an amount no greater than $295 (in 2009) that enrollees must pay out-of-pocket before the plan begins to pay. However, most plans have a reduced or $0 deductible.

Once enrollees meet the deductible, Part D plans charge copayments (a set amount per prescription), coinsurance (a set percentage of the drug’s negotiated price), or a combination of both throughout the initial coverage period ($2700 in total drug spending in 2009). HAP has created a chart outlining the cost-sharing structure of a standard Part D plan.

After the initial coverage period, enrollees must pay 100 percent of the plan’s negotiated price for drugs until the enrollee reaches $4350 (in 2009) in out-of-pocket spending. After this point, enrollees pay no more than 5 percent of the negotiated price of a drug through the rest of the plan year.

TrOOP refers to expenses that Part D plan enrollees must pay to fulfill the cost-sharing requirements needed to reach the Part D catastrophic benefit—the point at which the Part D plan pays 95 percent of prescription drug costs and the beneficiary pays 5 percent.

TrOOP includes the annual plan deductible and all coinsurance or copayments that enrollees pay for drugs on the plan's formulary, but it excludes the monthly plan premium. Part D plans are required to send monthly Explanation of Benefits statements to enrollees; these statements should show the enrollee's TrOOP totals. Plans may use the term TrOOP or may call it “Your Costs” or “Your Spending.” Some sources of payment that count as TrOOP include:

• Beneficiary out-of-pocket payments for any annual deductible and any copayment or coinsurance amounts (including the entire cost of covered prescriptions while in the “doughnut hole”)
• Beneficiary spending using health savings accounts (HSAs), flexible spending accounts (FSAs), and medical savings accounts (MSAs)
• Contributions from friends or relatives
• Contributions from certain charitable foundations
• Waivers or reductions by pharmacies of the cost-sharing requirements of Medicare drug benefit plans and payments by state-funded only programs such as state pharmacy assistance programs (SPAPs)

TrOOP is calculated as actual out-of-pocket costs that a beneficiary incurs during a plan year for drugs on a plan's formulary (not including the monthly premium). Plans begin calculating TrOOP from the time a beneficiary’s enrollment is effective. When TrOOP costs equal the deductible, the enrollee enters the initial coverage period and pays approximately 25 percent of the plan’s negotiated price for each formulary drug.

At this point, it becomes more complicated because while TrOOP determines the deductible period and entering the initial coverage period, it is total drug spending that that determines when a beneficiary enters the doughnut hole. Total drug spending includes the TrOOP paid by the enrollee (including any deductible) plus the amount paid by the plan.

When total drug spending is $2,700 (in 2009), enrollees enter the coverage gap, or doughnut hole. During the coverage gap, beneficiaries continue to build TrOOP. When TrOOP reaches $4350 (in 2009), enrollees reach catastrophic coverage. At this level of TrOOP ($4350), the plan has also paid approximately $1804 (in 2009), which brings the total drug spending to about $6154.

The costs of non-formulary drugs for which exceptions are granted do count as TrOOP. Section 423.578 (b)(3) of the MMA Regulations specifically addresses TrOOP and exceptions drugs:

(3) If the Part D plan sponsor covers a non-formulary drug, the cost(s) incurred by the enrollee for that drug are treated as being included for purposes of calculating and meeting the annual out-of-pocket threshold.

Beneficiaries have several options to pay the monthly premium to their plan. They can choose to pay the premium directly to the plan by check or money order. Another option is to have the premium deducted directly to the plan from a savings or checking account. Additionally, some plans allow beneficiaries to make an electronic payment by phone or through the Internet by using credit cards.

Beneficiaries may also elect to have the premium deducted from their Social Security checks. However, data transfers from the drug plans to CMS and then to SSA can take a few months to process, which can result in several months of premiums taken out of a Social Security check at once.

Creditable drug coverage is prescription coverage that is at least as good as standard Part D coverage. In this case, “as good as” means that the non-Medicare coverage must pass an actuarial equivalence test. The actuarial equivalence test measures whether the expected amount of paid claims under the prescription drug coverage is at least as much as the expected amount of paid claims under the standard Part D benefit. A non-Part D plan sponsor must submit an actuarial attestation to CMS that provides information showing that the coverage is at least equal to the actuarial value of a standard Part D plan.

Source: Section 423.56(a)-(b) of the MMA Regulations addresses the topic of creditable coverage. (See also CMS’s Simplified Creditable Coverage Determination.)

§ 423.56 Procedures to determine and document creditable status of prescription drug coverage. (a) Definition. Creditable prescription drug coverage means any of the following types of coverage listed in paragraph (b) of this section only if the actuarial value of the coverage equals or exceeds the actuarial value of defined standard prescription drug coverage as demonstrated through the use of generally accepted actuarial principles and in accordance with CMS actuarial guidelines.

(b) Types of coverage. The following coverage is considered creditable if it meets the definition provided in paragraph (a) of this section: (1) Prescription drug coverage under a PDP or MA-PD plan. (2) Medicaid coverage under title XIX of the Act or under a waiver under section 1115 of the Act. (3) Coverage under a group health plan, including the Federal employees health benefits program, and qualified retiree prescription drug plans as defined in section 1860D–22(a)(2) of the Act. (4) Coverage under State Pharmaceutical Assistance Programs (SPAP) as defined at § 423.454. (5) Coverage of prescription drugs for veterans, survivors and dependents under chapter 17 of title 38, U.S.C. (6) Coverage under a Medicare supplemental policy (Medigap policy) as defined at § 423.205. (7) Military coverage under chapter 55 of title 10, U.S.C., including TRICARE. (8) Individual health insurance coverage (as defined in section 2791(b)(5) of the Public Health Service Act) that includes coverage for outpatient prescription drugs and that does not meet the definition of an excepted benefit (as defined in section 2791(c) of the Public Health Service Act). (9) Coverage provided by the medical care program of the Indian Health Service, Tribe or Tribal organization, or Urban Indian organization (I/T/U). (10) Coverage provided by a PACE organization. (11) Coverage provided by a cost-based HMO or CMP under part 417 of this chapter. (12) Coverage provided through a State High-Risk Pool as defined under 42 CFR 146.113(a)(1)(vii). (13) Other coverage as the Secretary may determine appropriate.

Prescription drug coverage from the Veterans’ Administration (VA) is creditable coverage. Medicare beneficiaries have the option of joining a Part D plan in addition to having VA coverage, though it is not necessary. If VA coverage meets their needs, there is no penalty if they later choose to join a Part D plan during an applicable enrollment period.

Keep in mind that the VA will not provide assistance with the costs of prescriptions filled through Medicare Part D. For more information about VA and Medicare prescription drug coverage, see the VA's Common Questions about Medicare Part D.

Prescription drug coverage from TRICARE is creditable coverage. For more information about TRICARE and Medicare prescription drug coverage, see TRICARE's Medicare Part D Resource Center.

Medicare beneficiaries can have both a Part D plan and coverage from TRICARE. Because TRICARE is creditable and is generally considered comprehensive coverage, it is not necessary for an individual to have both. Low-income Medicare beneficiaries who qualify for the Extra Help may experience lower out-of-pocket costs through a Part D plan than through TRICARE.

For those who choose to have both types of coverage, the Part D plan is considered primary coverage, and TRICARE, secondary. TRICARE pays some of the enrollee’s Part D costs for prescription drugs (including any annual deductible as well as copayments or coinsurance during the initial coverage period, subject to TRICARE rules). During the Part D doughnut hole, TRICARE would become the primary payer for prescription costs. This means that enrollees would pay standard TRICARE co-payments. All beneficiary out-of-pocket spending counts towards the TRICARE spending cap of $3000. For more information about TRICARE and Medicare prescription drug coverage, see CMS's TRICARE Fact Sheet.

There are several reasons why an individual with VA drug coverage may want to consider enrolling in a Part D plan. Perhaps the formulary for VA drug coverage does not offer all of the medications that the individual needs, or the location of the VA facility is not convenient for the individual and the mail-order system does not meet her needs for urgent medications.

Medicare Advantage Plans with Part D (MA-PDs) offer Medicare Part A (hospital), Part B (physician), and Part D (prescription drug) benefits through one, coordinated plan. Medicare Advantage plans can offer enrollees additional benefits not covered by Original Medicare. Typical examples of additional benefits offered by MA plans include vision care, dental care, or lower cost sharing.

Enrollees in MA plans cannot use a Medigap (or supplement) plan, since the Medigap plan does not pay for out-of-pocket costs in the MA plan. For those with VA coverage, a Medigap policy would likely only duplicate, rather than offer any additional coverage.

This question really has three parts—the interaction of Part D and retiree health coverage, the impact of LIS on this relationship, and coordination of benefits.

1. Retiree health coverage and Part D. It is possible for an individual to be enrolled in both a retiree health insurance plan and a Part D plan. However, it is very important to understand exactly how a specific retiree plan will work with Part D before deciding to enroll in Part D. Some retiree plans, for example, may automatically drop those who enroll in Part D; others may coordinate their benefits (in this latter case, Part D is the primary coverage, and the retiree coverage is secondary). Thus, as Part D could have an adverse impact on the retiree coverage, retirees should check with their insurers before enrolling in Part D plans.

2. LIS, Part D, and retiree health coverage. For those LIS beneficiaries who also have retiree coverage, it is important to understand whether auto or facilitated enrollment will impact their retiree coverage. The worst outcome of CMS’s enrollment for these individuals is being dropped from retiree coverage altogether (including health benefits), because they were automatically enrolled into a Part D plan. CMS rules prohibit them from facilitating the enrollment of beneficiaries whose retiree plans receive a government subsidy for providing their coverage. On the other hand, some insurers offering creditable coverage are not known to CMS. In those cases, such retirees might be enrolled into plans. It is best to be cautious in all cases of retiree coverage and LIS. If retiree plans do not permit enrollees to keep their retiree coverage and Part D, these beneficiaries must affirmatively decline the Part D auto or facilitated enrollment. Beneficiaries with retiree coverage always should contact their plans’ administrators prior to making decisions about Part D coverage.

3. Coordination of retiree health insurance and Part D with LIS. If the retiree plan will permit coordination and the individual qualifies for Extra Help, out-of-pocket costs associated with the Part D plan will be minimal. If the enrollee is responsible for paying for a portion of the costs associated with the retiree plan, switching to a Part D plan might reduce the overall costs. However, if the individual does not pay for the costs associated with the retiree plan, then the individual might decide to be enrolled in both plans. It is important to note that, in this case, the Part D plan would be primary and the retiree plan would be secondary coverage.

For more information about the relationship between retiree coverage and Part D, CMS has created a Fact Sheet.

Beneficiaries who have creditable EGHP coverage have a SEP to switch from the EGHP to a Part D plan or from a Part D plan to an EGHP during the EGHP's open enrollment season. This is true even if it does not coincide with the Part D Annual Enrollment Period (11/15-12/31 each year). The SEP is described in Section 20.3.8.1 of the PDP Enrollment Guidance.

Apart from the above SEP, if someone covered by an EGHP that offers creditable coverage voluntarily disenrolls from the EGHP, there is no SEP to join a Part D plan. On the other hand, if the EGHP terminated coverage for enrollees, then they have a 60-day SEP to join a Part D plan. Using this SEP protects the person from a premium penalty because the person would not go 63 days without creditable drug coverage. This SEP is found in Section 20.3.5 of the PDP Enrollment Guidance.

No. There are several methods to enroll in Part D plans, including 1-800-MEDICARE, the plan's toll-free number, enrolling online at www.medicare.gov, or sending a paper enrollment form.

Yes, beneficiaries may make one choice to enroll or disenroll from a Part D plan at any time during the Annual Enrollment Period (November 15 to December 31 each year). Until the enrollment is effective (i.e., January 1), beneficiaries may make as many choices as they would like. The enrollment processed last will be the one that is effective on January 1.

After enrollment in a Part D plan during the AEP, beneficiaries begin receiving coverage from the new plan effective January 1 of the following year.

The auto and facilitated enrollment notices sent from Medicare to LIS recipients include information about changing plans. These notices include other details about Part D, including costs, other available plans, getting more information, and opting out of Part D coverage.

All beneficiaries who qualify for Extra Help have a continuous Special Enrollment Period (SEP) during which they may change Part D plans. These SEPs are described in two different places in CMS's PDP Enrollment Guidance. First, all dual-eligible individuals (including beneficiaries who also have Medicaid as well as those who are in Medicare Savings Programs) have access to a continuous SEP. Section 20.3.2 of the Enrollment Guidance describes their SEP as follows:

20.3.2 – SEP for Dual-eligible Individuals or Individuals Who Lose Their Dual-eligibility
There is an SEP for individuals who are entitled to Medicare Part A and/or Part B and receive any type of assistance from the Title XIX (Medicaid) program. This also includes individuals often referred to as “partial duals” who receive cost sharing assistance under Medicaid (e.g. QMB, SLMB, etc). This SEP begins the month the individual becomes dually-eligible and exists as long as s/he receives Medicaid benefits. This SEP allows an individual to enroll in, or disenroll from, a Part D plan. The effective date of the individual’s enrollment in their new plan would be the first of the month following receipt of an enrollment request. However, as described in 30.1.4, the effective date for auto-enrollments may be retroactive.

In addition, PDP eligible individuals no longer eligible for benefits under Title XIX benefits will have an SEP beginning with the month they lose eligibility plus two additional months to make an enrollment choice in another PDP, an MA-PD, or to disenroll entirely from Part D.

Section 20.3.8 (8) of the Enrollment Guidance addresses the topic of SEPs for other LIS-eligible beneficiaries as follows:

8. SEP for Other LIS Eligible Individuals Who are Not Dual Eligible Individuals Whose Part D Enrollment is Facilitated
If CMS facilitates enrollment for Other LIS Eligible individuals (who are not dual eligible individuals) into a PDP plan, the individual has an SEP to change to a different PDP. The SEP begins with the effective date of the facilitated enrollment, and ends on December 31st of the same year.

There are numerous reasons why an individual would decide to change Part D plans. First, all beneficiaries with LIS are auto or facilitated enrolled into Part D plans if they do not enroll in plans on their own. Since this enrollment process results in random assignment to plans, many LIS beneficiaries may not be in plans that meet all their needs. They may want to enroll in a plan with better customer service or to find one with more straightforward exceptions and appeals processes. Finally, the drug needs of many Medicare beneficiaries will undoubtedly change during the plan year. While not all Medicare beneficiaries are entitled to a continuous SEP, those with Extra Help will be able to utilize it to change plans to accommodate any new needs during the plan year.

The Part D Special Enrollment Period (SEP) for losing creditable coverage is the period of time that a beneficiary has to enroll in a Part D plan after involuntarily losing creditable coverage. This SEP lasts up to three months. This SEP should not be confused with the 63-day rule related to creditable coverage and the late-enrollment penalty. Beneficiaries who go without creditable coverage (or a Part D plan) for 63 days or more receive a Part D late-enrollment penalty (unless they are exempt).

According to the Centers for Medicare and Medicare Service's (CMS) PDP Guidance, Section 20.3.5, a person losing creditable coverage has up to three months to enroll in a Part D plan. This SEP begins either from date of the notice or effective date of the loss, whichever is later, and continues for two additional months. So, the length of the SEP is determined by when the notice or loss of coverage began.

Example: On March 1, Mr. Perry lost his job along with his creditable drug coverage. Mr. Perry therefore has a SEP beginning March 1 and ending June 30 to enroll in a Part D drug plan. If Mr. Perry enrolls in a plan in March or April, his new coverage will be in place on April 1 or May 1 respectively; and he will have no penalty. If Mr. Perry enrolls in a plan in June, his coverage will be effective July 1. He will have been without coverage for 92 days (more than the 63-day creditable coverage limit), which means that he will be assessed a late-enrollment penalty.

For more information on Part D and SEP opportunities, see HAP's Enrollment and Eligibility section of our Part D Resource Guide.

SHIP counselors are permitted a great deal of informal advocacy (including the filling-out of forms) without becoming an actual appointed representative for the beneficiary. However, it is prudent to consider entering into some kind of written agreement between the beneficiary and the counselor to assure that all parties understand the nature and scope of assistance that counselors can give. The appointment of representative form is available on the Medicare website.

Exceptions granted by Part D plans must last for at least the remainder of the plan year. Plans have the discretion to continue exceptions into subsequent plan years. This does not include prior approval requirements set by each Part D plan.

Section 30.2 of Chapter 18 of the Prescription Drug Benefit Manual specifically addresses the length of an exception:

Once an exception is granted, the plan sponsor is prohibited from requiring the enrollee to request approval for a refill or new prescription to continue using the Part D prescription drug approved under the exceptions process for the remainder of the plan year, so long as the enrollee remains enrolled in the plan, the physician continues to prescribe the drug and it continues to be safe for treating the enrollee's condition.

Generally, Part D plan enrollees cannot get coverage for excluded drugs through the exceptions process. This is usually true even when beneficiaries get assistance from their physicians. However, enrollees (and their physicians) may request an exception to the plan’s decision that the drug is an excluded drug. This means that when there is some flexibility in the definition of an excluded drug, as with drugs covered by Part B, plans make determinations as to whether a drug is excluded.

For example, the beneficiary (or his physician) can request an exception to a plan’s determination that a Part B drug is excluded from the plan’s Part D coverage. The request would state that the drug is being used for Part D purposes and not Part B purposes. The plan would then have to examine the evidence of the enrollee’s diagnosis and information the physician provides. In such a case, enrollees and their physicians may request an exception for excluded drugs.

For those enrollees in the transition period, CMS requires plans that do not issue a decision to enrollees within the 72-hour timeframe to provide enrollees with a transition fill. This transition fill allows enrollees to receive their medications until the plan issues a favorable decision or forwards the exception to the second level of the appeal process. The transition period is typically the first 90 days of enrollment in a Part D plan. During the transition period, Part D plans must provide at least 30 days of coverage for any Part D drug, regardless of any formulary restrictions.

For those enrollees not in the transition period, CMS does not require plans to provide a transition fill when the plans do not issue decisions on exceptions within the timeframe. However, when plans do not comply to timeframes, CMS has stated that SHIPs should contact the CMS Regional Offices if plans are not in compliance.

Only residents of certain long-term care facilities—skilled nursing facilities, nursing facilities, ICF/MRs, and inpatient psychiatric hospitals—who have requested exceptions are entitled to a temporary fill pending the plan's decision. For more information about these temporary fills, see the CMS Long-Term Care Guidance, Sec. IV: Exceptions and Appeals, p. 5.

No, there are no such limits.

Part D plans must provide specific details about all of their utilization management tools to current and prospective enrollees. Section 60.4 of Chapter 7 of CMS’s Prescription Drug Benefit Manual addresses this directly:

Part D sponsors must provide current and prospective enrollees (or their physician or authorized representative) with information regarding specific prior authorization criteria and other utilization management requirements. This information must be made available on a timely basis so that beneficiaries can make informed enrollment decisions and so that physicians can access information that will help avoid delays at the pharmacy and potential interruptions in drug therapy.

CMS has more specific requirements for Part D plans that use prior authorization for drugs on their formularies. Plans must post on their websites the specific criteria they use to make coverage decisions for drugs that require prior authorization. This new rule became effective in September 2008, and plans must post these details by November 15 of the year before the formulary is effective. These rules are available in Section 60.5 of Chapter 7 of the Prescription Drug Benefit Manual.

Any infusion, medication, or medical supplies currently covered under Part B will remain under Part B. Medicare Part B covers limited outpatient drugs. Other infusion drugs will be covered under Part D, unless specifically excluded by the MMA.

Medications classified as necessary for the effective use of Durable Medical Equipment are covered under Medicare Part B. The drugs and DME covered by Part B will continue to be covered by Part B. Any uses for those drugs that are not covered under Part B, however, will be covered under Part D.

CMS has specified that “all or substantially all” drugs in six therapeutic categories must be covered by all Part D plans. These six classes are called the “Classes of Clinical Concern” in Section 30.2.5 of Chapter 6 of the Medicare Prescription Drug Benefit Manual. The six classes include immunosuppressants, antidepressants, antipsychotic, anticonvulsants, antiretrovirals, and antineoplastics.

However, some immunosuppressants already are covered by Medicare Part B. Medicare Part B will continue to provide coverage for these drugs when used for a medically appropriate indication before or after a Medicare Part B-covered procedure, including transplants. Other uses of immunosuppressants (including transplants not covered by Part B) will be covered by Medicare Part D. Thus, no changes to Part B coverage of immunosuppressants have occurred, despite the implementation of Medicare Part D. More information is available in the CMS document, Medicare Part B vs. Part D Coverage Issues. At the bottom of page 20 it reads:

There is no change in Part B coverage of immunosuppressants on January 1, 2006. The only change is that coverage would become available under Part D for uses not covered under Part B. Pharmacists would bill Part B or the individual’s Part D plan based on information received from the individual or from the drug plan. Part B would be billed if the individual had a Medicare-covered transplant; otherwise, the Part D plan would be billed.

Section 30.2.5 of Chapter 6 of the Medicare Prescription Drug Benefit Manual established a definition for the expression "all or substantially all." This means that all drugs in these categories are expected to be included in plan formularies, with a few specific exceptions:

• Multi-source brands of the same molecular structure
• Extended-release products when the immediate-release product is included
• Products that have the same active ingredient
• Dosage forms that do not provide a unique route of administration (e.g., tablets and capsules versus tablets and transdermals)

According to Chapter 6, Part D sponsors may not use prior authorization or step therapy requirements to encourage enrollees to take preferred alternatives within these classes. Also, CMS discourages Part D plans from having any utilization management tools on HIV/AIDS drugs.

The information about meeting one plan’s step therapy requirements is not automatically available to a beneficiary’s new plan. Beneficiaries in such situations must apply for an exception to the step therapy requirement of the new plan. For such an exception request, beneficiaries must show the plan that they have previously followed the step therapy protocol.

For beneficiaries who have requested exceptions to the step therapy protocol because of adverse side effects of alternative drugs, they must request an exception from the new Part D plan as well.

The amount of help available to low-income beneficiaries depends on the amount of most types of income they receive, also known as countable income. In general, Supplemental Security Income (SSI) rules will be used to determine if beneficiaries meet the income limits for the low-income subsidies. Common sources of income that count are:

• Social Security benefits
• Railroad Retirement benefits
• Pensions or annuities (including veterans' pensions)
• Alimony
• Rental income (net)
• Workers compensation
• Wages (gross) or earnings from self-employment (net)

If the beneficiary receives Social Security benefits for a disability or blindness and has work-related expenses that are not reimbursable by his employer, these expenses will be deducted before earned income is counted.

The amount of help available to low-income beneficiaries depends on the amount of many types of resources they own, also known as countable assets. In general, Supplemental Security Income (SSI) rules will be used to determine if beneficiaries meet the resource limit for the low-income subsidies. Countable resources generally include those that can be turned into cash within 20 days. These are called liquid resources. Real estate that is not the beneficiary's primary residence is also a countable resource. The beneficiary's primary home does not affect his eligibility for a low-income subsidy. Other non-liquid resources (such as a car) that cannot be quickly turned into cash will not be counted in determining one's eligibility for a subsidy.

Examples of common resources that count are:

• Bank accounts (checking, savings or certificates of deposits or CDs)
• Stocks, bonds, savings bonds, mutual funds, individual retirement accounts (IRAs)
• Cash at any other financial institution or at home
• Cash value of life insurance policies (Note: In 2010 the cash value of life insurance will no longer count as a resource.)
• Real estate other than the beneficiary's primary home

Also, beneficiaries can designate up to $1,500 per person for funeral and/or burial expenses. If they have designated $1,500 as a single person (or $3,000 as a married couple) for this purpose, it is not counted.

Individuals who have met their income spend-down requirements and are eligible for full Medicaid benefits are notified by CMS that they are eligible for the maximum cost-sharing subsides that they qualified for based on their income. They remain eligible for the full subsidies for the remainder of the calendar year without interruption, even if they periodically lose their Medicaid eligibility because they must meet a new spend-down.

For example: Mrs. Jones, a Medicare beneficiary, spends down to full Medicaid in March. She will be deemed eligible for the full subsidies through December of that same year. However, if she loses her full Medicaid eligibility and does not go back on Medicaid by the end of the year, she may have to apply for the low-income subsidies for the next year. Alternatively, if Mrs. Jones spends down again the following year, she would once again be deemed eligible for the low-income subsidies. For example, if she meets her spend down in February 2007, she is deemed eligible for the low-income subsidies through December of 2007.

Because individuals who spend down to Medicaid are considered full benefit dual-eligibles, they are auto-enrolled randomly in a Part D plan. They are able to choose and enroll in a different plan at any time during their subsidy eligibility period just like other beneficiaries with LIS.

The process for subsequent applications depends on the agency or agencies to which the individual applied—Social Security or the State Medicaid Office. If both applications were submitted to Social Security, the process then depends on specific details about the applications. More detailed information about the subsequent applications, including charts about processes, is available in SSA’s Program Operations Manual System (POMS) Manual.

LIS beneficiaries may choose to enroll in an enhanced Part D plan and still receive LIS benefits. However, they must pay the portion of the premium that covers the "enhanced" benefits. For example, if the monthly premium for an enhanced plan is $40, but the cost of the standard benefit is $10, then beneficiaries must pay the remaining portion of the premium—$30—out-of-pocket. The plan finder does this calculation automatically.

The appeals process for LIS applications submitted to the SSA includes several steps. If SSA determines that the beneficiary is ineligible, the beneficiary will be sent a pre-decisional letter. The letter offers the beneficiary 10 days to submit any additional information that could be considered before SSA makes its final determination. Social Security then makes an eligibility determination and sends a letter of the decision to the beneficiary. If the beneficiary disagrees with the eligibility decision, he has an opportunity to appeal. This is known as an administrative review process.

Issues beneficiaries may appeal include the income and/or resource eligibility of the beneficiary, the determination of whether a person can receive full or partial assistance, the adjustment of the amount of assistance, and the termination of the assistance.

The beneficiary has the choice between a telephone hearing and a case review that proceeds without oral beneficiary input. In either case, the Subsidy Appeal Unit (SAU) in the Office of Disability and Income Security Programs (ODISP) at SSA make decisions when a beneficiary appeals. The beneficiary can appoint a personal representative to do the appeal on his or her behalf. If the appeal is denied, the beneficiary may file an appeal for judicial review with the U.S. District Court.

The appeal rules explained here apply when Social Security makes the initial eligibility determination. The appeals process for applications submitted to the State Medicaid Office follows the State appeals process, called "Fair Hearing" process. Ask your State Medicaid Office about this process. Many states post their Fair Hearing rules and forms on their websites.

A Medicare beneficiary who qualifies for Medicaid but is not yet enrolled into Medicaid should submit an application to the state Medicaid office. In most states, this application must be done in-person; however some states have implemented an online Medicaid application.

A beneficiary who is already in Medicare who then later qualifies for Medicaid may or may not be enrolled in a Part D plan. In either case, both an application for Medicaid and an LIS application should be filed. LIS is retroactive to the first day of the month in which an eligible individual applies for extra help; Medicaid eligibility may, at state discretion, be retroactive to three months before the month of application. After both applications are filed, beneficiaries should review their plan options and enroll in a plan that best suits their needs.

This process is significant in that the deemed status of the beneficiary is not available immediately after applying for Medicaid. Once the state determines the Medicaid eligibility of the individual, this information will then be reported to CMS through the state's next notification, which may be as often as daily. CMS then deems the individual eligible for LIS in the following month and sends a letter to the beneficiary with the auto-assigned plan and the effective date of enrollment (at least two months from the date that CMS deems eligibility). If by that date, they have not yet selected a Part D plan, they are auto-enrolled randomly into a Part D plan. Thus, if a beneficiary waits for the auto-enrollment process to enroll him or her into a plan, many months will have elapsed. If the individual enrolls in a plan at the same time he applies for extra help and Medicaid, s/he may be charged some out-of-pocket costs for the plan, but the plan can refund these costs.

The answer to this question depends on a state’s income rules for Medicaid. The Omnibus Budget Reconciliation Act (OBRA) of 1986 gives states the option of extending Medicaid to aged and disabled individuals with income up to 100 percent of the federal poverty level (FPL). However, many states use more restrictive income eligibility standards than this amount.

For states which use a higher income standard for aged and disabled people in Medicaid, most individuals with income below 100 percent will qualify for Medicaid. For states with lower income levels for eligibility, individuals with income below 100 percent (but higher than the Medicaid standard) may qualify only for the QMB program.

In order to qualify for the highest subsidy (i.e., the lowest cost sharing), a beneficiary has to have BOTH full Medicaid benefits AND income below 100 percent FPL. This means that two clients with identical income and assets who live in different states may fall into different categories of low-income subsidy.

For example, a beneficiary with limited assets has income at 80 percent of FPL ($722 per month). If she lives in Georgia, she will qualify for QMB and will pay cost sharing of $2.40/$6.00 (in 2009) for her Part D drugs. If, on the other hand, she lives in Massachusetts, she will qualify for full Medicaid and will pay cost sharing of $1.10/$3.20 (in 2009) for her Part D drugs.

The penalty amount will change each year because CMS calculates the penalty based on the Part D base beneficiary premium for a current calendar year. This amount is added onto the premium of the plan that the beneficiary selects. See the chart below for information on calculating the LEP in 2009.

      

There is no cap for the penalty. Part D plans can charge the late enrollment penalty to affected beneficiaries every month as long as they are enrolled in a Part D plan.

Those not adequately informed of a loss of (or that they never had) creditable coverage have a SEP to enroll in a Part D plan. Established on a case-by-case basis, this SEP begins upon approval from CMS and continues for two additional months. If a Part D plan assesses a late enrollment penalty to such beneficiaries, these beneficiaries may ask for reconsideration of an imposed late enrollment penalty. More information about the process of reconsideration on penalties is available in Section 80.7.1 of Chapter 18 of the Medicare Prescription Drug Benefit Manual.

Beneficiaries who qualify for LIS are exempt from paying a late enrollment penalty as long as they qualify for LIS. If an LIS beneficiary would otherwise have a late enrollment penalty, the penalty is waived. If the same beneficiary loses LIS and remains enrolled in a Part D plan, she will have to pay the amount of the late enrollment penalty that had been waived.

Beneficiaries who do not pay their monthly premiums can be disenrolled by the Part D plan, provided the plan can demonstrate that it has made “reasonable” efforts to collect the premium(s) and that the plan has notified beneficiaries of their disenrollment. If no appropriate enrollment period exists for disenrolled beneficiaries, they must wait until the next applicable enrollment period to re-enroll in Part D plans. At that point, if they have been without creditable coverage for more than 63 days, they must pay the late enrollment penalty. Beneficiaries who qualify for LIS are exempt from the late enrollment penalty.

Yes, all Part D plans have the option of including mail-order pharmacies as part of their networks. Part D plans may set prices for prescriptions filled at mail-order pharmacies as they do with any other pharmacy.

Part D plans can authorize dispensing of greater than a 30-day supply, through mail order or retail pharmacies. Each Part D plan will design its own dispensing rules.