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Social Security & Medicare Q&A: Will I Lose My Current Prescription Coverage Under the New Medicare Law?
Q: Can you answer a question concerning the new Medicare law? I am now signed up with Secure Horizons, a Medigap insurance that costs $105 monthly. I have access to a mail-in pharmacy that discounts my prescription by about 25%. Since I only have two prescriptions I am satisfied with this arrangement. Will I lose this coverage under the new law?—E.K. A: Under the new Medicare prescription drug legislation, seniors who are satisfied with their current Medigap insurance policy covering prescription drugs (plans H, I, or J) will be allowed to keep it, but only if they choose to forgo enrolling under one of the new Medicare prescription drug plans. It is important to understand the type of insurance you now have, because this rule will not necessarily affect you. That’s because Secure Horizons is not a Medigap policy, but a managed care Medicare Health Maintenance Organization (HMO). Under the new Medicare prescription drug legislation, Medicare HMOs immediately received a substantial 10.6% boost in federal government funding this year. Many HMOs recently announced that they will use the extra money to increase benefits, and reduce co-payments, a reversal from trends in recent years. Pacificare Health Systems, the corporation under which Secure Horizons operates, told The New York Times that the company expected to offer additional benefits to attract new Medicare enrollees. That’s the good news. You did not say whether you receive your Secure Horizons coverage through a former employer. If you do, considerable uncertainty remains about how employers will respond under the new Medicare law. A recent study conducted prior to the passage of the new legislation found that 20% of large, private-sector U.S. employers will probably terminate health insurance benefits within the next three years. In addition, 86% of the companies that plan to retain coverage also anticipated making retired employees pay a higher share of the premium. The new law provides incentives for employers to retain retired employees’ prescription drug coverage, but the Congressional Budget Office estimated that about 32% of Medicare recipients — or about 3.8 million seniors — would have their coverage reduced or dropped by their former employers. TSCL is carefully monitoring this situation to see if employers respond as the new law intends. Source: “Insurers Plan Broader Medicare Coverage,” Robert Pear, The New York Times, February 4, 2004. “More Firms to End Health Benefits for Retirees,” Bill Brubaker, The Washington Post, January 15, 2004. “Letter to William Thomas,” Chairman of Ways and Means U.S. House of Representatives, Congressional Budget Office, November 14, 2003. May 2004
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