What is the retiree drug subsidy Program?
The Retiree Drug Subsidy (RDS) Program was enacted in December 2003 to reimburse Plan Sponsors for a portion of their Qualifying Covered Retirees’ costs for prescription drugs otherwise covered by Medicare Part D that are attributable to such drug costs between the applicable Cost Threshold and Cost Limit.
How to calculate RDS subsidy?
The subsidy payment is calculated by first determining gross retiree costs between the cost threshold and cost limit, and then determining allowable retiree costs attributable to the gross retiree costs.
What is RDS CMS?
The retiree drug subsidy (RDS) is one of several options available under Medicare that enables employers and unions to continue assisting their Medicare eligible retirees in obtaining more generous drug coverage.
What is RDS attestation?
CMS’ RDS Center requires a qualified Actuary to complete a two-part Actuarial Equivalence Test before an application can be submitted. If Benefit Options are combined, the Actuary will attest to the gross value of each Benefit Option and to the net value of the combined Benefit Options.
What is EGWP Medicare?
What is an “EGWP”? Medicare Advantage employer group waiver plans (EGWPs, pronounced EGG-whips) are customized Medicare Advantage plans developed exclusively for employer and union groups. The Centers for Medicare & Medicaid Services (CMS) has waived or modified certain Medicare Advantage requirements for EGWPs.
What is a Medicare employer subsidy?
The employer subsidy program provides the opportunity for employers to receive a new tax-advantaged subsidy while maintaining valuable benefits for their retirees. The subsidy amount is equal to 28 percent of allowable retiree prescription drug costs – including costs paid by the employer and the retiree.
Are Medicare Advantage plans self funded or fully insured?
Created by the Medicare Modernization Act of 2003, an EGWP can be structured as either a fully insured or self-funded plan and customized to include different deductibles, coinsurance and copay amounts.
Is Medicare Advantage self funded?
Medicare Advantage, or Part C, is a health insurance program. It is funded from two different sources. The monthly premiums of beneficiaries provide part of the funding. However, the main source is a federal agency called the Centers for Medicare & Medicaid Services, which runs the Medicare program.
How much does the government pay Medicare Advantage plans per person?
In recent years, the rebate portion of federal payments to Medicare Advantage plans has risen rapidly, totaling $140 per enrollee per month in 2021, a 14% increase over 2020. Plans can also charge additional premiums for such benefits.
When does the Medicare Retiree Drug Subsidy end?
On Monday, April 1, 2019 the Centers for Medicare & Medicaid Services (CMS) announced the Cost Threshold and Cost Limit amounts that apply to Plan Sponsors participating in CMS’ Retiree Drug Subsidy (RDS) Program, with qualified prescription drug plans that end in 2020, as well as the parameters for Medicare Part D plans in 2020. March 28, 2019.
Is there a cost limit for prescription drug subsidies?
The amount below the federally defined Cost Threshold is not eligible for the subsidy. Therefore Plan Sponsors are not able to claim, for subsidy, this amount of gross covered retiree plan-related prescription drug costs. This ineligible amount is referred to as the Threshold Reduction.
What is the cost threshold for a Retiree Drug Plan?
The Cost Threshold is a federally defined amount of gross covered retiree plan-related prescription drug costs paid by a qualified retiree prescription drug plan and/or by Qualifying Covered Retirees. The amount up to the Cost Threshold is not eligible for subsidy.
Who is eligible for Medicare Part D subsidy?
The 28% federal subsidy helps to defray the employer’s/union’s cost in providing coverage. Beneficiaries enrolled in employer or union plan that receives an RDS cannot enroll in Part D. Anyone with Medicare is eligible to enroll in a Part D plan. To enroll in a PDP, the individual must have Part A OR Part B.