When it comes to Medicare open-enrollment season, you could be thinking, "Been there, done that." But as tempted as you may be to stick with your existing Part D prescription-drug policy or private Medicare Advantage plan, it's never a good idea to go on cruise control.
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Sure, it's a headache to plow through the fine print, but you could save money in the end—and improve your coverage. With a careful review, you may discover that your current plan is boosting co-payments, dropping one of your drugs or limiting certain services. It's particularly important to check all options if you have developed health issues or have been prescribed new medications since last year. You can choose a plan for 2014 from October 15 to December 7.
A warning: You do not have to make any changes because of the new health care law. Ignore scam artists who may try to persuade you that the Affordable Care Act requires Medicare beneficiaries to buy a new health care policy or get a new Medicare card. It doesn't. For the most part, the new law is directed toward people under age 65 who will buy individual coverage in 2014. "They are taking advantage of people's fears and anxieties and lack of information," says Elaine Wong Eakin, executive director for California Health Advocates.
At the start of the New Year, you will have something to celebrate: Under the health care law, Uncle Sam is continuing to shrink the Part D "doughnut hole," which is the period in which you pay out of pocket for your drugs. In 2014, you'll get a 52.5% discount on brand-name drugs that you purchase while you're in the coverage gap. The federal subsidy for generic drugs in the doughnut hole rises to 28% in 2014, from 21% in 2013.
Look for changes to your current Part D or Advantage plan on your "annual notice of change," which you should have received in late September. Details on 2014 plans will go online by October 15. Then go to Medicare.gov's Plan Finder online tool (www.medicare.gov/find-a-plan). It can take a bit of patience—or perhaps require help from a computer-savvy friend—but you will be able to compare prices, co-payments, deductibles and drug tiers for all Part D and Advantage plans. You can also get help over the phone or in person from your State Health Insurance Assistance Program (www.shiptalk.org; 800-633-4227).
Another tool: eHealthMedicare.com. You can compare Part D plans, Advantage plans and Medigap supplemental insurance policies at the site and enroll.
Selecting a Part D plan. Average premiums for Part D plans will rise slightly in 2014—by just one dollar, to $31 a month, according to the Centers for Medicare & Medicaid Services. But your out-of-pocket costs can still vary from plan to plan. The policy with the lowest premiums might end up costing you more if it charges higher co-payments for your drugs. And make sure all of your drugs are on the plan's formulary.
It's particularly important to watch out for two big trends. One is the change in the way plans are using tiers to boost drug prices. The other is the rise in plans' use of preferred pharmacies.
Insurance companies typically use four or five tiers of prescription-drug prices. The lowest co-payments—some $5 or less—are offered for preferred generics, while there is higher cost-sharing for nonpreferred generics. Preferred and nonpreferred brand-name drugs have even higher out-of-pocket costs. Topping the cost list are specialty drugs. Part D plans differ on how they define preferred and nonpreferred drugs.
Co-payments are continuing to increase, and many insurers are switching to co-insurance, in which your share of the costs is based on a percentage of the total price of the medications (such as 25% of the cost of specialty drugs). If your insurer is imposing co-insurance on your brand-name drugs, ask your doctor if you can switch to lower-cost drugs before you choose your plan for 2014. The plan with the best deals on brand-name drugs may be different from the one with the best deals for generics. And keep in mind that several big-name drugs are scheduled to go generic in 2014, including Nexium, Lunesta and Celebrex.
Even if co-payments increase only slightly, your costs could rise significantly if your insurer switches your medications from one tier to another. Before covering certain drugs, many insurers are adding preauthorization, which requires your doctor to prove certain clinical criteria. Another hurdle is step therapy, in which the plan will not cover a drug unless you try another, cheaper drug first or your doctor shows why you can't take that other drug.
Beneficiaries also should take a close look at various plans' preferred pharmacy networks. "They have to shop at certain pharmacies to get the lowest prices," says Ross Blair, senior vice-president of eHealth Medicare, a division of eHealth Inc. "It can be complicated. They may think the co-pay is $15, but it could actually be $35 unless they shop at a particular pharmacy."
The 2013 Humana Walmart-Preferred Rx Plan, for example, charges a monthly premium of $18.50 and co-payments of as low as $1 for preferred generic drugs and up to $5 for other generics at Walmart and Sam’s Club. It doesn’t charge a co-payment for either tier of generic drugs at RightSourceRx mail-order pharmacy.
But prices can be much higher if you buy drugs elsewhere. The co-payment is $6 to $10 for preferred generics at nonpreferred network pharmacies. You have to pay 20% co-insurance for preferred brand-name drugs at Walmart and Sam's Club but 25% co-insurance for the same drugs at nonpreferred pharmacies.
With Medicare's Plan Finder, you enter your zip code, drugs and dosages. The Plan Finder estimates your monthly drug costs for each plan and when you're likely to reach the doughnut hole.
The doughnut hole is not as big a problem as it used to be. Many big-name drugs have gone generic over the past few years. An analysis by eHealth Medicare found that 91% of people who used the site in 2012 would not reach the coverage gap in 2013 if they continued to use the same drugs.
Finding an Advantage plan. For one-stop shopping, you can get a private Advantage plan to cover all your drugs and medical expenses under one private plan. You won't have to buy a separate Part D or Medigap policy. You can switch from traditional Medicare to Advantage—or from one Advantage plan to another—during open-enrollment season.
Enrollees in Advantage pay Part B premiums. And they could pay additional premiums to the Advantage plan—still usually a good deal compared with premiums for Part D and Medigap plans.