Ask Kim
Shop Around for Medicare Prescription-Drug Plans
I bought a Medicare Part D prescription-drug policy last year and have been pretty happy with the results. Do I need to pick a plan again this year, or will I automatically be re-enrolled in my current plan?
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
October 19, 2006
I bought a Medicare Part D prescription-drug policy last year and have been pretty happy with the results. Do I need to pick a plan again this year, or will I automatically be re-enrolled in my current plan?
Open enrollment for Medicare prescription-drug coverage runs from November 15 to December 31, and it's basically the only time to switch plans before you're locked in for 2007. If you're happy with your current plan, you don't need to do anything. But it's a good idea to shop around again because some of the costs and coverages have changed. And it's particularly important to check out your options if you've been prescribed new drugs or aren't happy with your current plan.
At first glance, the choices don't seem to be a lot different from last year. Most companies that offered prescription-drug coverage last year remained in the business, and the average monthly premiums continue to be around $24 per year.
Similar to this year, the standard Part D plan in 2007 will cover most prescription-drug bills up to $2,400 (including the deductible, if any, your co-payments and the insurer's share of the cost). Then you are generally on your own until your out-of-pocket payouts total $3,850 -- the so-called doughnut hole. After that, the plan covers 95% of your prescription drug bills.
Some plans with costs on the high end -- and on the low end -- have adjusted their prices for 2007. The average cost of Cigna's least-expensive plan, its Value plan -- which doesn't provide coverage in the doughnut hole -- is 30% lower in 2007 than it was in 2006, and the co-payments for generic drugs dropped from $4 to $0. Co-payments for preferred brand drugs remain at $20, and the cost of non-preferred drugs rose from $40 to $60. The average premiums for Aetna's lowest-cost plan are 15% lower than they were in 2006, and premiums for its most comprehensive plan shrunk by 18%.
Meanwhile Humana, whose plans were unusually inexpensive in 2006, boosted its premiums in 2007 -- with an average increase of $5.29 per month for its Standard plan, $6.11 per month for its Enhanced plan, and $21.01 per month for its Complete plan.
Some of coverage is changing, too. Humana's Complete plan, for example, provided coverage for preferred and non-preferred drugs in the doughnut hole in 2006. In 2007, the policy only covers generic drugs in the coverage gap.
UnitedHealth Group offered only one policy under the AARP brand name in 2006, a popular plan that covered the deductible (which will be $265 for 2007) but not the doughnut hole. The prices remain similar to last year: from $24 to $32 per month, depending on the state. This year UnitedHealth Group is adding a low-cost Saver policy, which provides no coverage for the deductible or doughnut hole, but costs only $10 to $26 per month (depending on your state) and could be a good option for someone with few drug costs. And it's also adding an Enhanced plan, which costs $39 to $51 per month, has no deductible, provides coverage for generic drugs within the doughnut hole and covers several bonus drugs that typically aren't covered by Part D.
Because some of these changes are subtle, you can't just compare the policies by price. Instead, you need to check out your potential out-of-pocket costs -- for premiums as well as deductibles and co-payments -- for the drugs you're likely to take. Fortunately, the government continues to offer its Medicare Prescription Drug Plan Finder tool, which lets you type in your drugs and compare the total costs for the policies available in your area.
The 2007 version of the tool just went up on the Medicare.gov Web site last week, and it's a good idea to start using it as soon as possible so you'll be prepared when open enrollment starts on November 15. Even though you actually have until December 31 to make any changes, the government is recommending that you switch plans by December 8 to avoid the administrative nightmares that plagued the system last January.
