The federal reform legislation which passed in 2010 has many controversial elements. The reform legislation, however, is what brings us a new Medicare Part D Open Enrollment schedule which is very sane and welcome. In all but the first year of the program, 2006, the annual enrollment season has been crammed into a November 15th to December 31st timeframe. That narrow window made it difficult for plans to effectively handle changes and issue new identification cards for January 1. For the first time in years, we are anticipating a much more pleasant holiday season for our clients and staff!
Why Would I Consider Changing Plans?
If you are on expensive medications that take you into the donut hole or gap in coverage (like a deductible in the middle of your benefit), you should consider changing plans. Remember, like Medicare Part A and B, Part D is a government benefit but unlike Medicare Parts A and B, Part D is administered by private, for profit companies competing fiercely with one another. The Plan can matter. There are typically forty or fifty plans to choose from in a given geographic area. You want to know that the Plan you are in is a good, reputable Plan but not over-priced.
What Other Considerations are Important?
Verifying that the drugs you take regularly are on the Plan’s formulary is the most important consideration. The formulary is that Plan’s list of approved drugs. Every year we see newspaper articles suggesting one shop based on the Plan premium. That is true if you’re not taking any medications and don’t expect to (which, of course, we cannot know in advance). Again, you don’t want to overpay but a low premium plan is not the best choice if your drugs aren’t on the formulary.
In addition to the projected cost of your drugs, the rules of the Plan should be considered.
Quantity limits are difficult to avoid. If this is a problem for you, you are generally better off trying to obtain prescription drugs via mail-order which gives you a 90 day supply rather than a month’s supply.
Prior authorization means that the Plan may ask your doctor for additional information to justify your need for the drug. This can add to the hassle factor which has become part of the general experience of dealing with health insurance coverage but it’s common to see this requirement associated with any expensive drug. Prior authorization is typically not a major concern.
Step Therapy allows your Plan to require that you take a cheaper medication before covering the prescribed medication. This is a personal decision but in our experience most people truly resent having to try a cheaper drug than the one their doctor prescribed. If you’re in that camp, try to avoid a Plan that can require step therapy for a drug you’re taking.
What If I don’t Need Part D?
Everyone should have good prescription drug coverage. However, if you are on Medicare A or B and have active group coverage through a job or a spouse’s job or retiree medical with good drug coverage, then you don’t need Part D. But,
– should you or a spouse retire and need Part D, or
– should you decide you’d be better off with Part D than your retiree coverage, or
– should your former employer eliminate retiree coverage,
then you will need to prove to your Part D Plan that you had continuous group coverage going back to May 15, 2006 (the last day of the initial enrollment for Part D) in order to avoid premium penalties.
Premium penalties associated with Part D (and Part B) are designed to punish those who decide to go without coverage and then enroll in these programs. You shouldn’t have a penalty if you maintained continuous coverage but with more people working after they turn 65, it’s getting more onerous to prove creditable coverage back for years.
Whenever health insurance coverage ends, the insurer is obligated to send you a letter validating the effective dates of coverage. This is called a “letter of creditable coverage.” It is a very good idea to save that letter with your other important personal files.
What Else Should I Know?
Part D premiums became income-indexed in 2011. Single people reporting $85,000 in income or more or a couple reporting $170,000 or more pay income-indexed premiums for Part D and Part B. The income adjusted amount for 2012 will typically be based on the tax returns you filed in 2011 so your 2010 tax returns. You will receive a letter late in the year from Social Security if you have to pay more. Social Security refers to this amount as the IRMAA or Income Related Monthly Adjustment Amount. Review that letter carefully.
If your income has gone down associated with any of the following (taken directly from Social Security on-line), you can apply to Social Security to reduce your Part D and Part B premiums.
“You married, divorced, or became widowed;
You or your spouse stopped working or reduced your work hours;
You or your spouse lost income-producing property due to a disaster or other event beyond your control;
You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer’s pension plan; or
You or your spouse received a settlement from an employer or former employer because of the employer’s closure, bankruptcy, or reorganization.”
Apparently President Obama’s jobs bill proposes additional income-indexed premiums to both Parts B and D beginning in 2017. More to follow on this issue.
Also beginning in 2011, a 50% discount off brand name drugs is provided to those in the donut hole. Lipitor is slated to come off patent soon which will also affect many individuals.
Part D Plans are tied to your official state of residence. Your address on file with Social Security, the IRS and your Part D Plan should match. If you move, you need to change your Part D Plan.
How Do I Analyze My Part D Choices?
If you are a Healthcare Navigation subscription client, we do it for you. Otherwise, you go towww.medicare.gov, select “Compare Drug and Health Plans.” You will be given a choice of entering a zip code or your personal information. If you already have a Part D Plan, it’s best to enter the personal information because the search tool will compare your choices against your current Plan. Proceed through the screens and ultimately you will see all the Plans available in your zip code arrayed from least cost to highest cost.
The tools available today are pretty good but we commonly find disturbing discrepancies between results on the medicare.gov website and the Plan’s specific web site. If you’re taking expensive drugs, you should re-run your medicare.gov results on the Plan’s web site. If the Plan doesn’t have a sophisticated internet tool, don’t pick that Plan.
Medicare is more complex than it used to be and you want to choose a Part D Plan that will serve you well during the coming year. However, we can’t know what we’ll be prescribed in 2012 so in addition to your specific drugs being on the formulary, you want to select a reputable, recognized company with a track record. If you make a bad choice, that can be an unfortunate, expensive decision but remember, you’re locked in for just one year. The whole process starts over again next October.