What You Need to Know About Medicare Plans in 2012

Save money by taking the time to comparison shop

by: Patricia Barry, from: AARP Bulletin, October 14, 2011

Why compare plans?

Although most people tend to focus on premiums, these are usually less important in determining how much you pay out of pocket over the year than the copays for your specific drugs. In fact, the main reason for comparing Part D drug plans is because the copays vary so widely, even for the same drug. An AARP Bulletin analysis of 2012 plans in three states revealed examples of how big those variations will be for three common brand-name drugs:

Lipitor: In Florida, copays for the cholesterol-lowering drug Lipitor 20 mg range from $0 to $90 for a 30-day supply. Of the 33 plans offered, nine plans charge copays of $8 or less for this drug, whereas most have copays in the $30-$45 range, and 12 plans do not cover it at all.

Plavix: In California, copays for Plavix 75 mg, used to prevent heart attacks, range from $35 to $90.42 for a 30-day supply. Of the 33 plans offered, most charged copays between $40 and $50, and eight plans charged $70 or more.

Zyprexa: In New York, copays for the antipsychotic drug Zyprexa 5 mg range from $34 to $163.98 for a 30-day supply. Of the 29 plans offered, 10 plans charge copays of under $90 for this drug, 19 plans charge $90 or more, and 7 plans charge more than $115.

These huge disparities in copays for the same drug are very common because each plan decides its own copay structure and makes its own trade-offs. So plans that charge high for some drugs charge low for others. Some plans charge fixed dollar amounts for copays, and these cannot vary throughout the year. Others charge a percentage of the drug's cost — 25, 33 or even as high as 53 percent in a few cases — which can vary if the full price fluctuates. Paying a percentage rather than a flat copay for expensive drugs explains some of the highest prices shown in the examples above.

Next: Is a Medicare "gold star" plan an option for you? >>

Medicare Advantage Plans in 2012

Medicare Advantage plans provide an alternative way for people to receive Medicare benefits, typically through managed care delivered by private HMOs and PPOs. They currently have about 12 million enrollees.

Despite dire predictions that the new health care law — which begins cutting government subsidies to these plans next year — would destroy the Medicare Advantage program or increase premiums, neither has happened, at least not yet.

Almost all beneficiaries will have access to a Medicare Advantage plan in 2012, except in 28 counties in Colorado, two in Utah and one in Idaho — two more than last year — and in many places there are dozens of choices. Premiums are down an average 4 percent across the country, benefits remain "robust" and enrollment in the plans is projected to rise by 10 percent, Medicare officials say.

For example, in the highly competitive Medicare Advantage market in Miami, beneficiaries will have a choice of 47 plans that include prescription drug coverage (two more than this year), and 34 of them will charge no premiums, compared with 25 this year. Across the state, premiums fell by 26 percent on average, according to Sen. Bill Nelson (D-Fla.). "This should be welcome news for the seniors who were scared into thinking they were going to lose benefits or see higher premiums," he said.