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COPYRIGHT 2005 Thomson Financial Inc.
The Medicare drug benefit wasn't intended to work alone but in concert with other sources of drug coverage, especially employment-based health plans. That's a mantra that Centers for Medicare and Medicaid Services Administrator Mark McClellan repeats frequently as of late. To accomplish that end, congressional drafters of the 2003 Medicare Modernization Act offered a subsidy to employers who would offer their own prescription-drug coverage to Medicare-eligible retirees once Part D took effect, in hopes of stemming the already strong tide of employer drop-out from retiree health coverage.
The deadline for submitting completed applications to claim the employer subsidy is Sept. 30, so the tally of who will play is not yet known. But the Government Accountability Office and others say that most employers who currently offer coverage are at least considering applying for the subsidy for some retiree groups. And response from the employee-benefits community to CMS's final rules, issued last month, suggests that take-up may be on the high side of what earlier analyses predicted.
That being the case, the subsidy is likely to slightly slow the rate at which employers are dropping retiree coverage. However, it will not tempt companies that don't offer coverage today, analysts agree.
* Final rule looks employer-friendly to benefit experts. When final MMA rules were issued last month, CMS actuaries raised their estimates of the number of employment-based plan sponsors that would claim the subsidy. The higher estimate was primarily based on the rule's new provisions for determining whether an employer plan is actuarially equivalent to Medicare's own Part D benefit. In comments on its proposed rule, CMS heard from the employer community that the revised method would be more attractive,...
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