Making Sense of the Medicare Drug Plan

You probably have heard the horror stories about the medicare Part D prescription drug plan. Don't let them scare you. One-third of medicare recipients now have coverage, and the new plan may be the best way for you to save money on your prescription drugs. But you'll need to act soon because the May 15 deadline is approaching. Miss it, and you could get stuck with a penalty -- 1% of the average national premium for every month you delay -- and you'll have to make do without coverage until next year.

Even though critics of the plan would like to extend the deadline, don't count on it. You have all of the tools you need to make a decision and sign up for a plan right now -- and avoid the last-minute rush that could lead to more administrative hassles like those that plagued enrollees at the beginning of the year.

A way through. Bob Borden, 66, of Andover, Mass., is a veteran of the enrollment wars. He and his wife, Karin, planned their strategy carefully, which helped the sign-up process go more smoothly.

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Karin, also 66, has rheumatoid arthritis and takes drugs that would cost her more than $20,000 a year without insurance. So the first thing the Bordens did was go to the medicare Web site and type her drugs and dosages into the site's plan finder. There they discovered that Humana's standard plan -- with bare-bones coverage and the lowest premiums ($7.32 per month in Massachusetts) -- would net them the lowest out-of-pocket expenses throughout the year. After adding in her supplemental coverage under Massachusetts' state-sponsored Prescription Advantage plan, Karin expects her premiums and co-pays to total about $3,070 this year.

Bob has much lower costs. He paid about $560 for his medications last year using a medicare-approved drug-discount card. After running his numbers at Medicare.gov, he found that the Humana standard plan would save him about $100 per year.

The couple signed up with Humana online, which expedited their enrollment, and had their membership cards before their coverage took effect on January 1. "Had I waited for them to send me an information packet and then mailed back the enrollment forms, we would probably still be waiting for our cards," says Bob.

Anticipating transition problems, the Bordens ordered three-month supplies of their medications in December under their old plans, "so we were insulated until March." They were pleasantly surprised when Karin went to the pharmacy in early February and had no trouble filling a new prescription.

Should you jump in? If you have prescription-drug coverage through a former employer or another source that is considered to be better than medicare's plan (officially called "creditable coverage"), stick with it. That's because if you leave the plan, you could lose that coverage forever. And as long as you have creditable coverage, you won't be penalized if you sign up later.

If you have drug coverage through medigap plans H, I or J, medicare's Part D plan is a better deal because it's government-subsidized. You can sign up for a stand-alone Part D plan and switch to another medigap plan, or sign up for a Medicare Advantage plan, a senior HMO that covers prescription drugs and medical expenses.

To shop for a plan, do what the Bordens did: Draw up a list of your medications and their dosages and run the numbers at Medicare.gov (you can also call 800-633-4227 or get help from your local state health insurance assistance program). You can find helpful Part D information at the Web sites of the Medicare Rights Center and the Center for Medicare Advocacy.

Before you make a decision, call the insurer to verify that your medications are covered without restrictions. Deane Beebe, of the Medicare Rights Center, cautions that although some drugs may appear to be covered, you could be asked to get preauthorization from your physician.

Most of all, don't worry that you have to find the perfect plan now. If you're not satisfied, you can switch next year.