Medicare Part D Open Enrollment

Column 14:  Medicare Part D Open Enrollment

We are just a few short weeks away from the Medicare Part D open enrollment.  There is a lot of confusion because this is around the same time as the Open Enrollment period starts for new insurance under the Affordable Care Act (ACA). Part D open enrollment is from Oct. 15th to December 7.   The ACA open enrollment period is Oct. 1 to March 31, 2014.

It's interesting to learn a bit of the history of Medicare.  President Truman tried to enact this program between 1945-48. But the final legislation was not enacted until 1965.  The process was long, complex and highly charged. Prescription drug coverage was not included until legislation in 2003. 

What is Medicare Part D?

Medicare Part D is the coverage of outpatient prescription drugs (Rx) for those eligible for and enrolled in Medicare.    The easiest way to remember this is D=Drugs.  Prior to the implementation of this expansion, Medicare recipients simply had no coverage for most outpatient prescription drugs.

Simply Part D is governed under CMS (Center for Medicare and Medicaid Services) and outsourced to the private insurers and vendors that actually provide the benefits.  There is integration between both parties which can be both valuable and an administrative challenge.

What are the benefits under the Part D Plans?

The Part D Rx plans are required to all have benefits "at least as good as" the basic plan outline provided by CMS.  In 2013 this means an annual deductible of no more than $325.  Then coverage is split roughly 75% (them) 25% (you) until your total Rx cost reach $2970.  Your out of pocket expenditure would be about $986 at that time.

Then you are in the donut hole or gap as it is known. At that point your split is 97.5% (you) and 2.5% (them) for brand name drugs and 79% (you) and 21% (them) for generic drugs.  However you are given a manufacturer discount of 50% which results in a net cost to you of about 47.5% for Brand name Rx and 79% of generics. Coverage stays at that level until your total out of pocket costs for Rx is $4750. 

Then you are in the catastrophic coverage zone and the split is 95% (them) and 5% (you). 

So how are the plans different?

Note that we said all the plans have to be "at least as good as" the basic plan.  But they can be better with such things as lower or no deductible, and enhanced coverage in the gap.  Two other issues are the formulary and the preferred pharmacy features of the plans.

The formulary is the approved list of medications covered by the plans.  All the plans have to have at least one medication covered in each of the therapeutic classes.  But that doesn't mean they will cover your particular Rx. Further, the plans can cover medications at multiple tiers.  For example, Preferred Generic, Generic, Preferred Brand Name and Specialty drugs.

 It's also important that you are aware of which are the preferred pharmacies under your plan. If your current health plan covers prescriptions with a $10 copay at Costco, that doesn't mean that will be the price under all of the Part D plans when you go to Costco.

Is the most expensive plan the best way to insure I will be covered?

In my opinion, the answer is no.  Of course we are all one doctor visit away from a new medication, but the fact that you have an open enrollment period every year allows you to endure a short fall in your plan for no more than a year.

The Medicare website is one of the most valuable tools to evaluate these plans.  You can input your current Rx list and it will provide a number of reports, the most valuable of which is a ranking of all the plans costs based on your current list of drugs.  This includes deductibles, premiums and copays based on the list and the pharmacy you choose.  This is a great selection and budgeting tool.  It also provides star or quality ranking on each plan. 

When this legislation was first enacted I spent countless hours trying to evaluate plans for my clients.  When the website was released I was cautious because I wasn't sure how accurate it would be.  To date, my clients have not reported any big discrepancies in the estimates provided from this site and their own actual claims experience.

The site can be found at https://www.medicare.gov/find-a-plan/questions/home.aspx. In addition you can obtain a report by bringing your list to the HICAPP (Health Insurance Counseling & Advocacy Program) office in Redding at 1647 Hartnell Avenue, Suite 8. (530)223-0999.  It is best to call for an appointment.

Note: All information in this column is provided" to the best of my knowledge" subject to final regulation by the respective agencies.