What Every LACERS Member Should Know About Medicare
Medicare Parts A and B
The Los Angeles City Employees’ Retirement System (LACERS)
provides quality medical benefits for eligible retired Members and their dependents. In order to continue bringing these benefits to you,
LACERS coordinates its medical plans with Medicare for Members and
dependents that are age 65 and older. Everyone is eligible for Medicare
Part B. You may be entitled to Medicare Part A based on you or your
spouse’s years of qualifying employment. Also, you may be entitled to
Part A based on a disability or ESRD (Kidney disease).
Pursuant to the Los Angeles Administrative Code, upon turning age 65, you must enroll in all parts of Medicare for which you are eligible (Parts
A & B or B only), whether you are a new retiree or are currently enrolled
in a LACERS plan. You and/or your dependent(s) must submit both proof
of Medicare insurance and the senior enrollment application(s) to
LACERS beginning 90 days before your 65th birthday and no later than
your 65th birthday or you will lose your LACERS medical plan coverage.
Medicare Part B Premium – Premium Tiers Based On
Modified Adjusted Gross Income
The Medicare Prescription Drug, Improvement, and Modernization Act
(MMA) of 2003, which authorized Medicare Part D for Prescription Drug
Benefits, also created an income-related reduction
in Part B premium subsidies effective January 2007.
Traditionally, the cost of the Medicare Part B
program is shared by both its members and the
federal government – by law, the monthly premium for Medicare Part B that you pay must be sufficient
to cover 25% of the program’s costs, while the
federal government subsidizes the remaining 75%
of the cost. For 2006, the 25% cost was seen in the$88.50 monthly premium that you paid directly to Social Security. In
2007, the Medicare Part B monthly premium will increase to $93.50, not
including income-related monthly adjustment amounts and late
enrollment penalties.
What is the Medicare Part B tiered premiums that I have been
reading/hearing about? Starting in 2007 and for the future, retirees
whose income exceeds $80,000 per year ($160,000 for couples) will receive less of a subsidy from the government and pay an incomerelated
monthly adjustment amount (IRMAA) in addition to the standard
premium and any late enrollment penalties.
Is the income requirement based just on my LACERS retirement allowance? No. Social Security will base the Part B premium tiers upon your total income.
How will Social Security know how much income I have?
The MMA also modified the Internal Revenue Code to authorize the
Internal Revenue Service (IRS) to disclose information to the Social Security Association regarding a person's modified adjusted gross
income. Contact Social Security at (800) 772-1213 for more details.
If I am going to experience a reduction in my Part B Federal
subsidy, will it occur at once? No. Any decreases in your subsidy
will be made gradually, over a five-year period.
• 2007 – 20% of the reduced federal subsidy
• 2008 – 40% of the reduced federal subsidy
• 2009 – 60% of the reduced federal subsidy
• 2010 – 80% of the reduced federal subsidy
• 2011 and each subsequent year – 100% of the reduced
federal subsidy
When will Social Security notify me of what my monthly 2007 Part B premium will be? The basic premium (25%) is set at $93.50 for
2007. According to Social Security, they will notify you in late November
or early December regarding what your Part B premium will be.
I am a City Retiree with Medicare Parts A and B. Will LACERS be
reimbursing me for the additional cost of Part B? The Los Angeles
Administrative Code, which governs LACERS benefits, states that the
Part B reimbursement for a City retiree with Medicare Parts A and B is
the basic Part B premium. The LACERS Board has defined “basic” as
25% of the actuarial cost of the Medicare Part B program, which
amounts to the monthly premium of $93.50 in 2007, not including any
IRMAAs or enrollment penalties.
Medicare Part D
Medicare Part D is integrated into your LACERS health plan premium,
so you do not have to sign up for Medicare Part D separately. However, Members and dependents who decide to enroll in a LACERS Blue Cross plan must complete a Medicare Part D assignment form. This form will
be provided to you by LACERS and only needs to be completed when
you first enroll. Medical Premium Reimbursement Program (MPRP)
participants should contact LACERS regarding Medicare Part D.
LACERS Medical Plans Fill the Medicare Part D“Doughnut Hole”
Medicare Part D drug coverage is generally divided into three phases:
• Phase I (initial coverage period): You may pay a deductible and
about 25% of your drug costs until the total cost of drugs you
have used since joining Part D in 2006 reaches $2,250.
• Phase II (commonly called the doughnut hole): There is a gap in coverage when most people must pay 100 percent of their drug
costs out of their own pocket. The gap ends when you have spent
$3,600 out-of-pocket in 2006.
• Phase III (catastrophic coverage): You pay about 5 percent of your drug costs.
This three-step cycle starts over again each calendar year. The dollar limits may increase each year to accommodate higher drug costs.
LACERS incorporates Medicare Part D into our medical plans to help
reduce your prescription drug costs. Because LACERS offers full
coverage throughout the year, you will not experience the doughnut hole of Phase II.
Your plan must send you monthly statements showing how much you
and the plan have spent for prescription drugs and how near you are
to the start or end of the Phase II gap. If you receive such a statement,
keep in mind that the costs and gap do not affect LACERS medical
plans – you will have full coverage and your costs will remain the same
throughout the year.
For more information on Medicare Part D and LACERS medical plans, please contact LACERS.
REMINDER: Your LACERS medical plan and your LACERS coverage
will be terminated if you or your dependent enroll and/or assign your
Medicare Parts A, B, or D to another group or individual plan.
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