How does retiree drug subsidy work?
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.
What is the difference between RDS and EGWP?
As a general rule of thumb, EGWP coverage provides a higher base subsidy than RDS plans and even come with catastrophic reinsurance which kicks in when out of pocket costs exceed $5100 or a total of $8140 in total drug costs.
What is a qualified retiree prescription drug plan?
Qualified retiree prescription drug plan means employment-based retiree health coverage that meets the requirements set forth in § 423.884 of this chapter for a Part D eligible individual who is a retired participant or the spouse or dependent of a retired participant under the coverage.
How is RDS subsidy calculated?
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 EGWP Medicare?
Group Medicare Advantage plans are also called employer group waiver plans (EGWP), pronounced “egg-whips.” EGWPs are a type of Medicare Advantage plan offered by some employers to employees and retirees of some companies, unions, or government agencies.
Is RDS Medicare?
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.
Is retiree coverage creditable?
Retiree insurance isn’t creditable coverage, and you want to avoid penalties. Each employer plan is different, so contact your human resources representative for more details.
Who is eligible for EGWP?
What is an 800 series EGWP?
800 Series EGWP plus Wrap – Is Coinsurance the way to go? To maximize savings, organizations can opt for an EGWP + Wrap program. This consists of a EGWP without gap coverage for brand name drugs plus a commercial wrap product to provide the missing coverage.
Do you pay Medicare after retirement?
After retirement, your source of income switches to investment income and retirement benefits, and you typically are not required to pay Medicare or FICA tax on most or all of your retirement income.
Is an EGWP a Part D plan?
Under the Part D program, Medicare beneficiaries can purchase prescription drug coverage offered by private health plans in their area. Employers and unions can also provide Medicare Advantage and Part D coverage to their Medicare-eligible retirees through specialized plan known as Employer Group Waiver Plans (EGWPs).