Medicare Part D and TRICARE

Since January 1, 2006, Medicare Part D prescription drug coverage is available to everyone with Medicare, including TRICARE beneficiaries. The following are several factors beneficiaries need to consider when deciding whether to purchase a Medicare prescription drug plan:

Purchasing Medicare Prescription Drug Coverage

For nearly all TRICARE-Medicare beneficiaries, under most circumstances, there is no added value in purchasing Medicare prescription drug coverage if you have TRICARE. The exception to this general rule may be for those with limited incomes and assets who qualify for Medicare's extra help with prescription drug plan costs. These individuals may benefit by applying for the Medicare low-income subsidy and enrolling in a Medicare prescription drug plan. The table below compares TRICARE Pharmacy benefit to Medicare Part D:

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Services Requiring Prior Authorization

Although beneficiaries are not generally required to have a referral for specialty care, some procedures may require prior authorization. They must check with the TRICARE Area Office listed below for details about services requiring prior authorization.

TRICARE Pharmacy (Entitlement):

Medicare Part D

- Beneficiaries must be registered in DEERS-Medicare Part B is required if age 65 after 1 April, 2001 , except for active duty family members (ADFMs)

- No enrollment necessary

- Uniform national formulary

- Nationwide network of pharmacies and mail-order pharmacy benefit

Beneficiary Costs:

- No monthly pharmacy premiums

- No deductible for retail network pharmacies or mail order

- Standardized cost shares: $3 for generic, $9 for brand name and $22 for non-formulary; no cost shares at military treatment facilities (MTFs)

- Deductible and higher cost shares when using non-network retail pharmacies

- $3000 maximum fiscal year cap for medical and pharmacy; $1000 fiscal year cap for ADFMs

- All Part A or Part B enrollees are eligible

- Voluntary annual open enrollment period

- Covered drugs and network pharmacies vary by drug plan

- Offered by private sector drug plans and Medicare Advantage plans

Beneficiary Costs:

- Monthly premium about $32 (varies by plan, adjusted annually); minimum coverage plan to cost about $20

- $250 deductible

- 25% copay for prescription drugs for the first $2,250 in prescription drugs

- 100% beneficiary responsibility for prescription drugs from $2,250 until their out-of-pocket costs reach $3,600

- After $3600, they pay the greater of $2/$5 copay or 5% for rest of calendar year

TRICARE is considered creditable coverage, meaning it pays, on average, the same or more than a standard Medicare prescription drug plan. So, if beneficiaries decide not to enroll in a Medicare drug plan now, but change their minds later, they may do so without paying the late enrollment penalty. Beneficiaries will pay the enrollment premium penalty if they lose TRICARE eligibility and delay the purchase of Medicare's prescription drug coverage for 63 days or more.

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Q. What is a Medicare prescription drug plan?

A: A Medicare prescription drug plan offers coverage for prescription drugs through insurance and other private companies and requires payment of a monthly premium. A plan may cover generic and brand-name prescription drugs; different plans cover different drugs. There are two types of Medicare prescription drug plans:

  • Prescription drug plans that add coverage to the original Medicare plan; and
  • Prescription drug plans that are part of Medicare health plans (Medicare Advantage and Medicare Cost Plans).

Unlike many non-DoD Medicare beneficiaries, TRICARE beneficiaries enjoy a robust pharmacy benefit with no monthly premium and minimal copays for TRICARE Retail NetworkPharmacy (TRRx) and TRICARE Pharmacy Home Delivery services and no costs for prescription drugs filled at MTFs. For more information on TRRx, beneficiaries may call 1-866-363-1303 within the continental United States and 1-866-ASK-4-PEC (1-866-275-4732) outside the continental United States.

TMOP is administered by Express Scripts Inc. (ESI), and is available for prescriptions that beneficiaries take regularly. It is the most convenient and cost-effective way for beneficiaries to get prescriptions. They may receive up to a 90-day supply for most medications. Prescription refills may be requested by mail, phone or online. For more information about how to use TMOP, beneficiaries may visit www.express-scripts.com/TRICARE or contact TMOP member services at 1-866-DOD-TMOP (1-866-363-8667) within the continental United States or 1-866-ASK-4PEC (1-866-275-4732) outside the continental United States.

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Q. Should TRICARE-Medicare eligible beneficiaries sign up for the new Medicare drug coverage?

A: TRICARE-Medicare eligible beneficiaries, entitled to the TRICARE Pharmacy benefit, need to consider a number of factors when deciding whether or not to enroll in a Medicare drug plan. They should consider monthly premiums, deductibles, copays and drug coverage under the different plans offered, to include TRICARE. The following questions and answers may help in making this decision:

Q: Is TRICARE's Pharmacy benefit reduced because Medicare now has a drug benefit?

A: No. TRICARE has a comprehensive Pharmacy benefit, which does not change as a result of the new Medicare drug benefit. TRICARE continues as beneficiaries' primary payer for prescription drugs, if they do not enroll in a Medicare Part D prescription drug plan.

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Q: What happens to TRICARE Pharmacy coverage if beneficiaries sign up for a Medicare drug coverage plan?

A: TRICARE-Medicare beneficiaries who purchase a Medicare prescription drug coverage plan must pay the monthly Medicare prescription drug coverage plan premium; TRICARE does not reimburse beneficiaries for their Medicare prescription drug premium costs.

If TRICARE-Medicare beneficiaries enroll in a prescription drug plan that adds prescription coverage to the original Medicare plan, Medicare is primary and TRICARE, as second payer, will pay their out-of-pocket costs for TRICARE-covered medications and the Medicare deductible and cost shares. When beneficiaries become responsible for 100 percent of the drug costs under the Medicare Part D drug plan, the TRICARE pharmacy benefit becomes primary payer and the beneficiary is responsible for applicable TRICARE pharmacy copays and cost shares. Once the TRICARE catastrophic cap is met, TRICARE pays 100 percent for TRICARE-covered medications.

Standard Medicare Prescription Drug Benefit

Medicare with TRICARE
Wrap Around Coverage

Monthly Premium

$32.20 (national average, varies by plan); $386.40 annually for 2006

Beneficiaries are responsible for the monthly premium *

Annual Deductible

$250 (national average, varies by plan)

TRICARE pays the $250 Medicare deductible **

Drug spending: $250-$2,250

- Medicare pays 75%

- Beneficiaries pay 25%;

- TRICARE pays the 25% for TRICARE-covered medications **

- Beneficiaries pay nothing

Drug Spending $2,250-$5,100 (Medicare's Coverage Gap)

- Medicare pays nothing

- Beneficiaries pay 100%

- TRICARE becomes the primary payer

- Beneficiaries pay the TRICARE copays ($3 for generic; $9 for brand name; and $22 for non-formulary medications) **

Drug spending: $5,100 and up

Beneficiaries pay 5% of drug costs (or a small copayment) for the rest of the calendar year after they have spent $3,600 out-of-pocket

- TRICARE remains the primary payer once the TRICARE catastrophic cap is reached

- Beneficiaries pay the TRICARE co-pays ($3 for generic; $9 for brand name; and $22 for non-formulary medications) **

*Medicare Part D Premiums are not applied towards the TRICARE catastrophic cap ($1,000/fiscal year for active duty family members and $3,000/year for all other TRICARE beneficiaries.)

**Deductibles and cost shares paid by TRICARE for TRICARE-covered prescriptions count towards your TRICARE catastrophic cap. Beneficiaries will meet their TRICARE catastrophic cap before they meet the $3,600 out-of-pocket amount required by Medicare.

If TRICARE-Medicare beneficiaries enroll in a Medicare Advantage drug plan, they must pay the monthly premiums and obtain all medical care and prescription drugs through the Medicare Advantage plan. The Medicare Advantage plan is always the primary payer. Beneficiaries may file a claim with TRICARE for reimbursement of their out-of-pocket expenses for TRICARE-covered medications.

To help TRICARE-Medicare beneficiaries decide whether or not to enroll in a Medicare drug plan, the following example demonstrates that under most circumstances there is no added value in having Medicare prescription drug coverage if they have TRICARE:

Max, a Medicare-TRICARE beneficiary, has a number of medical conditions including acid reflux, hypertension, and problems sleeping and breathing for which he takes 26 prescriptions in a year. Assume he gets brand name medications. He has already met his Medicare deductible.

Medicare Only

TRICARE Only

Medicare with TRICARE

Annual Premium

Max pays $386.40 (based on national average, varies by plan)

Max pays $0 - No annual premium

Max pays $386.40 (based on national average, varies by plan)

Annual Deductible

Max pays $250 (based on national average, varies by plan)

Max pays $0 - No deductible when using retail network pharmacies or TMOP

Max pays $0 when Medicare deductible is paid by TRICARE for TRICARE-covered medications

Drug spending: $250-$2,250

Max pays 25% of drug costs for each prescription

Max pays $234 for 26 prescriptions ($9.00 x 26 prescriptions)

- Max pays $0

- TRICARE covers Max's drug costs as second payer for TRICARE-covered medications

Drug Spending: $2,250-$5100

Max pays 100% of drug costs

Max pays $234 for 26 prescriptions ($9.00 x 26 prescriptions)

Max pays $234 for 26 prescriptions ($9.00 x 26 prescriptions), while TRICARE is primary payer

Drug spending: $5,100 and up

Max pays 5% of drug costs

Max pays $234 for 26 prescriptions ($9.00 x 26 prescriptions)

Max pays $234 for 26 prescriptions ($9.00 x 26 prescriptions), while TRICARE is primary payer

Totals:

$636.40 + cost shares

$234 x 3= $702

$234 x 2 =$854.40

If Max qualifies for Medicare's extra help (see question 3 below for income and asset levels), his Medicare prescription drug premium and deductibles may be lower than TRICARE's costs depending on his prescription needs.

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Q: If TRICARE-Medicare eligible beneficiaries don't sign up for a Medicare drug coverage plan now, can they change their minds and sign up later without having to pay any penalty?

A: Yes. Beneficiaries may enroll in a Medicare prescription drug coverage plan during the open enrollment period without paying the monthly penalty because the TRICARE Pharmacy benefit is creditable coverage. However, if beneficiaries lose their TRICARE eligibility, they must enroll in a Part D plan within 62 days or they will pay the monthly premium plus an additional one percent for each month that they did not have creditable coverage.

Examples:

Sid is a military retiree and TRICARE-Medicare eligible. Though offered a Medicare prescription drug plan, Sid chooses not to purchase it and continues to use his TRICARE Pharmacy benefit, which qualifies as creditable coverage under Medicare. He is responsible for all TRICARE-related pharmacy costs. If, for some reason, he later chooses Medicare prescription drug coverage, he will be responsible for paying the regular monthly premium rate for enrollment in a Part D plan.

Betsy is the widow/divorcee of a military member. If she marries a civilian who is not entitled to TRICARE, Betsy loses her TRICARE eligibility and may now enroll in Medicare Part D at the regular monthly premium rate. If Betsy delays her enrollment for more than 62 days from the time she lost TRICARE eligibility, she will then pay her monthly premium and an additional late enrollment penalty of one percent for each month she was not enrolled after becoming eligible.

TRICARE will send a letter of creditable coverage:

  • Annually, prior to Nov 15th;
  • Prior to a beneficiaries Initial Enrollment Period;
  • Upon termination of TRICARE Pharmacy coverage; and/or
  • Upon beneficiary request.

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Q. Do TRICARE-Medicare eligible beneficiaries qualify for extra help paying prescription drug costs under a Medicare Prescription Drug Plan?

A: They may qualify for help paying the Medicare Part D premiums, deductibles and copays if they have limited income and limited resources. Beneficiaries that think they may qualify for Medicare's extra help may apply for it, and still keep their TRICARE pharmacy coverage.

What are the income limits?

Beneficiaries with an annual income below $14,355 (or $19,245 if they live with their spouse) may qualify. These amounts may be higher if beneficiaries provide at least half of the support for other relatives living in their household; or reside in Alaska and Hawaii; or work. There are also income exclusions for the working blind and disabled.

What are the resource limits?

For extra help with Medicare prescription drug plan costs, beneficiaries' countable resources, which are the value of their possessions, must be below $11,500 (or $23,000 if you are married and living with a spouse), including $1,500 per person for burial expenses. Countable resources include real estate (other than primary residence); bank accounts, including checking, savings and certificates of deposit; stocks; bonds, including U.S. savings bonds; IRAs; mutual funds; and cash at home, or anywhere else.

Countable resources do not include primary residence; vehicle(s); household goods and personal possessions; resources not easily convert to cash, such as farm machinery, livestock, jewelry and home furnishings; money conserved for medical and social services; federal income tax refunds; property needed for self-support, such as rental property, or land used to grow produce for home consumption; and life insurance policies owned by an individual with a combined face value of $1,500 or less. An individual and spouse may have a total of $3,000.

The Social Security Administration (SSA) sent an application for extra help paying for Medicare prescription drug coverage to people with certain incomes during the summer of 2005. Beneficiaries who did not get an application in the mail may request one by calling SSA at 1-800-772-1213 or apply online by visiting www.socialsecurity.gov. They may also apply at their local Medicaid office.

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Additional Resources

For more information about the TRICARE Pharmacy benefit, beneficiaries may visit www.tricare.mil/pharmacy.

For general information about TRICARE, call one of the many toll-free TRICARE information lines found at the TRICARE Contact Us web page.

For more information about Medicare prescription drug coverage, beneficiaries may read the "Medicare & You" handbook, which will be mailed in October 2005. For more help, beneficiaries may visit www.medicare.gov and select "search tools;" call their State Health Insurance Assistance Program (the "Medicare & You 2006" handbook has the telephone number); or call 1-800-MEDICARE (1-800-633-4227). TTY users may call 1-877-486-2048.

TRICARE Management Activity collaborated with Centers for Medicare & Medicaid Services on this Fact Sheet.

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