The annual open enrollment period for Medicare Part D, the federal prescription drug benefit program, begins on October 15 and ends on December 7. Except for certain special enrollment periods, this month-and-a-half window is your chance to either enroll in Part D for the first time or change to a different drug plan within Part D. Should you enroll in Part D? If you are already enrolled, should you change drug plans? This article lists some resources that can help you answer these questions. But first, here is a quick introduction to Medicare Part D.
Some background. Medicare Part D was introduced in 2006 to help offset the cost of beneficiaries’ prescription drugs, most of which had not previously been covered by Medicare. People usually become eligible for Medicare when they turn 65. (The only exceptions are people who are permanently disabled and are thus eligible for Medicare at a younger age.) They can choose either Original Medicare or a Medicare health plan. Original Medicare has two parts: A and B. Broadly speaking, Part A covers hospital costs and Part B covers doctor costs. Medicare health plans, the most common of which are Medicare Advantage plans, provide roughly the same benefits as Parts A and B. Unlike Parts A and B, however, Medicare health plans are run by private insurance companies that have contracted with Medicare. Part D plans are also run by private companies under contract to Medicare. Thus, when you enroll in Part D, you are actually enrolling in a private insurance plan. All Part D plans have to meet some basic requirements, but there are many differences among them. For example, each plan offers its own list of covered drugs (called a formulary), covers these drugs at different rates, and has its own set of regulations. It is therefore to your benefit to compare several different plans before choosing your Part D plan.
Many Medicare health plans include drug coverage. Individuals with drug coverage through a Medicare health plan do not need to enroll in a stand-alone Part D plan.
Paying for Part D. Payment for Part D consists of a deductible, premiums, and co-payments or coinsurance. The deductible is the initial amount of your yearly drug costs that you pay before insurance kicks in. In 2013, the highest allowed deductible is $325. The premium is a set monthly payment that ranges widely among different plans. In 2013 the average premium is expected to be about $30. In addition to your premium, you may have to pay a “Part D income-related adjustment amount.” However, if you made less than $85,000 as an individual or $170,000 as a couple in 2011, you will likely pay no additional cost. Some drug plans use co-payments, in which you pay a fixed amount for each prescription. Others use coinsurance, in which you pay a set percentage of a prescription’s cost. (And many use some combination of the two.) After you have paid off your deductible, your co-payments/coinsurance will be about 25% of your drug costs — at least at first. Once the total cost of your drugs — both what you and your insurer have paid — rises above $2,970, you are responsible for 47.5% of the cost of plan-covered prescription drugs and 79% of the cost of plan-covered generic drugs. This is the famous coverage gap, or “doughnut hole.” You only get out of the doughnut hole when your out-of-pocket costs reach $4,700. This last number does not include any money the insurer paid — only what you paid out of pocket. When you emerge from the doughnut hole, “catastrophic coverage” kicks in, and your co-payment drops to 5% of drug costs, or $6.60 for covered brand-name drugs and $2.65 for covered generic drugs, whichever is more. Since your drug costs are recalculated yearly, you start each January 1 with a clean slate and another doughnut hole on the horizon.
The penalty. You may be thinking, “Why should I pay for Part D if I don’t take many prescription drugs?” The problem with this logic is that if you don’t sign up for Part D when you are first eligible, you may be penalized if you sign up later. This penalty only applies if, before you sign up for Part D, you do not have drug insurance from another source — from your job or union, for example — whose coverage is at least equal to that of Medicare’s. (This is called “creditable” coverage — you should ask whoever provides your drug coverage whether Medicare considers it creditable.) If you are over 65, do not have creditable drug coverage, and did not enroll in Part D during your initial enrollment period, your monthly premium, when you do sign up, will cost an additional 1% of the “base beneficiary premium” for each month you delayed. The base beneficiary premium for 2013 is $31.17. That means that if you waited two years to sign up for Part D, your monthly premiums would be $7.50 more a month. The base beneficiary premium changes every year, and your penalty could increase every year for the rest of your life. So even if you don’t have high drug costs now, you may want to consider enrolling in Part D to save yourself a penalty down the line.
Change of plans. Part D insurance plans can (and usually do) increase their deductibles and premiums every year. They can also change the drugs they cover and how much they charge for them. (However, if they drop a drug you are taking or raise its price, the changes will not go into effect for you until the new year.) You should therefore keep abreast of any changes to your plan. Then, when the reenrollment period comes around, you’ll know whether you need to switch out of your plan because it no longer covers your drugs or because it is no longer the most cost-effective. If you don’t do anything during the reenrollment period, you will be automatically reenrolled in your current plan.
The following Web sites can help you learn more about Medicare Part D and find answers to specific questions about enrolling or reenrolling in drug plans.
On the AARP’s Medicare Part D page, go to the Medicare Starter Guide for basic some “do’s and don’ts,” and to the Medicare Part D Guide for a more thorough overview of Part D. The AARP also offers pages on choosing a Medicare Private Plan and paying out-of-pocket costs associated with Medicare.
Kaiser Family Foundation (KFF)
The Kaiser Family Foundation conducts many studies on Medicare. The results of these studies are available on its site. This site will be most interesting for people seeking a broader perspective on Medicare drug coverage.
This government-run site is the place to go to research and enroll in Part D plans.
To look into which individual plans best meet your needs, go to the Medicare Plan Finder. After a few preliminary steps, the site will prompt you to type in what drugs you take and at what doses. It will also ask you to select a pharmacy near you. From this information the site will produce a list of the plans available in your area that cover your drugs. Click on the name of any of these plans to study its details. You will come to a page with information on the plan’s cost, including a chart showing how much you would pay for drug coverage each month of the year, assuming the drugs you take stay the same. (This lets you see if and when you will go into — and out of — the doughnut hole.) This page also has much other useful information. For example, it will tell you whether there are any potential barriers to getting the drugs that are covered by your plan. Some plans require you to get authorization before you can take certain drugs; some plans require that you try certain other drugs before you are covered for the drug of your, or your doctor’s, choice (this is called “step therapy”); and some plans set quantity limits on the drugs you take.
The “Find & Compare Plans” feature is a terrific resource to help you find the Part D plan that is best suited to you. You can also get all this information, and enroll in Part D, by calling Medicare at (800) 633-4227.
Medicare Rights Center
This site has extensive information on the Medicare program, including Medicare Part D. There is also information under the headings Enrolling in a Medicare Private Drug Plan, “Getting Your Drugs Covered” (which includes advice on appealing your plan’s decisions), and Help Paying for Your Drug Coverage. In addition, there is a regular question-and-answer column called Dear Marci and a site called the Medicare Interactive Counselor, which searches for answers to your specific concerns.
The Medicare Rights Center can be a good resource for information on more complicated issues, such as the interaction between Part D and Medigap, Medicaid, Medicare Advantage, State Pharmaceutical Assistance Programs, or VA and TRICARE benefits.