Updated: May 3, 2013 12:14PM
Originally published: November 14, 2005
Ready. Set. Go!
Starting tomorrow, seniors can sign up for the new Medicare Part D drug plan. Signing up is easy. Choosing the best plan isn’t.
There are two ways for you to compare all the variables -- especially the monthly premium and the cost of the drugs you take -- in choosing the plan that will require the smallest outlay every month.
You can go to the Medicare Web site, www.Medicare.gov. Or call (800) MEDICARE, and an expert will use the same computer program to create comparisons, and mail you a copy of the results.
The selection process can be intimidating until you realize the key comparison is for basic drug coverage up to the first $2,250 in drug outlays. The two basic choices are plans that offer a standard $250 deductible, and for plans that have a zero deductible, but a slightly higher monthly premium. Each of those plans may have different co-pays for generic, brand name or very expensive brand drugs. And each plan may have slightly different “tiers” of co-payments, thus varying the amount you’d have to pay.The doughnut hole
If you spend more than $2,250, but less than $5,100, a year on drugs, you’ve entered the “doughnut hole” where you’re supposed to pay in full for drugs at reduced prices negotiated by your Part D plan through pharmacies.
But for a higher monthly premium, a few insurers offer co-payments that reduce the cost of drugs bought in the doughnut hole. The extra premium may be only about $10 per month, and that might be worth it if you take a lot of drugs.
If you buy more than $5,100 in drugs, you’ve entered the “catastrophic” range. And no matter which plan you pick, you’ll pay only 5 percent of the price of drugs over that amount.
“TROOP” is an important part of Part D. It stands for True Out Of Pocket expenses. Catastrophic coverage does not kick in until the individual has paid $3,600 in TROOP, including the deductible and the cost of drugs that an individual pays during the doughnut hole. Some plans do offer insurance coverage during the doughnut hole period, but beware: That just delays access to catastrophic drug coverage.
Now let’s go to the computer. Go to www.Medicare.gov. On that page you’ll see some choices. Click on “Compare Medicare Prescription Drug Plans.”
There’s a lot of print on that first screen. Just scroll down to the words “Find a Prescription Drug Plan,” and click on the orange arrow. At the next page, you’ll find two choices. If you’re already enrolled in Medicare, you can enter your Medicare claim number for a personalized search. But for starters, you can scroll down to the second choice: “B -- General Plan Search.”
Then insert your ZIP code, and answer two other simple questions. I answered “no” to a question about other current prescription drug coverage, and assumed “not eligible” for federal assistance. I figured that might make the search easier.
On the next page, I clicked on “Choose a Drug Plan Type.” The site wants to know if you want “stand-alone” plans that are separate from Medicare Part A and B, or if you’re interested in Medicare Advantage, a sort of HMO/PPO type plan that includes drug coverage at a low monthly premium, or in some cases no extra cost. I chose option C, a stand-alone plan for easier comparison.
I was shocked to find that there were 60 different plans, with about 12 insurance companies each offering several versions. The next step would narrow things down.
Click on “Enter My Medications.” There you’ll be asked to enter the name and dosage of all the drugs you take. Don’t worry if you don’t take many drugs now. You’ll be directed to a less expensive plan.Crunching the plans
Here’s where the computer really does its work: giving you the top three plans that save you the most money in out-of-pocket expenses for your specific drugs.
Then decide within those plans, perhaps choosing one because it uses a pharmacy near you or because you know and trust that company name. Print out the comparison by clicking on “Print on Demand.”
Starting tomorrow, you can click on the plan of your choice to enroll. You’ll get a confirmation number and receive an enrollment kit in the mail.
But remember, if you don’t sign up for a plan before May 15, 2006, even if you’re not taking drugs now, the penalty for late signup will be steep. And that’s The Savage Truth.
Terry Savage is a registered investment adviser.