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 substantially, 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.

Research by the 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.

Three of the most popular stand-alone PDP plans will have premiums that are 8 percent higher on average next year. In some cases, the increases will be much larger. For example, the largest plan–SilverScript Choice–will post average monthly increase of 29%, to $29.10. Aetna Medicare RX Saver will be up an average of 20 percent.

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Avalere Health reports that the overall number of Part D plans offered next will decrease 23 percent, part of an ongoing Medicare-driven effort to eliminate duplicative offers. But the minimum number of offerings across all states is 16, and the maximum is 22.

Plan drug formularies are listed in the Annual Notice of Change, and full formularies can be found on the plan’s website; you can also request it by phone.

Also pay attention to the method of delivery used by plans. One way drug plans keep prices down is by working through “preferred pharmacy” networks–often a big box retailer or through the mail. Make sure that a plan network meets your needs.

Donut hole coverage

Another decision is whether you need an “enhanced” plan that covers you in the so-called doughnut hole–the coverage gap that requires most beneficiaries to pay out of pocket after reaching a cap. In 2017, the gap starts when spending by you and your insurance company reaches a combined $3,700; coverage resumes when your out-of-pocket spending reaches $4,950. In 2017, there will be a 60% discount on brand name drugs (up from 45% this year); generic drugs will be discounted by 49% (compared with 42% this year).

What counts –and doesn’t count — toward getting out of the gap once you enter?

First, the drug plan premium and what you pay for drugs that aren’t covered don’t count toward getting you out of the coverage gap.

Here’s what does count, according to Medicare & You, the annual guide to Medicare published by The Centers on Medicare and Medicaid (CMS).

    • Your yearly deductible, coinsurance, and co-payments
    • What you pay in the coverage gap
    • The discount you get on brand-name drugs in the coverage gap
Help for low-income individuals

Low-income individuals may qualify for assistance with their Part D premiums through a program called “Extra Help,” which is administered through the Social Security Administration. The subsidy can defray thousands of dollars in costs, and in many cases eliminate prescription drug expenses entirely for participating seniors.

Eligibility is determined based on your current income at the time you apply. In 2016, you may qualify if you have up to $17,820 in yearly income ($24,030 for a married couple) and up to $13,640 in resources ($27,250 for a married couple). There also are rules governing the assets you can have and still qualify for the program.

Shopping tips

Medicare D plans routinely change the drugs they cover from year to year, so it’s important to review your coverage annually.  Don’t pick a Medicare D insurer simply because you know its name or because it’s your health insurer. And don’t be swayed by a pharmacist’s recommendation. Pharmacies have partnerships with particular Medicare D plans, so they may well recommend a plan that’s in the drugstore’s best interest, not the recipient’s.

The two most important Medicare D plan features to consider are 1) Whether the beneficiary’s drugs would be covered by a particular plan and 2) Whether the pharmacy you want would deliver the drugs. (Medicare D plans don’t work with all pharmacies and vice versa.)

Then, of course, there’s the cost. Medicare D premiums can vary widely among plans. While it’s tempting to go for the lowest price, that can be a costly mistake. Watch out for these three traps when comparing plan costs:

  • Misleading drug prices: Examine the cost of each drug over the full year. The amount can vary month to month based on the way the plan sets prices.
  • Drug usage restrictions: A drug may be included in a plan, but with restrictions on its use.
  • High delivery costs: Mail-order drug delivery is less expensive with some plans, but not with others.
Resources

The best online tool for shopping plans is the Medicare Plan Finder at the Medicare website. Plug in your Medicare number and drugs (you’ll need each drug’s name and dosage). The tool then displays a list of possible plans; their estimated cost, premiums, and deductibles; which drugs are covered; and customer-satisfaction ratings. The finder also will give you advice about drug utilization and restrictions.

All seniors receive an annual notice from their current providers by the end of September that summarizes plan changes for the coming year. However, the statement doesn’t offer a detailed, personalized summary of formulary changes that might affect your coverage. For that, it’s important to use the Medicare Plan Finder.

Another useful feature of the Plan Finder is the plan quality rating system, which utilizes data gathered by the federal government measuring whether patients received appropriate procedures and patient satisfaction feedback.

Although it’s possible to enroll online via the Plan Finder, the MRC recommends that you confirm coverage information by phone with a plan representative and that you keep a written record of that conversation. The Center also recommends enrolling by calling Medicare’s enrollment hotline (1-800-MEDICARE), rather than talking directly with the plan.

“If you get erroneous information from the government, that’s a reason to let you out of a plan later if necessary,” says Baker. “If a plan representative gives you wrong information, you’re out of luck.”

If you don’t have a copy handy, download the federal government’s free guide to Medicare benefits, Medicare & You. This is the definitive source on all things Medicare and can be useful in plan decision-making.

Free one-on-one help is available from your local State Health Insurance Assistance Program (SHIP), a network of non-profit Medicare counseling services. Click here to find the SHIP program in your state.

The Medicare Rights Center also offers free counseling by phone (1-800-333-4114).

If you’re willing to pay to get advice and help with paperwork, hire an independent, fee-based, counseling service such as Allsup Medicare Advisor (1-866-521-7655). For a few hundred dollars, Allsup assigns an advisor who will provide a written personalized plan analysis and offer phone consultations.