Marketing of the new Medicare drug benefit that starts next month makes it sound as if it will help all 43 million people in the program. But some beneficiaries would actually be better off not signing up at all. In fact, many of the estimated 12 million retirees with coverage from their former employer could end up worse off if they do sign up.
Nina Helstein's mother is one of them. Helstein is a Chicago social worker who lives next door to and cares for her 90-year-old mother. Like most 90-year-olds, her mom takes a lot of medicine, but Helstein says she's not sure exactly how much. "I'll tell you how lucky I am. I don't have to know what they really cost," she says. "We pay so little for it because of the insurance plan."
That insurance is a retiree policy earned by Helstein's late father through his union, the United Food and Commercial Workers. Helstein said her mother recently got a letter from the union — as required by the 2003 Medicare law — telling her that the union's coverage is better than the new Medicare coverage and that she doesn't need to sign up for a Medicare drug plan. In fact, she says, the letter said specifically that "if you choose one of the plans you will lose what they offer" — meaning both the drug coverage and the doctor and hospital coverage that the union plan provides to supplement Medicare.
That's what worries Judy Ann and Earl Grandmaison of Harvard, Ill. Earl is a retired mechanic from United Airlines. He had a stroke last year, and Judy Ann suffers from lung disease, so they take many medications. She says their coverage from United is pretty good, but with the airline's financial troubles, their drugs have gotten more and more expensive. "They used to be $12; now they're up to a minimum of $50," she says, "a big increase when you have a patient like my husband that has 10 to 12 prescriptions a month.
Judy Ann Grandmaison was hoping the new Medicare drug benefit would help them with those costs. But now there seems to be a catch. "What happens if I go to plan D?" she asks. "I'm afraid my husband's supplemental insurance — supplemental to the Medicare — will be jeopardized. I don't want that canceled."
Grandmaison is right to be confused. That's because it's up to the employers that offer retiree coverage to decide how to proceed. Employers have three main choices: They can continue their existing coverage as it is now; they can let retirees drop just the drug part of their coverage and keep the other doctor and hospital benefits; or employers can end their own drug coverage and in effect force retirees into a new Medicare drug plan.
A survey released this week by the Kaiser Family Foundation and consulting firm Hewitt Associates found the vast majority of large employers who offer retiree health benefits are keeping their drug coverage intact. Companies get a government subsidy for doing that.
But some of the letters companies have sent to their retirees have been less then helpful, says Stephanie Altman, a staff attorney with Health and Disability Advocates, a Chicago-based consumer group. Right now she's trying to help another union retiree. "His union plan sent him a letter that said 'You will/will not be terminated if you enroll in a Medicare prescription drug plan'," she said.
While Altman was able to work out that man's problem, she says she's still worried that people like Nina Helstein's mother — those with dementia or other cognitive impairments — will succumb to aggressive sales pitches from the dozens of private plans offering Medicare drug coverage. "If she goes ahead and signs up, without understanding the consequences, she could lose something that's very valuable to her," Altman says.
Judy Ann Grandmaison says her plan is to have her stepdaughter — who has a masters degree — help sort things out. "I invited her for Christmas, and hopefully, after I give her a nice present, she'll read this through and tell me yes or no," Grandmaison says with a laugh.
But the Grandmaison's biggest fear — that United Airlines will drop its retiree health coverage and they'll have to pay a penalty to enroll late in a Medicare drug plan — is probably unfounded. The 2003 Medicare law specifically allows retirees whose former employers drop coverage to sign up if or when that happens.