Savings Are in the Details
By: Patricia Barry; Source: AARP Bulletin Date Posted: 2005-12-16 15:44:00-05:00
By Patricia Barry
December 2005
Millions of Medicare beneficiaries, and the relatives helping them, now face a daunting task—how to pick one private prescription drug plan from a huge range of choices in order to get Medicare drug coverage next year.
Yet there is good reason why people should carefully compare all the plans available to them. It's because the best savings, like the devil, are in the details. Only by looking at what you would actually pay out of pocket for your drugs for the whole year under each plan can you find the least expensive one that meets your needs.
The most effective way to make that comparison is through the Drug Plan Finder tool on the official Medicare website at www.medicare.gov. (Click on Compare Medicare Prescription Drug Plans on the website's home page and follow the instructions.)
If you don't have Internet access, you can get the same details by calling Medicare's hotline at (800) 633-4227. Or contact AARP at (888) 687-2277 for community sources of help.
You can also get help navigating Medicare's website from consumer groups, senior centers and local agencies on aging.
So how good is this plan finder? Certainly, it's sophisticated and ambitious. The goal is to allow people on Medicare to plug in their ZIP code, their coverage preferences and the names of the drugs they take and then see a personalized display that shows exactly how much they would pay for their own drugs during 2006 under any plan serving their area.
But Medicare officials may be overly-optimistic in saying that people should be able to get through the process "in a few minutes." Even experts are taking much longer than that on the website plan finder, because there is a lot of information to handle.
The number of plans available in any one area varies from 27 to more than 100—and there are big differences in the drugs they cover and the premiums, deductibles and copayments they charge.
How do you narrow down the range of choices to a manageable few? And how do you find the most affordable plan? Here are some basic pointers, based on an AARP Bulletin analysis of Medicare's plan finder:
Make a list of the prescription drugs you take now and their dosages. This is essential to find out exactly how much you will pay under each plan—regardless of whether you use Medicare's website or call its hotline.
Decide how you want to get your medical care. If you prefer traditional, fee-for-service Medicare for your medical services, you need to choose a "stand-alone" plan that offers only drug coverage. (These are simply called Medicare Prescription Drug Plans on the plan finder.) Or you can choose a Medicare Advantage plan that provides both medical care and drug coverage, most often in a managed care (HMO or PPO) package.
The plan finder allows you to compare your potential costs among plans of each type. Choosing one type or the other narrows your choices at once.
Find out which plans cover your drugs and how much you will pay for them. This is the most critical step you can take to figure out your actual costs under each plan—because often it is the copays, not the premiums or deductibles, that will determine your overall out-of-pocket spending.
When you've entered the names and dosages of your medications, you'll see a comparison chart listing each plan in your area and the total amount you would spend out of pocket in 2006 under it—including premiums, deductible and your share of the cost of the drugs. The least expensive option is listed first.
If you take multiple drugs, you may find that the least costly plan has a higher than average premium. That may be because its copays are lower than other plans or because it provides payment for drugs in the coverage gap, also known as the doughnut hole. (Under plans that do not fill in the gap, after you and the plan have paid for drugs costing $2,250 in a year, you would have to pay the entire cost of the next $2,850 worth of drugs until catastrophic coverage kicks in.)
A plan that does not cover all your drugs on its formulary is likely to be much more expensive, since you would have to pay full retail price for the uncovered drugs. The plan finder reflects those extra costs.
Click on the "Select Below" button and then on "View Cost Details" to find out which of your drugs are on the plan formulary and the copays charged for them. Drugs not on the formulary are marked with double asterisks.
Find out if you can reduce your copays. Click on the "Select Below" button for each plan and then on "Lower My Cost Share" to find out if there are any less expensive versions of your drugs (such as generics) and how much you'd save if you used those instead. You can also see mail-order prices for 90-day supplies.
Limit your search by the maximum you're willing to pay for monthly premiums and/or annual deductible. This step may be useful if you currently use no drugs but still want coverage at the lowest cost. It will cut the list of available plans dramatically. But if you use one or more drugs, it would be wise to search by medications as explained above, since very low premiums do not always translate into the lowest overall cost.
Look at the "preferred" pharmacies in each plan's network. The cost-compare chart shows the number of each plan's preferred pharmacies in your ZIP code. Click on the number to see which are available within a certain distance. You can extend the distance for more names. Going to a pharmacy outside the network costs more.
Limit your search by service area. If you spend some of the year in another part of the country, you'll need a plan that allows you to buy your drugs away from home. There are 10 plans that operate nationwide and others that, though based regionally, offer a national service. This information will appear if you click on a plan's name and then on "View Important Notes."
These are basic tips. A great deal more information is provided on the plan finder and varies according to the personal details you plug in—for example, if you already have drug coverage from a former employer or qualify for the Extra Help available to people with limited incomes.
Nobody yet knows how reliable the plan finder will prove. As a precaution, before signing up for a particular plan, you can contact it by phone or go to its website to check important details about coverage and costs.
Taking the time to make careful comparisons is key. There's no rush. Enrollment began Nov. 15, but you have until Dec. 31 to sign up if you want coverage to begin Jan. 1, or until May 15, the final deadline for current Medicare enrollees to get coverage in 2006.
If you've already signed up for a plan and find another you prefer, you can switch before May 15. Enrolling in a second plan will automatically cancel your enrollment in the first.
Additional Related Links
A Better Bargain (November 2005)
Medicare Special Report: The Basics (November 2005)
The New Medicare Prescription Drug Plan (AARP Prime Time Radio)
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