Understanding Medicare prescription drug plans
In last month’s Momentum, we discussed the various Medicare and Medicare-related plans available to Medicare-eligible individuals. This month, we will focus on the newest and arguably the most confusing and controversial of these: Medicare Prescription Drug Plans, commonly known as Medicare Part D.

Introduced this past January, Medicare Prescription Drug Plans are available to anyone who is entitled to Medicare Part A and/or enrolled in Medicare Part B. The plans are offered by private companies and overseen by the Centers for Medicare and Medicaid (CMS).

Although the federal government established a model plan design, each plan sponsor can alter the design (as long as the benefits are as good or better than the government-designed model), establish its own formulary (list of covered drugs), create a network of participating pharmacies and set its own pricing (subject to CMS approval). These companies can negotiate drug prices with the pharmaceutical companies, but the government can not.

Individuals may enroll in a stand-alone Prescription Drug Plan (PDP) or in a Medicare Advantage Plan with Prescription Drug coverage (MA-PD).

Each plan sponsor can offer up to three different stand-alone plans in each of the 34 geographic regions established for the Part D program, with different co-pays, formularies and premiums possible for each plan. Many of the plans include a coverage gap (called the doughnut hole) during which the Medicare beneficiary is liable for 100% of the cost of the prescription drug.

Timing is important
For the first year of the Part D program, the enrollment period ran for six months, from Nov. 15, 2005 until May 15, 2006. For the 2007 plan year, however, most individuals can only enroll in a plan (including changing their prior year enrollment) during the six-week period beginning Nov. 15, 2006 and ending Dec. 31, 2006, with coverage effective on Jan. 1, 2007.

Individuals who are newly eligible for Medicare have a seven-month period in which to enroll in Part D, beginning three months prior to their birthday month and ending three months after that month. Failure to enroll when first eligible, may result in penalties — increased premiums.

Beginning this month, expect to be inundated with marketing material from companies offering Part D plans in your area. In my Pennsylvania county alone, 22 companies offering 53 plans are operative. But don’t let the wide variety of choices, or their complexity, discourage you from signing up for this important coverage.

Key questions

If you aren’t currently enrolled in a Part D plan, or if you are but want to shop around for a different plan, you might want to consider:

• Are the drugs you take today on the plan’s formulary?
• Is there a deductible you must meet before the plan begins to pay benefits?
• What are the co-pays for generic drugs, preferred brand drugs, non-preferred brand drugs, and specialty drugs?
• Is there coverage in the doughnut hole?
• Are the pharmacies you use most often included in the plan’s network?
• Is there a mail-order option, and if so, will it save you money?
• What is the premium for the plan?

Consider, too, whether you prefer to purchase a stand-alone Prescription Drug Plan in addition to Original Medicare (and, perhaps, a Medicare Supplement Plan); or if you want an integrated plan that would provide both medical and prescription drug coverage — a Medicare Advantage Plan with Prescription Drugs (MA-PD) — as an alternative to Original Medicare.

One reason frequently cited by people who don’t enroll during their first year of eligibility is that they don’t take many medications. However, there is data indicating that a Medicare beneficiary’s health can change quickly; you may not be on medication today, but that situation may not last throughout the year. It is better to plan ahead and factor that possibility into your decision. If you do, not only will you have coverage if and when you need it, but you will avoid having to pay a lifetime penalty for delayed enrollment.

The Medicare website — www.medicare.gov— is a valuable resource to help you compare plans. Another is your state insurance department’s State Health Insurance Assistance Program.

The Annual Enrollment Period will compete for your attention with the holiday season. Give yourself the gift of peace of mind by enrolling in a Medicare Prescription Drug Plan.

Copyright 2007 Longevity Alliance, Inc.