Most people are surprised to learn when they reach age 65 and sign up for Medicare that the standard government health plan does not cover prescription drugs. To get prescription coverage, you need to sign up with a private insurance company for Medicare Part D. That supplements Part A (which covers hospital stays, skilled nursing facilities and hospice care) and Part B (which covers doctor visits and other outpatient care).
A survey by Walgreens found that 37% of Medicare beneficiaries have daily concerns about prescription costs, and 20% have had to make sacrifices to cover those costs. One way to save on prescription drugs is to choose the right Medicare Part D plan. But it’s not easy.
First decide which kind of Medicare plan you want: traditional Medicare, which operates like a fee-for-service plan with deductibles and co-pays, or a Medicare Advantage Plan, which is an HMO or PPO and requires you to stay within the network for your care. Most, but not all, Medicare Advantage Plans include prescription coverage.
If you choose traditional Medicare or a plan with no drug coverage, get ready to hit the computer (or ask a friend or a relative to do it for you). The right Medicare Part D plan for you depends upon the drugs you take and the pharmacy you choose. Plus, the best plan for you may not be the best plan for your spouse, because each plan covers different drugs. Plans can change from year to year as well. That means you need to evaluate all the available plans (around 30 for each state) every year.
Here are answers to some of the most commonly asked questions about Medicare Part D:
When can I enroll or change plans?
You can sign up for Medicare Part D when you sign up for Medicare, starting three months before you turn 65, during the month you turn 65 and the three months after your birthday. After that, the open enrollment period or the time to change plans is Oct. 15 through Dec. 7 every year, with the new plans going into effect Jan. 1. If you don’t sign up when you are first eligible, you may have to pay a penalty, in the form of higher premiums.
How do I find out which plans are available in my area and what they cover?
Start your search at the federal government’s Medicare Plan Finder. Do a general search based on your ZIP code or a personalized search, based on your Medicare use so far. Once you enter your ZIP code, you are asked to choose pharmacies and you are then presented with information on available plans. To fully compare the Medicare Part D plans, see how each plan prices your drugs.
What do Medicare Part D plans cost? Do they cover the full cost of my drugs?
The monthly premium varies by the plan you choose. We entered a ZIP code in Missouri into the Medicare Part D Plan Finder and found premiums ranging from $15 to $110 a month, with deductibles ranging from $0 to $325 (the maximum allowed). The co-pays for three common drugs ranged from $0 for some generics to $45 for Nexium.
Do my drugs cost the same no matter where I buy them?
No. This is where you really need to drill down. The Medicare Plan Finder shows you what you will pay at various pharmacies under the same drug plan. Choosing a preferred network pharmacy is a way to save on drug costs. My father, for example, discovered his generic drugs were free at Walgreens. At his previous pharmacy, he had a co-pay.
What if I don’t feel comfortable using a computer to do all my research or want some personalized advice?
Call the State Health Insurance Assistance Program (SHIP) for your state and talk to advisers in person or on the phone. You can find the number at the Medicare website or at this site. You can also call Medicare (1-800-633-4227) and ask where to get assistance. Another option: Ask your pharmacist if the company has a preferred plan that would save you money on your prescriptions.
What about the “doughnut hole”?
The doughnut hole means once your drug expenses hit a certain amount ($2,970 in 2013), your coverage stops. You get a discount of 52.5% on brand-name drugs and a 14% discount on generics, until your drug expenses reach $4,750. After that, you qualify for catastrophic coverage, which means you pay only 5% of your drug costs for the rest of the year. AARP has an interactive calculator you can use to explore ways to avoid the doughnut hole. The doughnut hole is still with us and will be until 2020, though the out-of-pocket costs consumers will have to pay while in the doughnut hole will shrink every year.
What if I’m on Medicaid or need help paying for my drugs?
If you are on Medicaid, you should choose a Medicare Part D plan or the government will choose one for you. Lower-income people also are eligible for Medicare’s Extra Help program as well as some state programs. Drug companies sometimes help with drug costs, too.
This all sounds realty complicated? Where can I get more information?
It is really complicated, and we’ve just given you a brief overview. Here are four places to learn more:
- Your Guide to Medicare Prescription Drug Coverage, an 82-page official publication from Medicare.
- Medicare.gov, the Medicare website, has a Medicare Part D section.
- Choosing a Medicare Part D Plan, from AARP.
- Managing Medicare, by Consumer Reports.