What is RDS in 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.

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.

What is a qualified retiree prescription drug plan?

In general, 42 CFR §423.882 defines a qualifying covered retiree as a Part D eligible individual who is not enrolled in a Medicare Part D plan but who is covered by employment-based retiree health coverage (as the participant, or as the participant’s spouse or dependent) that meets the standards in 42 CFR §423.884 to …

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.

Is retiree coverage creditable?

Usually provided as part of retiree medical coverage that pays after Medicare pays, retirees with this drug coverage generally don’t join a Medicare drug plan because their retiree drug coverage is creditable—that is, it’s expected to pay, on average, as much as standard Medicare drug coverage.

What is the name of the monthly explanation of benefits statement that Medicare patients receive?

EOB
Each month you fill a prescription, your Medicare Prescription Drug Plan mails you an “Explanation of Benefits” (EOB). This notice gives you a summary of your prescription drug claims and costs.

Are retiree health insurance premiums paid by employer taxable?

Employer-paid premiums for health insurance are exempt from federal income and payroll taxes. Additionally, the portion of premiums employees pay is typically excluded from taxable income.

What companies offer retiree health benefits?

Compare The Best Health Insurance for Retirees

Do health insurance premiums reduce taxable income?

Taxes and Health Care. Employer-paid premiums for health insurance are exempt from federal income and payroll taxes. Additionally, the portion of premiums employees pay is typically excluded from taxable income. The exclusion of premiums lowers most workers’ tax bills and thus reduces their after-tax cost of coverage.

Can you deduct marketplace health insurance premiums?

If you buy medical coverage through an insurance marketplace, then premiums would be tax deductible as a medical expense. It is important to note that if you are eligible to enroll in a spouse’s employer’s plan and opt out of that coverage, then you would not be able to take the tax deduction.

How does the Retiree Drug Subsidy Program work?

ANSWER: The RDS Program has flexible rules that permit Plan Sponsors to continue providing drug coverage to their Medicare-eligible retirees at a lower cost. Reimbursement for a portion of Plan Sponsors’ eligible expenses for retiree prescription drug benefits

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.

How is the cost of a retiree 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.