Take your time picking Medicare drug plan
The official launch of the program is this week, as various health insurers start sending out information about their plans. You can sign up for a plan starting Nov. 15, and you can start using it Jan. 1. But you have until next May 15 to sign up for a plan without penalty. So take your time.
You're probably aware that the government came up with a complicated requirement for basic Medicare Part D coverage. But since private companies are selling the plans, each has been working on ways to simplify the structure and price their plans competitively -- while still meeting the government's basic requirements.
The government has inspected and approved every plan being offered to make sure that it covers a wide variety of drugs. In fact, the average plan covers 89 of the top 100 drugs taken by seniors, both generic and brand-name drugs. Many plans cover almost all of those widely used drugs. And most plans don't price the drugs individually because comparisons would be a nightmare. Instead, they have flat co-payments for branded or generic drugs.
You're about to see a wide variety of plans. They'll compete not only on pricing, but on drug lists (which are called formularies), co-payment amounts for generic and brand drugs, and on the locations (drugstores, mail order) where you can purchase drugs if you participate in their plans. Some will be purchased on a stand-alone basis, and others will "wrap" your drug coverage into a total Medicare Advantage plan that covers all of your health care needs.
Here are some of the things you need to consider:
With "stand-alone" plans, you'll purchase them in addition to Medicare Part B and a Medicare supplement plan. You may purchase Part D from your current supplement provider, or another Part D provider. But you'll be writing three checks -- and the total cost is going to take a chunk out of your budget.
Medicare Advantage plans provide a lower-cost alternative. Medicare Advantage is the successor to the HMO concept that was offered a decade ago under the name "Medicare Plus Choice." Seniors who are willing to use doctors and hospitals offered under the Medicare Advantage plan might find it easier to get their drug coverage under one plan. In fact, many Medicare Advantage plans are offering the drug coverage at no additional cost, just to attract new participants.
The government made a list of the top 100 prescriptions used by seniors. The average approved drug plan covers 89 of those drugs, but many plans will cover all of them. Some plans cover only one or two of the best-known branded drugs for conditions such as high blood pressure, gastric problems or arthritis. So check the drug formulary for each plan. That's the first thing to look at.
Most plans are offering a flat co-payment, depending on whether you use a branded or generic drug. But those co-payments may differ, depending on the monthly cost of the plan itself. And the co-payment may depend on the total amount of drugs you purchase.
If you like using the drugstore that's within walking distance of your house, then you'll want to find a plan that includes this pharmacy. All plans must include local pharmacies. But some plans will give you a discount or waive a co-payment if you purchase a three-month supply of drugs from their mail order provider.
You can get ready to start the comparison process by getting organized so you'll be ready to apply starting Nov. 15.
*Make a folder for all of the brochures and information you'll start receiving in the mail.
*Make a list of the drugs you take currently. You'll want to be sure they're included in the drug list (formulary) of the plan you choose.
*Decide where you want to purchase your drugs.
Now you can sit back and relax. Yes, you'll be inundated with information. But starting in mid-October, Medicare will have thousands of specialists trained to help you make the choice. (See sidebar)
Many seniors have serious reservations about the entire concept of Medicare Part D. Some worry about the government's involvement and will reject the plans on principle. That could be costly in the future, if your health situation changes and you need expensive medications. Joining after May 15 subjects you to a penalty that increases the monthly cost.
Some seniors simply can't afford even the lowest-priced plans. They may find help in the Medicare Advantage plans. Or, as written in a recent column (available online at www.TerrySavage.com), the state will provide extensive assistance to low-income seniors through the Illinois Cares Rx program. But first, you must sign up for the lowest-cost plan.
In Monday's column, I'll answer frequently asked questions about what to do if you currently have a Medicare supplement that covers drugs, what to do if your company has a retiree drug benefit, and what happens to non-senior Medicare participants.
Don't panic. There's something for everyone in this drug plan. In the coming months, I'll be dedicated to helping you figure it out. That's the Savage Truth.
Terry Savage is a registered investment adviser and the author of the newly published The Savage Number: How Much Money Do You Need To Retire? (256 pages, Wiley, $24.95).