Choosing a Plan

By: Source: AARP Bulletin Date Posted: 2005-11-16 10:22:00-05:00

If you decide to get Medicare drug coverage, you must sign up for one of the drug plans approved by Medicare. You will have many to choose from, depending on where you live. In most cases, the plan you choose for 2006 will be the one you’ll have to stay in for the entire year.

For Residents of Puerto Rico and the U.S. Virgin Islands

How will I know what different plans offer?
You will receive many promotions for Medicare drug plans in your area. But to make a real choice, you need to compare them carefully point by point. You can do this online at Medicare's website. Or you can call Medicare at (800) 633-4227 and ask them to compare the plans for you.

How do I compare "stand-alone" plans with Medicare Advantage (MA) plans?
The critical question is what kind of medical services you want. Joining an MA plan means going to the doctors and hospitals in its regional network (or paying more to go out of network). Traditional fee-for-service Medicare allows you to see any health providers that accept Medicare patients, anywhere in the country.

Most MA plans offer medical and drug coverage as a managed-care package. Traditional Medicare doesn't include drugs, so you'd also need to join a stand-alone plan (which covers only drugs) to add drug coverage. You can choose both an MA plan and a stand-alone drug plan only if the MA plan does not offer drugs.

So deciding first how you prefer to have your medical care delivered will considerably narrow your choices. These are other points to consider:

Traditional Medicare does not cover outpatient prescription drugs, so you would need to join a stand-alone plan (for drugs only) to add coverage. You cannot join an MA plan as well as stay in traditional Medicare.
Most MA plans offer medical and drug coverage as a managed-care package, so it ' s important to compare them in their entirety.
You can choose both an MA plan and a stand-alone plan only if the MA plan does not cover drugs
If you are already in an MA plan that covers drugs, be aware that enrolling in a stand-alone plan would automatically return your medical coverage to traditional Medicare.
Beyond May 15, 2006, if you stay in an MA plan that does not cover drugs, you will pay a penalty if you later join a drug plan.

What if I can't find a plan that covers all my drugs?
Find a plan that covers most of your drugs, especially expensive ones. Then talk to your doctor to see if any of the others can be switched to similar drugs that are covered by the plan. Also, your specific medical condition may qualify you for an exception that pays for a drug not on the plan's formulary. Once you've joined a plan, you can appeal for an exception with your doctor's support.

Should I consider a plan with extra coverage?
It may save a lot out of pocket if your drug costs are high enough to take you into the coverage gap but not high enough to get out of it. Some plans will cover some or all of those costs, often for a higher premium. The extra coverage may be for both generic and brand-name drugs, or for generics only.

But if your costs are very high, be aware that any extra coverage from a plan will not count toward your $3,600 out-of-pocket spending limit in the gap—and so will delay the beginning of more generous catastrophic coverage.

Related question: What counts towards my $3,600 limit?

What if I use few or no drugs right now?
A plan with the lowest premium available in your area would keep your costs to a minimum while providing coverage you might need later on. A plan with a zero annual deductible would cover even very low drug costs immediately.

What if I live in different states during a year?
A national plan would cover you throughout the United States. (This would mean choosing a stand-alone plan plus traditional Medicare. There are no national MA plans.) If a regional plan offers mail order services, your drugs could be sent to a temporary address in another state—but make sure the plan allows that option.

Should a married couple choose the same plan?
Not necessarily. Each spouse should consider plans separately, according to the drugs she or he takes.

Who can help me make these decisions?
Here's a tip: Take your time. You don't have to decide by the first day of enrollment, Nov. 15. You still have six weeks (till Dec. 31) if you want drug coverage to start Jan. 1—or six months till the final deadline (May 15) to sign up for 2006.

Meanwhile, start by making a list of the drugs you're taking now, to help compare plans. (Click here for a worksheet that may help make the comparison.) Discuss plan choices with family and friends. Check newspapers, bulletin boards and local television announcements for local help sessions. Review our list of extra sources of help.

Extra Help Paying for Prescription Drugs

"Extra Help" is a special part of Medicare drug coverage that gives a lot more assistance to people with limited incomes. If you qualify, you'll receive full coverage throughout the year and pay very little for your drugs:

If you now receive Medicaid or SSI or if your state pays your Medicare premiums, you'll pay no premium or deductible for Medicare drug coverage. Your copays for each prescription will be $1 or $2 for generics, $3 or $5 for brand-name drugs and nothing for catastrophic coverage. Many people in nursing homes will pay nothing for drugs.

If your 2005 income is no higher than $13,230 (or $17,820 for a married couple living together), and your assets are no more than $7,500 ($12,000 for a couple), you'll pay no premium or deductible. Your copays will be $2 for generics, $5 for brand-name drugs and nothing for catastrophic coverage.

If your 2005 income is no higher than $14,700 ($19,800 for a couple), and your assets are no more than $11,500 ($23,000 for a couple), you'll pay a monthly premium of $0 to $35 depending on income, an annual deductible of $50, 15 percent of the cost of each prescription and $2 or $5 for each prescription at the catastrophic level of coverage.

What counts as income?
It includes money you receive from Social Security, wages, dividends, rental property, workers' compensation and education grants. It does not include funds acquired through a reverse mortgage.

What counts as assets?
They include bank accounts and the value of investments, life insurance policies and extra real estate. They do not include your home, vehicles, personal possessions, burial plots or $1,500 in savings intended for funeral expenses.

What if I'm married but we live apart?
You'd count as single for the income and asset tests. You may also count as single if your spouse's stay in a nursing home is likely to be permanent. Check with the Social Security Administration to be sure.

What if my income is a little too high?
It's still worth applying. The income limit is higher if you live in Alaska or Hawaii, have dependent relatives living with you or have certain earnings that don't count.

What if my assets are a little too high?
Social Security Administration rules do not prevent you from spending down or giving away some of your savings to reduce assets below the limit. Only what you have when you apply counts as assets. But be aware that spending down might affect your eligibility for other programs (such as Medicaid and SSI) should you need them within a few years.

How do I know if I qualify?
If you receive Medicaid or SSI or your state pays your Medicare premiums, you qualify automatically, and Medicare should have notified you of this. Otherwise, you can apply to the Social Security Administration at (800) 772-1213 or online or in person at your local SSA office. SSA will notify you whether or not you qualify. You have the right to appeal that decision.

Can anyone else apply for me?
Yes. Anyone—including a family member, friend, caregiver, legal representative, social worker or SHIP counselor—can complete a printed or online application and even sign on your behalf. There is less red tape in Extra Help than in most assistance programs.

What if I don't qualify?
You may be able to get similar or better help from a state pharmacy assistance program. Most have higher income limits than Extra Help and usually don't count assets. Your state health insurance counseling program (SHIP) can tell you more. Otherwise, you can sign up for regular Medicare drug coverage.

How will I get my drugs?
By enrolling in a Medicare drug plan. If you qualify for Extra Help automatically but don't enroll in a plan, Medicare will enroll you in one. But you have the right to switch to a plan of your own choosing. If you got drugs through Medicaid in 2005, you will get them through Medicare from Jan. 1.

Choosing a Plan

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