How to shop for a Medicare Part D plan

prescription-drug-RR-GuideThe annual Medicare enrollment period starts on October 15th and ends of December 7th. This is the opportunity for seniors to review their prescription drug or Medicare Advantage coverage, and to select new plans.

With dozens of plans available in most parts of the country, Medicare shopping can be a complex chore. Re-shopping your plan annually makes sense — insurance companies often change their offerings year-to-year in ways that can increase drug costs by thousands of dollars, or make it more difficult to get certain drugs. At the same time, your drug needs may have changed since the last plan selection period in ways that make a plan less beneficial for you.

A study released last fall by the Henry J. Kaiser Family Foundation found that, on average, just 13 percent of enrollees voluntarily switched their drug plans over four recent enrollment periods. The switching rate is nearly identical for those in for Advantage plans, the all-in-one managed-care option offered to Medicare beneficiaries. That’s unfortunate, since plenty of people are leaving money on the table. The Kaiser study found that 46 percent of plan switchers saved at least 5 percent the following year, mainly on premiums.

Start the process by reviewing your the Annual Notice of Change (ANOC), which health insurance companies must send to you each fall by September 30th. The notice describes any changes in premiums and co-pays for the year ahead, and lets you know whether your medication will be covered.

On average, Part D plan prices are expected to decline a bit in 2015. But among the top ten plans, premium changes will vary widely, as this chart from Avalere Health shows.

 

PDPs 20151

Donut hole coverage

The Affordable Care Act gradually closes the doughnut hole, which refers to the gap in coverage when total annual drug spending by you and your insurance company hits a certain point. In 2015, the gap starts at $2,960 (up from $2,850 this year) and ends after you’ve spent $4,700 (up from $4,550 this year).
Seniors who enter the gap also get discounts on brand-name and generic drugs, and those breaks will be larger next year. Enrollees will pay 45 percent of the cost of brand-name drugs in 2015 (down from 47.5 percent this year) and 65 percent of the cost of generic drugs (down from 72 percent this year).

Every month that you fill a prescription, your drug plan mails you an Explanation of Benefits (EOB) notice, which tells you how much you have spent on covered drugs and if you’ve reached the coverage gap.

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