“Beware the Ides of March,” the Soothsayer famously warned Julius Caesar. Caesar ignored this advice and paid with his life. But today is the Ides of May — May 15 to those of us who no longer use the early Roman calendar — a day which also happens to be the deadline for people with Medicare coverage to enroll in the Medicare Part D outpatient prescription drug program. Unless the Bush administration takes action, a soothsayer’s warning will be appropriate for this Ides of May as well.
Millions of Medicare beneficiaries must sign up for the Part D program by midnight tonight or face significant, lifelong premium penalties should they decide at a later date they would like to purchase prescription drug coverage. As of late April, however, only 8.1 million people had chosen to enroll in a stand-alone prescription drug plan, while another 950,000 had newly joined Medicare Advantage plans that include prescription drug coverage — and the figures from last week showed only modest change.
It’s obvious why so few individuals have managed to meet the deadline. The new prescription drug program has been beset by implementation problems. Low-income people who previously had Medicaid coverage for prescription drugs are paying more for skimpier coverage and often getting lost in the system, while other Medicare beneficiaries are bewildered by the range of drug plans, cost-sharing options and drug formularies.
The Medicare Modernization Act (MMA) that established the prescription drug benefit requires the Medicare program to charge a penalty of one percent per month for people who do not enroll in the Part D program when they are first eligible for benefits. In addition to facing premium penalties, people who do not enroll in Part D by midnight on May 15 will not be able to enroll in coverage until November 15, during the next annual enrollment period. That means their coverage will not take effect until January 2007 — even as they incur a seven percent (for the seven months until January) premium penalty that they will pay each and every month.
The MMA, however, allows the Medicare program to exempt certain groups from this enrollment deadline by establishing “special enrollment periods.” The administration has already used this authority to extend the enrollment date for people who qualify for “extra help” with their Part D premiums and co-payments. The administration has also waived the premium penalty for these individuals.
This is an important first step. But the administration can do more. Using the same exceptions authority they could extend the deadline through the first year (or even first several years) of the program and enable people to enroll after May 16 without waiting until January to receive prescription drug benefits.
Members of Congress on both sides of the aisle are also eyeing legislative approaches that would extend the deadline, waive the penalty, or both. Legislation would take this question out of the Bush administration’s hands, and ensure that people with Medicare can make a deliberate, careful and individually appropriate decision about their drug coverage. As Congress examines strategies for easing Part D enrollment issues, legislators should also consider lifting or eliminating the asset test for the Low-Income Subsidy program — the “extra help” that low-income people with Medicare coverage can receive for their premiums and co-payments.
Currently, people with incomes below 135 percent of poverty and assets below $7,500 for an individual and $12,000 for a couple can receive Part D coverage without paying a premium or deductible and with significantly reduced co-payments. Those with incomes between 135 and 150 percent of poverty and assets no higher than $11,500 for an individual and $23,000 for a couple can enroll in a partial subsidy that provides somewhat less generous help with these costs.
Many people who apply for the Low-Income Subsidy, however, do not qualify for this extra help. According to the Social Security Administration, less than half – 43 percent – of people who apply for this assistance actually receive help with their Part D premiums and copayments. Many of those who are turned down have assets that exceed these modest limits – cash assets that supplement their monthly income and help them pay for care that Medicare does not cover, or life insurance policies or other financial instruments that provide peace of mind for their families.
Several states, including Alabama and Arizona, have eliminated asset tests within the Medicare Savings Programs, which are Medicaid-administered programs that help with Medicare premiums and co-payments. This approach simplifies the application process for people who are eligible for premium and co-payment assistance, reduces administrative costs for state eligibility offices and extends the benefit to additional low-income people. Congress could choose to follow the same path for the Part D Low-Income Subsidy.
It shouldn’t take a soothsayer to look at the enrollment numbers and implementation problems of the Medicare Part D program and figure out that these fixes — extending the May 15 deadline, waiving premium penalties and dropping the assets test — should be made as soon as possible.
Karen Davenport is Director of Health Policy at the Center for American Progress.