AREAS TO LOOK AT WHEN PICKING A MEDICARE PART D PLAN

Medicare Part D beneficiaries now have the opportunity to change to a different prescription plan between November 15 2010 and December 31, 2010. There are a few things to keep in mind when looking at the Part D plans available.

Look at Premiums. Based on current plan elections, it’s predicted that monthly Medicare Part D premiums will average $40.72 in 2011. Of course, monthly premiums vary greatly based on location and some plans have seen more substantial increases than others. It’s important to realize that just because a plan was cheapest when elected doesn’t mean it’s still the best option. There will also be a premium increase taken from Social Security checks for a retiree earning more than $85,000 yearly and couples earning more than $170,000.

Look at Additional Costs. Aside from premiums, the retiree should look at how much the deductible is, coinsurance, co-payments, and how much must be paid prior to the coverage beginning when calculating overall cost of a plan. There’s a helpful online tool provided by The Centers for Medicare and Medicaid Services where out-of-pocket expenses for various drugs under various plans can be viewed.

Look at Formulary. The list of covered drugs under Medicare Part D plans are referred to as the formulary. The formularies in most plans are divided into tiers, each having different out-of-pocket costs. Even those satisfied with their existing coverage should look at the formulary of their plan, as many are altering coverage amounts and subtracting and adding drugs to the formulary.

Look at the Red Tape. Most plans have red tape. For example, some Medicare Part D drug plans might require you to have a PA (prior authorization) before it will pay for the drug, essentially meaning that the doctor will need to provide additional information about why the drug is needed before it can be obtained. Some plans might require trying cheaper similar alternatives first or place a limit on the amount of medications that can be bought at one time, thereby potentially affecting access to medications.

Look at Gap Coverage. Most plans have what’s called the donut hole (a coverage gap.) After drug spending reaches $2,840, the coverage gap begins. After $4,550 is spent out-of-pocket, the gap closes and catastrophic coverage begins. Due to the Affordable Care Act, beneficiaries reaching the coverage gap in 2011 will see some cost decreases. For example, during the gap, brand name drugs will be discounted 50% and plans will still cover 7% of generic drug costs.

Lookout for Late Enrollment Penalties. Ideally, Medicare Part D should be obtained at 65-years-old or as soon as employer-sponsored prescription drug coverage is lost. A late enrollment penalty will be applied to anyone that doesn’t have drug coverage for more than 63 days. Keep in mind that late enrollment penalties for 2011 will be calculated by multiplying 1% of the base national premium by the number of months the individual was actually eligible. In other words, the longer the delay, the more the penalty will be. The penalty amount will be added to monthly premiums for the duration of participation and could increase as the base national beneficiary premium increases.

Your Looking May Be Limited. There will be fewer options next year as new regulations begin to purge duplicative and low enrollment plans. Nationwide, it’s estimated that only 1,109 prescription drug plans will be offered in 2011, with the average beneficiary having about 33 prescription drug plans from which to choose. Unless you selected a new plan on your own, beneficiaries of eliminated plans will be reassigned in 2011 to an alternative plan with the same provider.

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