The promotions for the Medicare prescription drug program are starting and will become intense for many of you over the next few months. Take your time to analyze the choices.
If you are eligible for Medicare now, you are eligible for the prescription drug program. Sign ups for the plans can start Nov. 15. The plans go into effect Jan. 1, 2006.
For many of you, the most important action is to choose some plan by May 15, 2006. If you do not choose a prescription drug plan, there will pay a 1% higher premium for each month you delay signing up. You do not face the penalties if you have comparable coverage, such as through an employer-sponsored plan. You can decide to switch to a Medicare plan later without paying the penalty.
Fortunately, the wide variety of plans makes it easy to meet the deadline. There are plans with premiums of less than $20 monthly. You can sign up for one of these plans, get minimal drug coverage, and avoid the premium penalty if you switch to a more robust plan in the future.
The plans available to you and their cost depend on where you live. Many plans are being offered around the country. You can find the plans available in your area at www.medicare.gov, along with other details to help make a decision. Or check www.cms.hhs.gov/map/map.asp for a summary of plans available to you. Of course, the free booklet, Medicare and You, has many details.
Here are some key points to look for when considering the available plans.
The formulary. If you already are taking medications or anticipate needing to, the most important factor is the medications covered by a plan. You have to contact the company and ask to see the formulary or preferred drug list for the plan.
Some plans will not cover all the drugs available to treat a condition. Instead, they will cover only a certain brand if several are available or will cover only generic versions. For example, for high cholesterol a plan might cover Lipitor but not Pravachol. Or a preferred drug will be fully covered while a member who uses a non-preferred drug will pay more of the cost.
Another approach some plans take is to require prior authorization before a particular drug is covered. You might be required to try other drugs before the plan will approve a non-preferred drug.
Preferred drugs, prior authorization, and limited formularies are ways plans hold down costs. If certain drugs are important to you or you want maximum flexibility in the future, check these features.
The doughnut hole. As we explained in past visits, the Medicare prescription drug plan has a gap in which the beneficiary is responsible for all drugs after the first $2,250 of prescription drug expenses for the year until out-of-pocket expenses reach $3,600. This is known as the gap or doughnut hole. A few plans, however, will cover some or all drug payments in the gap. Some cover only generics in the doughnut hole. Others cover both generics and brand names in the gap.
Of course, plans that cover drugs in the doughnut hole also charge higher premiums. You have to decide if the coverage is worth the higher premiums.
Cost sharing. Pay close attention to how the patient’s share of the costs is determined.
Some plans require a flat copayment amount for each prescription. Others charge one copayment amount for generics, another for brand names, and another for high-cost specialty drugs. Another variation is to charge one copayment amount for drugs on the preferred list and a higher copayment for other drugs. Others don’t charge copayments. Instead, they have co-insurance requirements. These are a percentage of the drug’s cost. They could mount, and you have less certainty of your ultimate out-of-pocket costs. Be sure you understand the difference between co-payment and co-insurance and how it will affect your cash outlay.
Pharmacy or mail order. Another way plans save money is by requiring patients to use their mail order pharmacies for drugs they use regularly. Other plans have arrangements with one or more chain pharmacies or cooperatives so that prescriptions can be filled locally. Patients generally save money through the mail order pharmacies, but some find them inconvenient. With a mail order pharmacy, check the maximum supply allowed at one time. Some will allow a three-monthly supply and will charge only one or two copayments instead of three. When a local pharmacy is used, generally only a one month supply is allowed.
My main concern remains that some plans might be underpricing to build market share. In two years they might force members to pay higher premiums or shop for another plan. November 2005.