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Zero Plan Disruption for Retirees
Zero Plan Disruption for Retirees
EGWP's allow plan retiree's to keep the same pharmacy benefits without interruption or additional costs, while the plan provider realizes significant cost savings.
Retiree Prescription Drug Plans
Retiree Prescription Drug Plans
Under an EGWP the PDP handles main administrative requirements, manages all federal interaction, collects federal Part D plan subsidies and assumes compliance responsibilities.
Employee Group Waiver Plans
Employee Group Waiver Plans
EGWP's are commonly referred to as Egg Whips and provide generous cost savings combined with improved cash management.
 
 

EGWP Eligibility

Does my company have EGWP eligibility?

Does your business have EGWP eligibility?  EGWP eligibility is primarily for those companies that have retirees who are being provided prescription drug benefits presently.  Many companies who participated in Medicare Part D Retiree Drug Subsidy (RDS) payments now find themselves seeking company benefits alternatives due to recent changes in the Patient Protection and Affordable Care Act (PPACA).  Most have EGWP eligibility.

If you are presently providing prescription drug plan benefits to retirees, you should consider your company EGWP eligible if you satisfy any of the following conditions:

circleA taxable entity who has received RDS payments in the past, but now are faced with paying taxes on those retiree drug subsidy payments

circleA unit of the government that looking for a way to reduce the tax liability impact of Medicare Part D in its GASB 43/45 tax accounting reporting.

circleA retiree prescription benefits plan where compliance with RDS guidelines has been an issue or is starting to become an issue

circleAny retiree drug plan considering shelving its post-65 Medicare eligible retiree benefits because of cost concerns

circleAny pharmacy plan for retirees seeking a better strategy for managing their retiree premium costs

circleAny retiree pharmacy benefits plan where prescription drug claims have costs have escalated to unacceptable levels even with RDS

circle A post employment drug benefit plan that has a limited number of members and thought that their pool of enrollee’s was too small to qualify for CMS subsidies

 

What are common EGWP Eligible organizations?

EGWP eligibility is most common in the following organization types:

circle_bluePublic Companies

circle_bluePrivate Companies

circle_blueGovernment Agencies or Units

circle_blueUnions

circle_blueMunicipalities

circle_blueSchool Systems

circle_blueCity Governments

circle_blueThird Party Administrator Clients

circle_blueUnion Groups

EGWP Eligibility, RDS and Tax Liability

Any organization that has participated in the Retiree Drug Subsidy (RDS) administered by the CMS in the past will want to consider an EGWP.   The recent changes that are part of the PPACA which became effective in January 2013 specify that self-funded employers who receive Medicare Part D RDS payments for implementing prescription drug coverage for retirees are no longer eligible to take a deduction for retiree prescription drug costs.  This represents a significant increase in costs to companies that qualify provide prescription benefits for their retirees.

Prior to January 1, 2013, the 28% subsidy of approved costs of prescription drug coverage through Medicare Part D RDS payments were not taxed, and companies were able to write off 100% of their pharmaceutical costs as expense.  While the drug subsidy provided through the CMS is still available, it is less attractive to plan sponsors because of the lack of tax-free status of RDS payments, as well as the provision that the administrative costs of administering the RDS are no longer tax deductible either.

Presently, employers under general accounting rules, must now include the present value of future taxes as a current liability to be charged against earnings.  For some companies this meant a huge increase in tax liability, for example:

–          $1 billion in additional tax liability for AT&T

–          $150 million in additional tax liability for John Deere

–          $90 million in additional tax liability for 3M

The magnitude of the impact has been estimated by a Towers Watson benefits consultant report that the total write down represents as much as $14 billion affecting over 3500 companies.

Benefits of EGWP for your organization

In order to properly asses the complete palette of benefits that an EGWP can provide for your organization, you will need to consult with an qualified pharmacy benefits manager.  EGWPInfo.com can help you find the proper EGWP benefits consultant to meet your organization’s specific needs.  Questions such as how your present group Medicare Part D formulary will work inside the framework of an EGWP and how much additional savings you can expect to see from moving to an Egg Whip plan are common among companies we assist.

To get a customized assessment of the benefits an EGWP can provide for your organization, please fill out the form below to get started.  A qualified retiree prescription benefit consultant will contact you to answer your questions and show you have an EGWP may be able to transfer risk, improve cash flow, reduce administrative expenditures and significantly lower your retiree prescription drug plan costs.  The consultation is free.  Contact us below to find out about your EGWP eligibility.

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updated 12/16/2013
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