It’s Medicare Season, Part 3 of 3

Health care costs continue to be an important retirement planning consideration. Last week, we covered Medicare Supplement Plans F & G and why we recommend Plan G during your initial open enrollment window or as an option to consider for those who are healthy and may currently have Plan F.

This week, you’ll find some tips on shopping your Part D coverage (which you should do every year during Open Enrollment) both for yourself, if applicable, or for someone you may care about or care for.

Part D updates for 2017:

• Annual deductible is increasing by $40 to $400
• Initial coverage limit is increasing to $3,700 from $3,310
• Out-of-pocket threshold is increasing to $4,950 from $4,850
• Catastrophic Coverage begins at $7,425 vs. $7,062.50
• Base plan premiums are increasing 4.5% to $35.63
• Income-related monthly adjustments for higher income beneficiaries are increasing roughly 4.5%

Open Enrollment and your Part D plan

The difference between a plan that meets your needs and one that doesn’t can potentially save thousands of dollars each year, which adds up over the course of a normal retirement today. The key to realizing any savings is simply to avoid being complacent and, instead, be a savvy shopper.

As is the case every year, traditional Medicare beneficiaries and their caregivers should shop their Part D prescription plan during the Oct 15 – Dec 7 open enrollment period and also read the Annual Notice of Change that your insurer sends to you.

If you have a Medicare Advantage Plan, then that same insurer provides your health and hospital benefits too. You can consider changing your Medicare Advantage plan if your plan’s Part D list of Medicare approved prescription drugs (“formulary”) for next year would limit your ability to continue taking your current prescriptions (just make sure that the replacement plan will also cover your current health providers).

Plans change their formularies and drug costs every year. They can also add “prior-authorization” or “pre-certification”, which means that you need the plan’s approval before covering your current medications starting in January. Check to see whether your medications are still covered and in the same tier and at what cost. Also check to see if your pharmacy is still “preferred” or if another pharmacy nearby may be a better choice.

Even without major coverage changes to your existing plan, new and different plans may be available in your area so it still pays to shop around. If you find a plan that offers generic drugs without co-pays, and those offerings apply to your medications, then could save you a lot of money. Generics comprise 88% of prescriptions written today!

Your ability to comparison shop is facilitated by Medicare via its “find a plan” tool,  https://www.medicare.gov/find-a-plan/questions/home.aspx. ,which has been updated for 2017. Entering your medications , dosages , quantities and your pharmacy will allow you to find the best plan by premium and, more importantly, in terms of total-out-of-pocket cost.

The formulary and the premium are only part of the story as Part D premiums are often the smallest part of prescription costs. Plans can change their co-pays, coinsurance and deductibles before, during and after you pass through the donut hole :

The affordable care act is gradually closing the donut hole each year. By 2020, you’ll pay a standard 25% for both brand name and generic drug as opposed to the 40%/51% listed above for 2017.

If you expect to reach the donut hole in 2017 or beyond, then:

• Talk to your doctors about using lower cost generics that are appropriate for you.
• Find out if any local pharmacies offer your drugs at a lower cost
• Buy your long-term medications via mail-order pharmacy.
• Always use a “preferred” pharmacy.
• Always use your member card to ensure you get a discounted rate and your costs count toward your deductible.

Some plans have enhanced coverage that offer partial or full coverage during the coverage gap (when you are in the donut hole).

Plans with gap coverage often charge a higher monthly premium, so you should only consider one of these plans if you have high drug costs and know that you will reach the donut hole. Be aware that the higher premiums for enhanced plans can more than negate the savings offered by the lower co-pays and deductibles advertised. So this is why it’s so important to consider costs across the entire year, including premiums, co-pays and co-insurance, before making a decision on next year’s plan.

Using Medicare’s own tool on page 2 (rather than a third party’s tool) allows you to hold Medicare and your Part D plan accountable if any information turns out to be inaccurate. You should be able to change plans during the year if that turns out to be the case and you can back it up with proof that a plan gave you incorrect information when you were selecting it.

If you are not comfortable using the computer and the internet, then the next best way to select a Plan D is simply to call Medicare at 800-633-4227. Unlike Social Security, Medicare is open 24/7 and the best time to call is late at night when volumes are low and you are likely to get better attention. In order to accomplish the same result available through the online tool, you need to have information on your medications, dosages, and pharmacy handy so that they can help you find the best plan.

If you can’t find a plan that covers all your medications, then you may be able to work with your doctor to get your existing plan (where they have changed a medication to require pre-authorization) to cover the drug anyway. Keep any correspondence from your Part D insurer that show they’ve approved the drug for this year as evidence to submit to support your case. Also, if your plan benefit has changed, then your existing insurer generally must offer you a 90-day filling of your current medications (known as “transition fill”).

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Health care costs can represent a significant portion of overall retirement spending. As health care costs, including insurance premiums, continue to rise it is increasingly important to proactively manage these costs.

$1 out of every $6 Medicare dollars is spent on prescription drug costs. Prescription medication can easily become one of our larger expenses as we get older and the complexity of they system makes it easy to become complacent. So don’t automatically re-enroll in your existing plan. Just 7% of Part D plans had preferred (in-network) pharmacies five years ago. Today, 85% of Part D plans have preferred pharmacies.

In other words, pay attention and be a savvy shopper. Be sure to focus on the lowest cost plan in terms of your “total out-of-pocket” expense (including co-pays and co-insurance and not just the premium ) and on plans that have at least a three star rating (four is even better). If you need help, then ask – a friend , neighbor, family member – or an advocate that you can access through your senior center or social services office.

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