Medicare Part D and The Local Choice Health

Medicare Part D and The Local Choice Health Benefits Program Prescription Drug Options for January 1, 2006 1

What’s Happening? Effective January 1, 2006, Medicare Will Offer a Prescription Drug Benefit (Part D) Sign Up between Nov. 15 th and May 15 th without penalty. TLC Rx Benefits End 1/1/2006 2

Surveys Indicate… Most participants: Are Aware of Medicare Part D But Have Minimal Knowledge of the Part D Benefit Do Not Understand the Value of Part D Are Concerned about the impact of Part D on their Health Plan Coverage 3

Medicare Part D – The Standard Benefit 4

Actual Drug Cost Range $0 --$2, 000 $2, 001 --$3, 000 $3, 001 --$4, 000 $4, 001 --$5, 000 $5001 + A 65/Option I % Participants 52. 7% 16. 2% 10. 8% 7. 3% 13. 0% 100% 5

Part D Concerns Formulary Non-covered classes of drugs Deductible “Donut” hole 6

The Good News Potential for Significantly Lower Premium Option to Elect Medical-Only Coverage under TLC with PDP of your choice More Flexibility - Choices Based on your individual Needs Premium Savings will help to pay for possible non-covered drugs 7

The Bad News Formulary Non-covered classes of drugs 8

Protections – Formulary Restrictions At least two drugs in each therapeutic category and class Notification requirements before formulary deletions Exceptions process Appeals process 9

What Drugs Are Excluded? In Medicare D Drugs for anorexia, weight loss or weight gain Drugs used to promote fertility Drugs used for cosmetic purposes Drugs for symptomatic relief of cough and colds Prescription vitamins and mineral products Non-prescription drugs Barbiturates (Phenobarbital, Seconal – sedatives prescribed for anxiety and insomnia) Benzodiazepines (Ativan, Valium, Xanax – CNS Depressants)) 10

TLC Had 3 Choices Do Nothing Apply for Federal Subsidy Eliminate Drug Coverage 11

TLC Choice: Do Nothing Pros Maintain Current Benefit Structure—No Formulary Retirees could Drop TLC Drug Coverage and Enroll in a Part D Plan Coverage is Creditable —No Penalty Cons Value of Medicare benefit is lost within the program (? COB) No premium savings Likely premium increase based on trend Adverse selection High co-payments 12

Choice: Apply for Federal Subsidy Pros Maintain Current Benefit Structure—No Formulary Retirees could Drop TLC Drug Coverage and Enroll in a Part D Plan Coverage is Creditable —No Penalty Cons No Savings to TLC No Savings to Retirees Continued Premium Increases High Co-payments Adverse Selection Administrative Costs 13

Choice: Eliminate Drug Coverage Pros Standard Part D Benefits is Effective for Many Retirees Part D Average Premium is approximately $32. 20/month Medical-only premium is Less than Half of Current Premium Cons Some Retirees (high cost/non-covered) could see Increased Cost Enrollment/Selection of Part D plan by Retirees 14

Summary of Choices 15

Why? (A Review of the “Pros”) Best Application of Part D Value Greatest Positive Impact on Premium Potential for Significantly Lower Copayments Choice Opt-out still Available l Choose Plan that Best Fits Needs l 16

Your TLC Plan Drug Costs Now $200 per month in premium for 2005/$2, 400 per year Co-payments 17

2006 Premiums 18

The Consensus The Greatest Value of the Medicare Part D Benefit is Realized for TLC Retirees by Eliminating Rx Coverage 19

Retiree Choices Keep Current Plan Coverage Without Prescription Drug Coverage (medical only) and Enroll in a Separate Medicare Part D Plan Drop TLC Coverage and Enroll in another Medicare Supplemental or Medicare Advantage Plan 20

New TLC Medical Only Plan Choices NEW! – Medicare Complementary – (grandfathered) NEW! – Advantage 65 with Dental/Vision 21

Tools Medicare Choices Medicare & You 2006 www. medicare. gov 1 -800 -MEDICARE l 1 -(800) 633 -4227 www. eldercare. gov l 1 (800) 677 -1116 Area Offices on Aging l www. vda. virginia. gov State Health Insurance Assistance Program (SHIP) l (800) 552 -3402 22

What Will I Need? Names of Drugs Currently Taking Cost of Drugs (Not Just Co-Pay) l www. thelocalchoice. virginia. gov and click on: Carrier Contacts l Medcohealth. com l Be sure to add “plan pays” and “you pay” l 41 PDPs and 26 Medicare Advantage Plans available in Virginia 23

Determine What Matters Most to You Cost Coverage Convenience 24

Retiree Group To-Do List Read Materials / Use Tools Compare Options Choose Coverage for 2006 Remember: TLC Rx Coverage Ends 1/1/2006 25

Questions 26