It's that time of year when people enrolled in Medicare Part D prescription drug plans need to take a hard look at what they'll be charged for their drugs next year and, if they wish, switch to a more affordable plan. Open enrollment began Nov. 15 and ends Dec. 31. Every year, Medicare officials and consumer groups such as AARP urge Part D enrollees to review coming changes in out-of-pocket expenses under their current plans and compare them with others. And every year, most people don’t bother. But this year may be different. With the economic downturn, more people are likely to want to scout out better deals.
Fewer "stand-alone" Part D plans, the type that cover only drugs, will be available next year. But there's still a bewildering number of choices—ranging from 41 plans in Alaska and Hawaii to 55 in Pennsylvania and West Virginia.
It takes effort to compare the costs and benefits of the different plans— but the effort often yields big payoffs. Plans, for example, vary enormously in what they charge for the same drug. A person in Florida taking Lexapro for depression could be charged $76.66 a month more for it under one plan than another—a difference of nearly $920 over the year.
All Part D enrollees should have received their plan's "Annual Notice of Change" describing changes in premiums, deductibles, copayments and coverage for 2010. When reviewing it, consider these four key questions, based on research into national cost trends among stand-alone drug plans in 2010 and an AARP Bulletin analysis of those in Florida.
1. Will the plan still cover the drugs you take? Plans are allowed to drop or add drugs every year, so this is worth checking. For example, using a test list of common brand-name drugs that have no generic equivalents, the Bulletin analysis determined how many plans in Florida that covered these drugs in 2009 will no longer do so in 2010: Prevacid (16 plans), Actonel (8), Lipitor (6), Advair Diskus (2).
2. Will your plan's premium still be affordable? For many Part D enrollees, hikes in premiums are a special concern because Social Security payments will be frozen in 2010, with no cost-of-living increase.
Among the top 10 stand-alone Part D plans—which together cover more than 14.6 million enrollees—all but one will raise average premiums in 2010, with increases ranging from 6 to 47 percent, according to Avalere Health, a research group.
Among all plans, average monthly premiums will rise 11 percent to $38.85, the Kaiser Family Foundation research group reports. Kaiser says that about 1.2 million enrollees will face premium increases of at least $10 a month next year if they stay in the same plan.
Across the country, premiums in 2010 range from $8.80 to $120.20 a month. Only one plan—available in Oregon and Washington—has a premium of less than $10. Plans with premiums under $20 are available in 29 states and the District of Columbia.
3. Will your copays increase? A plan's charges, whether in the form of fixed copays or a percentage of the drug's cost, are typically divided into "tiers"—ranging from the lowest copays for the least expensive generics through the plan's "preferred" generics and brand names to its "nonpreferred" and very expensive drugs that carry the highest copays.
In 2010, many plans are raising copays for some tiers while lowering them for others. In Florida, only four plans are not altering their charges.
One significant trend for 2010 is that more plans are changing from fixed copays to a percentage of the cost of the drugs.
In Florida, 10 plans will make this switch, which makes it more difficult for enrollees to know exactly what they'll pay toward their drugs next year without further inquiry or research. This doesn't automatically mean the cost will go up—it could go down. It depends on the price of the specific drug and the percentage the plan charges for the tier it's placed in.
For example, under one Florida plan, a person using Plavix, a drug that protects against strokes and heart attacks, currently pays a $34 copay in Tier 3. Next year, drugs in this tier will be charged at 50 percent of the cost, driving the out-of-pocket expense up to $61.05. But under another Florida plan, someone who is now paying a $25 copay for Plavix in Tier 2 will instead pay much less—$16.52—because this plan will charge 11 percent of the cost in that tier next year.
4. Is it worth paying more for gap coverage? Nationwide, 80 percent of stand-alone Part D plans will offer no coverage in the "doughnut hole" in 2010—when enrollees must pay 100 percent of their costs after they've used $2,830 worth of drugs since the beginning of the year.
Of the remaining 20 percent, almost all will cover only generic drugs in the doughnut hole, usually for a higher premium. In Florida, premiums for the 10 plans offering at least some gap coverage range from $47.50 to $100.40. But since generics are inexpensive, it’s possible that using them would prevent an enrollee from ever reaching the gap.
Also, some plans charge higher copays for generics in the gap than at the initial coverage level—sometimes three times as much. These inflated copays are often higher than the full price of the drug. When that happens, the plan must charge the lower of the two amounts, which means you're still paying full price in the doughnut hole, even though you're forking over a higher premium for gap coverage.
How to compare plans properly
- The most effective way is to use Medicare's online drug plan finder (www.medicare.gov)—because it automatically does the math to find your best deal, according to the specific drugs you take. To help you navigate the plan finder in the quickest way, see AARP BulletinToday's step-by-step consumer guide.
- Call the Medicare help line at 1-800-633-4227 and ask a customer service representative to do a similar search for you.
- Call your state health insurance information program (SHIP). Get its phone number online or by calling the Eldercare Locator at 1-800-677-1116.