Choosing a Medicare Prescription Drug Plan

Living on a fixed income is difficult. When living with a limited amount of resources, finding the biggest bang for your buck is not only wise- it’s necessary. There is good news. As an individual receiving Medicare benefits you have many options for providing coverage for your prescription drugs. As a Senior Market Representative, here are some tips I’ve learned for finding the plan that offers the most coverage for the least amount of money.

First, it’s always nice to review how the Medicare system works. Medicare is broken down into four parts: A, B, C and D. Part A pays for your hospital bills and almost always is provided to you at no cost. The premiums for Part A were paid while either you or your spouse were working. Part B covers your Doctor visits. The monthly premium for Part B can vary, but is usually just under $100.00 per month. Part B is optional, but if you and your spouse aren’t working you may face a penalty of 10% for not opting into it. When covered by Part B, Medicare will cover 80% of your Doctor’s Office bills, x-rays, labs, etc. You are expected to cover the remaining 20%. If you are currently only covered by Medicare Part A and B you may be able to save quite a bit of money by picking up what’s referred to as Part C.

Part C covers the 20% of your bills that Medicare does not. There are two major types of plans to accomplish this: Medicare Supplements and Medicare Advantage Plans. Medicare Supplements work with your current Medicare plan to pay the portion of your expenses Medicare does not. You remain enrolled in Medicare and continue receiving Medicare benefits. In short- you will show both your Red, White and Blue Medicare card and your Medicare Supplement card to the Doctor when visiting. Medicare Supplement plans are assigned a letter, usually A through J.  The government strictly regulates these plans and, as a result, any company that offers a Medicare Supplement F plan will offer the exact same benefits- but at a different cost. This makes shopping for a Medicare Supplement fairly easy.

The other type of Part C coverage consist of Medicare Advantage plans. Medicare Advantage work differently than Supplements. Medicare Advantage plans cover all of your Hospital and Doctor Visit expenses, with some deductibles and co-pays included. This means that while you remain in the Medicare program,  you will no longer need your Red, White and Blue card because Medicare is no longer providing coverage. The nearly $100 of premium you currently pay to Medicare to provide Part B coverage is sent to a private company as premium for the plan. This means that many times you can pick up a Medicare Advantage plan at no additional cost to you, but receive far greater coverage.

That brings us to Part D- Prescription Drugs. The first step in choosing the best Prescription Drug Plan is to know if you currently have drug coverage. Drug plans can be stand alone or included in a Medicare Advantage plan- referred to as a Medicare Advantage Prescription Drug plan, or MAPD. If you are currently only covered by Part A and B, picking up an MAPD may be a simple and effective way to improve your health coverage and provide drug coverage. I would warn, however, that many times I recommend to my clients that separating health coverage from drug coverage is better. For starters, you are able to select the best health plan and the best drug plan when choosing them separately. It also makes it easier to change drug plans if your medication changes in the future.

After deciding what coverage you already have, visit Medicare Online to research drug plans. There is a link in the center of the page that says “Compare Drug Plans.” Follow the link and enter your current medication, dosage, and refill time frame and the system will search all drug plans offered in your county to find the plans that provide the most coverage at the least price. Note that these plans are the stand alone plans. If you think that an MAPD would work best for you, follow the link to “Compare Health Plans. Once there, look for plans that have prescription drug coverage included. This is a quick and easy way to research what plans exist and what they may cost you. This service is provided at no charge by Medicare.

Although you have all the information you need to make a great choice about your health and drug coverage, many times the language built into the plans can be confusing. This is why I always recommend using a high-quality local agent to assist you in finding the perfect plan. Whether you choose to find an agent or not, here is a list of drug plan characteristics you must know before buying:

1. Gap Coverage. Also referred to as the “donut hole,” the gap was created to force individuals to be more responsible when purchasing medication. You will be fully covered until your medication costs reach a certain number, usually $2,830. You will then be required to pay out of pocket while in “the gap.” Out of pocket costs are capped at $3,610, not including premiums.

Once this cost is reached you enter “Catastrophic coverage” which will cover the majority of your drug costs for the remainder of the year. This is a lot of money and can be a burden- especially since most people that enter the donut hole do so toward the end of the year near Christmas time, then have to pay deductibles when the new year begins. Be sure to speak with your agent about ways to stay out of the donut hole.

2. Cost Sharing. This term is used to describe your out of pocket costs throughout the year. This can include deductibles and co-payments, but also may include an extra charge your pharmacy charges you that your plan does not cover. The latter is rare, but possible.

3. Step Therapy. This phrase is used when a drug plan requires you to try a prescription (usually a brand over a generic) before covering the drug you and your doctor decided on. For example, your doctor may have prescribed Esomeprazole, but your Prescription Drug Plan requires you try Nexium first. Plans with step therapy are generally cheaper, but they cost you more at the counter.

Good luck locating the the perfect Prescription Drug Plan for you. Medicare has made several improvements lately that have improved your ability to research and sign-up for a drug plan that fits your needs. Armed with the information above you are ready to finally find peace of mind that comes with knowing you have solid coverage at a fair price.