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For Release:
November 19, 2007

Fred M. Jacobs, M.D., J.D.

For Further Information Contact:
Marilyn Riley
(609) 984-7160

PAAD Participants to Receive Important Letter Explaining Changes in 2008 Medicare Part D Coverage


          TRENTON --   As a result of the federal government’s annual review of Medicare Part D prescription plan costs, New Jersey must move 114,000 Pharmaceutical Assistance to the Aged and Disabled (PAAD) beneficiaries to lower-cost Part D plans, Health and Senior Services Commissioner Fred M. Jacobs, M.D., J.D., announced today.

Nearly all people enrolled in PAAD will receive a letter in late November explaining changes in their Medicare Part D plans for 2008.

          “We are moving people to new, more reasonably priced Part D plans, and we’re working to make this a smooth transition,” Commissioner Jacobs said.   “People in PAAD should be assured that they will continue receiving the same level of prescription drug benefits next year.  And they will still only have to pay, at most, a $5 co-pay,” Dr. Jacobs added.

          Only PAAD participants in stand-alone Medicare Part D plans are potentially affected by the move.

Most of those affected will not have to take any action after receiving the letter.  The PAAD program will match beneficiaries with a PAAD-approved Part D prescription plan that best meets their needs, based on prescription drug use and pharmacy choice over the past year. Beneficiaries will be automatically enrolled in the new plan for 2008, unless they write to the PAAD office within two weeks to decline the enrollment.         

The following PAAD participants are not affected by the move:

  • people with prescription coverage through Medicare Advantage HMO or PPO plans;
  • anyone with employer- or union-sponsored health coverage who has been notified by their former employer that they are prohibited from enrolling in Part D (some State of New Jersey retirees, for example); and
  • those who are ineligible for Medicare.

However, Commissioner Jacobs cautioned that there may be some people with Medicare Advantage or employer-sponsored prescription coverage who will receive a letter moving them to a stand-alone Part D plan, even though they are not eligible for that coverage.

 This may happen, for example, if someone recently switched from stand-alone to managed care coverage, and PAAD has not yet been notified.  Or it could occur if a beneficiary did not inform PAAD that their former employer notified them not to enroll in Part D.

          “You should write to the PAAD program immediately if you get this letter and must decline the enrollment so you can keep your managed care or employer coverage.  The letter will give you instructions for doing that,” the Commissioner said.   “Otherwise, if you have managed care coverage, you will be moved to a stand-alone plan.  If you have employer-sponsored prescription coverage, you could lose your health benefits.”

In New Jersey, people on PAAD receive comprehensive prescription benefits through both PAAD and federal Medicare Part D.  The PAAD program coordinates benefits and pays participants’ Part D premiums.  All people in PAAD enjoy the same level of benefits, no matter which Part D plan they have.

The 114,000 PAAD participants must move to lower-cost plans next year as a result of the federal government’s annual review of Part D premium costs.

The federal Centers for Medicare and Medicaid Services (CMS) pays the Part D premiums for certain low-income people nationwide, including those on Medicaid.  Each year, the private insurance companies offering Part D plans must submit new bids to CMS detailing each plan’s coverage and premium costs for the next calendar year.

Each year, CMS sets a regional maximum that it will pay in premiums for low-income people.  For 2008, CMS has set New Jersey’s maximum at $31.23 a month for standard plans.                  

New Jersey will follow the federal policy for all PAAD participants.  As a result, the 114,000 PAAD participants with higher-cost plans must switch to lower-cost plans.  About 9,000 participants will not have to switch, as their premiums are already less than $31.23 a month.

PAAD participants who switch plans will receive a new eligibility card from their new Medicare Part D plan once the enrollment process is completed.

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