September 29, 2005

Q: I am a 78-year-old retiree on Medicare with health benefits from my former employer. Will I have to give up my retiree benefits when the Medicare drug benefit begins next year? —James

A: Dear James,

Medicare will begin to help pay for prescription drugs starting in January, and you are right to think about whether to stick with your employer plan or switch to a Medicare prescription drug plan. The good news is that the Medicare prescription drug benefit is voluntary, so you can continue with your employer plan next year, if you prefer.

Here are four questions to help you make this decision. First, will your former employer continue to offer benefits for retirees next year? If so, the second question is whether the employer’s plan is considered by the government to be "creditable." This basically means that it is at least as generous in value as the new Medicare drug benefit.

Fortunately, you don’t need to answer this yourself. Your former employer should be sending you a letter with this information. If your employer says the retiree plan meets this test, you can either keep your employer health plan next year or enroll in one of the new Medicare prescription drug plans. If you do not receive this information, contact your former employer. In general, benefits offered by employers are more generous than the standard Medicare drug benefit, but there are exceptions.

The third question — and this one could require considerably more effort — is deciding which plan is best for you. Compare the benefits offered under your employer plan with the benefits offered by new Medicare drug plans in your area. You will need to take into account monthly premiums, whether the drugs you take are covered by the plan, how much you will pay for your drugs, and whether you will be able to use a convenient pharmacy. A final question concerns whether you qualify for additional help that is available to people with modest incomes and resources. This help can be quite valuable but is not available to you if you keep your retiree health plan.

This column was prepared by the Kaiser Family Foundation, an independent, non-profit private foundation based in Menlo Park, Calif., that is not affiliated with the Kaiser Permanente health plan. Do you have questions about the new Medicare drug benefit? Send your questions to Medicare Q and A. The Kaiser Family Foundation. 1330 G St., NW. Washington, DC  20005 or MedicareQ@kff.org. 

(c) 2005, Knight Ridder/Tribune News Service.

Distributed by Knight Ridder/Tribune Information Services.