Updated: May 3, 2013 12:14PM
Attention seniors -- and those who love them. Medicare Part D -- the prescription drug program -- is back again. From Nov. 15 through Dec. 31, there is a new "open enrollment" period for 2008 Part D coverage.
So, here's a reminder of how Medicare Part D works, along with a quick lesson in how to use the Medicare.gov "PlanFinder" tool to choose the plan that's best for you.
Medicare Part D is the federal government program started in 2006 to make sure that all seniors can get access to prescription drugs through a national insurance program, provided by private insurers. Since it is an insurance program, every senior must sign up, even if he is not currently taking prescription drugs, unless he is covered by a "creditable" plan such as a workplace health insurance program or corporate retiree plan.
Many seniors take no prescription drugs. Still, they need to sign up for the least expensive monthly plan, or face steep penalties when they do sign up in the future as they start taking necessary medications.
Last year, Washington created the standards for what must be covered in Part D, but it allowed private insurance companies to compete on the structure of their plans as well as the prices and co-payments they would charge. The result was a complicated challenge of comparing many variables, including the inexplicable "doughnut hole" that eliminates coverage after a certain level, then reinstates it after the "catastrophic" level of costs is reached.
To make choices even more confusing, Washington also subsidizes Medicare "HMOs" to include prescription drugs in their coverage. So, seniors could choose a "stand-alone" Part D plan along with traditional Medicare Part A and B. Or they could choose an HMO - simpler and typically less expensive, but perhaps limited in the choice of physicians and services they might need in the future. But Medicare did one good thing that kept these choices from being incomprehensible. It created the online "Plan Finder" tool at the www.Medicare.gov Web site. It is the only reasonably sane way to figure out what a plan will cost a participant for his specific drugs and dosages.
Since all competing private plans offered by insurers must register their monthly premiums, individual drug costs, co-payments and approaches to dealing with that coverage gap, the Plan Finder tool miraculously allows users to instantly compare and choose the best coverage. To make best use of this tool, you'll need to get your Medicare card. Then line up all your prescription bottles and dosages.
STEP 1. Go to www.Medicare.gov, and then click on the top line that reads "Medicare Drug Plans 2008 Plan Data." On the next page, click on "Begin Personalized Search."
STEP 2. On the next page you'll have the task of entering your prescriptions, one by one. Since there are many versions of some drugs, be sure you enter the name exactly. Or search the drug list alphabetically. The plan finder will suggest a lower-cost generic drug if available.
Then be sure you have entered the correct dosage amount, and the number of pills per day. Continue until you have entered all your drugs. (You can save your list of prescriptions at the site, to make it easier next time.)
STEP 3. On the next page, you can choose pharmacies in your ZIP code to make sure the plan you ultimately choose based on price is also convenient. Click once more, and you'll be amazed to see a list of all of the plans available in your area starting with the one that has the lowest total estimated annual cost based on your prescriptions.
If you're not taking any prescriptions now, then just choose the plan with the lowest monthly premium. But if you are planning to take medications all year long, you might care less about the monthly premium or annual deductible than about your total cost for the year.
The tool allows you to compare up to three plans, so you can see the differences. Then click on the name of the plan you choose to learn more details, including how to enroll.
It always amazes me that we ask seniors to do the most sophisticated calculations about their financial decisions. But with a little help, seniors have proved they can do it. And that's The Savage Truth.
Terry Savage is a registered investment adviser. Distributed by Creators Syndicate.