How to choose a Medicare drug plan
November 29, 2012
Drugs are inevitable — for most of us that is. Today I don't use any drugs, but I am wise enough to know that may change. And the cost of drugs (new ones as well) is arguably the highest increasing cost of health care today.
Seniors over 65 are the big users of prescription drugs. So what are your choices when it comes to drug plans? And which is best for you?
Medicare drug plans (Part D) started in earnest in June of 2006. This is also when joining one was mandatory when eligible unless you have a Medicare approved drug coverage from another source (Medicare Advantage Plan, Employer plan, Retiree plan or the VA).
If you don't have this type of coverage and don't join a drug plan when eligible, then there is a growing permanent government penalty added to your drug plan when you do join one. That penalty stays with you for life and increases each month you delay joining a drug plan. How do you stop the continued growth of the penalty? By joining a drug plan, but the accumulated penalty up to that time stays with you for life.
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You are eligible to join a drug plan when you turn 65 or are permanently disabled for two years prior to turning 65. Other times you may qualify: loosing group drug coverage, leaving a group retiree drug plan, loosing Medi-Cal drug coverage or leaving a Medicare Advantage plan (where your drug plan is included).
If you are already on a drug plan (or never joined one), you can switch during the annual enrollment period, which ends Dec. 7 with a plan change effective date of Jan. 1.
Types of drug plans
There are three main types of Medicare drug plans:
1. Plans designed to mainly prevent the government penalty
— Lowest monthly premium
— Limited drug list (formulary)
— Usually no mail order option
— For people on no drugs to one or two
— Usually have an annual deductible
— May have limited pharmacies available
2. Comprehensive plans
— Almost all generics in formulary
— No deductible
— Larger drug list
— Mail-order option
3. Plans that give added coverage during the donut hole (see previous column for explanation of the donut hole).
— Cost about twice as much as the comprehensive plans
— Donut hole copay coverage can be for all tier one and two drugs on the formulary and between 10 to 64 percent of tier three, four and five drugs on the formulary.
Which plan for you?
When deciding on a drug plan remember a few things:
1. Drugs are a large part of health care
2. Insurance is not about yesterday or even today but the unexpected tomorrow
3. Check that your drugs are on the formulary (or equivalents)
4. If thinking about choosing a plan for coverage during the donut hole (Plan No. 3 above) be sure you are going to get help with your specific drugs. In my experience it is rare for the savings in the donut hole to be greater than the added monthly premium for this coverage. Check if this is true for you, if so comprehensive plans may be a better value.
For people qualified to use the VA and get drugs at $8 each, there are a few things to remember.
1. The drug list of the VA is limited.
2. If it is not on the list you may pay full price.
3. You will need to get your drugs at the VA facility.
4. The VA does constitute as credible drug coverage, so you will not incur the penalty when you join a part D drug plan or Advantage Plan (where a drug plan is included).
Remember the phrase: penny wise and dollar foolish? This is doubly true when it comes to drug coverage. Think about tomorrow. If your life was in the balance would you decline taking a drug? Some say yes. Before I was in a car accident seven years ago, I may have said the same thing. But then, I realized that when faced with the choice of walking again or maybe dying without a drug — I choose life and I think most of us will.
Bill Anderson lives in Nevada County and is licensed, certified and authorized to present, provide and bring clarity to Medicare plan choices. Bill conducts Individual & Community Meetings throughout Nevada and Placer counties. He can be reached by email at Bill@MedicareDoneRight.com or by calling (530) 432-7988. For a list of Nevada County Medicare Community Meetings go to http://www.MedicareDoneRight.com.
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