Examining Part D Prescription Drug Plans

Open enrollment for Medicare’s Part D prescription drug pro-gram is almost here. Marketing has begun, and you can sign up from Nov. 15 – Dec. 31. Only entering its fourth year, enrollment grows each year, and surveys show satisfaction among enrollees.

One constant about Part D so far is change. Premiums, other costs, and coverage change as insurers gain experience and drug costs change. Last year many seniors changed their Part D plans, because premiums and coverage changed a lot from 2008 to 2009. Premium increases for the 10 most popular plans averaged over 30% in 2009 and over 20% in 2008. In addition, out-of-pocket costs, such as copayments, increased. For 2010, the average premium is set to increase by $2 to $30 monthly, which is a lower increase than Medicare expected. There are several national plans available. Most areas have dozens of plans available. Almost all areas of the country have low premium plans available.

Why to Review the Choices

Even if you are happy with your plan, be prepared to shop around. Your premium or other terms may be changing. Also, other plans changed or were added and may be better suited for you. New coverage will be effective Jan. 1. (If you did not enroll in a Part D when you were first eligible, you might pay a penalty by enrolling in a plan now.)

Don’t automatically choose the lowest premium plan, unless you have minimal drug costs and want to enroll in a basic plan now to avoid paying a penalty for enrolling in a Part D plan late in a few years when you might need more medicine. The lowest premium plans have minimal coverage. Also, don’t be persuaded by popularity. A plan might have large enrollment because low-income members automatically are enrolled in the lowest cost plan available to them, and that boosts the enrollment numbers.

Before choosing a Part D plan, consider enrolling in a Medicare Advantage plan. These plans, discussed in last month’s visit, are an alternative to Original Medicare. They combine the hospital care of Part A, doctor’s services under part B, and other coverage, such as prescription drugs and dental and vision care. These plans have been rising in popularity, and about one third of those who receive prescription drug coverage under Medicare receive it through Advantage plans.

One goal of many seniors is increasing certainty in their medical expenses. Part D plans increase certainty of prescription drug costs, and Medicare Advantage plans increase certainty of overall medical costs. Consider all your medical coverage together instead of looking only at Part D plans.

Handling the Coverage Gap

A Key issue for many seniors is dealing with the “doughnut hole” or coverage gap in Part D Plans.

Part D first has an annual deductible, which is around $250. In addition, most plans require a copayment or coinsurance on each prescription. A copayment is a fixed dollar amount, such as $5, per prescription. Coinsurance is a fixed percentage of the prescription’s cost. The more expensive the medicine, the higher your cost per prescription under coinsurance.

The Part D coverage gap works like this. After combined payments by you and the insurer exceed a certain amount, you pay all the costs from there to a ceiling amount. In 2009, the floor was $2,700 and the top was $4,350. The amounts are adjusted annually. Part D policies are allowed to pay your costs in the doughnut hole, but few do. Some will pay only for generic drugs in the gap or a limited range of generic and prescription drugs. But plans with coverage in the gap also have higher premiums and other costs. After you have paid $4,350 for prescription drugs during the year, the plan will cover 95% of all additional costs for the year.

One way to deal with the gap is to always use your Medicare card when paying for drugs. This likely will get you a lower price than without the card. Another strategy is to use generic drugs or less-expensive brand-name drugs whenever possible. Mail-order pharmacies and low-cost pharmacies also might help control costs. Many pharmaceutical companies offer price breaks for those with lower incomes, and the states also have assistance programs for those with lower incomes. Additional information about the pharmaceutical and state programs are on the web site at www.medicare.gov.

Another key feature of a drug plan is the formulary. The formulary is the list of medicines covered by a plan. Don’t assume that because you are buying a “prescription drug plan” that it covers all prescription drugs.

New or experimental drugs often are not covered. Also, coverage might not be available when an approved drug is prescribed for an “off label” use.

More importantly, a plan might limit the drugs covered for specific treatments. If a generic drug is available, you might be required to at least try it before a brand name is covered. When more than one brand-name drug is available, the plan might cover only one of them. Usually when a specific generic or brand-name drug is required by the plan, you are covered for an alternative only if the preferred drug is not effective for you or you have an adverse reaction.

You can check the formulary for each plan available to you on the Medicare web site at www.medicare.gov. If you already are taking drugs, you can see which plans cover them. If you are not using drugs, you can review the lists for an idea of how restrictive the plans are.

The Medicare web site lists all the plans available in your area. It also has a tool that searches for plans with certain features and another that compares plans you select. You can enter the prescription drugs you use, and the comparison feature will estimate your out-of-pocket costs for each of the plans, assuming no changes in your use. The comparison feature on the web site is an important tool to use when selecting a plan.

There are a few other plan features to consider.

Some plans require authorization before a prescription will be covered. If you take a prescription regularly, many plans require you to receive it through mail order and from a specific pharmacy. Some plans cover only drugs issued through a specific pharmacy or pharmacies. These steps are to save you and the plan money, because the plan has negotiated prices with them.

RW November 2009.