The Retiree Drug Subsidy Program is a program offered by the

Centers for Medicare & Medicaid Services The Centers for Medicare & Medicaid Services (CMS), is a federal agency within the United States Department of Health and Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer M ...

(CMS) to reimburse

health plan Health policy can be defined as the "decisions, plans, and actions that are undertaken to achieve specific healthcare goals within a society".World Health Organization''Health Policy'' accessed 22 March 2011(Web archive)/ref> According to the ...

sponsors (municipalities, unions and private employers) for a portion of their eligible expenses for retiree

prescription drug A prescription drug (also prescription medication or prescription medicine) is a pharmaceutical drug that legally requires a medical prescription to be dispensed. In contrast, over-the-counter drugs can be obtained without a prescription. The rea ...

benefits. This enables Plan Sponsors to continue providing drug coverage to their Medicare-eligible

retirees A pensioner is a person who receives a pension, most commonly because of retirement from the workforce. This is a term typically used in the United Kingdom (along with OAP, initialism of old-age pensioner), Ireland and Australia where someone of p ...

at a lower cost. Benefits of the RDS Program for participating Plan Sponsors include:
RDS User Guide
', Centers for Medicare and Medicaid Services, Version 17, May 11, 2013 * A Federal

subsidy A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...

equal to 28-percent Qualifying Covered Retiree's costs for prescription drugs otherwise covered by

Medicare Part D Medicare Part D, also called the Medicare prescription drug benefit, is an optional United States federal-government program to help Medicare beneficiaries pay for self-administered prescription drugs. Part D was enacted as part of the Medica ...

that are attributable to such drug costs between the applicable Cost Threshold and Cost Limit * Incurred costs (including dispensing fees) that the Health Plan Sponsor pays, and that the retiree pays, are eligible for subsidy. Rebates received are subtracted from the amount eligible for subsidy. * Program flexibility that supports the Health Plan Sponsor's current prescription drug plan structure * Extensive educational materials and support To qualify for the subsidy, a Health Plan Sponsor must show that its coverage is "actuarially equivalent" to, or at least as generous as, the defined standard Medicare Part D coverage.

References

Medicare and Medicaid (United States) Subsidies {{health-stub