During May and June 2005, the Centers for Medicare & Medicaid Services (CMS) began mailing letters to beneficiaries about a new prescription drug benefit, called the Part D benefit, that will take effect on January 1, 2006, for those patients who join. CMS estimates that this new benefit will prove advantageous to more than 42 million Americans. CMS summarizes the incentives and penalties in this way: Beneficiaries who opt to remain with an employer or union plan that covers as much as or more than a Part D plan can keep that plan until such time as they choose to join a Part D program, without penalty.

If an employer or union drug plan covers less than a Part D plan, the beneficiary can opt to join a Part D plan for better coverage or stay with their current plan. However, if they join a Part D plan later, they will have to pay at least 1% more for every month they waited to enroll in that Part D plan after May 15, 2005. Furthermore, any beneficiary who does not sign up for a Part D program by May 15, 2006 (the day that open enrollment ends), may have to wait until November 15, 2006, to do so. At that time, they may pay higher premiums.

CMS doesn’t require them to be part of the Part D benefit although some plans may include them. There does not appear to be a movement toward streamlining everything under one benefit. CMS is incredibly focused right now on implementing Part D first.