By Michael Bihari, MD. Health Insurance Expert
Updated December 29, 2014.
Medicare Part D allows people over age 65 to choose from a number of prescription drug plans (PDPs) that offer a set of basic prescription services.
When Can I Join a Medicare Part D Drug Plan?
If you have Medicare, you can enroll in a Part D drug plan during the open enrollment period, which typically begins on November 15 and lasts until the end of December. If you have a Part D drug plan already, you can change to a different plan during this enrollment period.
You can enroll in the Part D drug plan at any time without paying a penalty if you have both Medicaid and Medicare, or if your income is below a certain threshold (about $20,000 for an individual or $25,000 for a couple).
Should I Enroll in a Medicare Part D Drug Plan?
There are a many plans, with a confusing array of plan options, available in each state.
This may make it difficult for you to know which plan to choose and whether you will save money on your prescription medications.
Premiums for Part D plans range from low cost (such as $15 per month) to more than $100 each month, with most plans falling within the $30 to $60 per month range. The following two examples show how Medicare Part D may or may not help you save money on your prescription medications.
Example 1: Ms. Smith has type 2 diabetes, high blood pressure and depression. She takes three generic medications. namely metformin for her diabetes, enalapril for her high blood pressure, and paroxetine for her depression.
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She buys these drugs at her local Costco at a cost of $10 for a 90-day supply of each medication. Her annual cost is $120. The least expensive Medicare drug plan in her state has a monthly premium of $15 per month for an annual cost of $180. A Part D plan may not make sense for Ms. Smith.
Note: Mrs. Smith, however, may want to purchase the least expensive plan in her state. Since she has three chronic health conditions that could worsen with age, there is a risk that she may need to take more expensive medications. If this happens, she most likely will need to pay a Part D Late Enrollment Penalty.
Example 2: Mr. Smith has type 2 diabetes, simvastatin for his high cholesterol, Diovan for his high blood pressure, and Androgel for his low testosterone. He buys these drugs at a pharmacy in his local supermarket. Diovan and Androgel are both expensive medications and have no generic version. Mr. Smith's medications cost him more than $2,000 each year. After paying his monthly premium, deductible, and drug copays. he can save more than $500 each year by joining a Part D drug plan.
How Do I Choose a Part D Drug Plan?
There are approximately 20-40 different Part D drug plans offered by a number of different health insurance companies in each state. All Part D drug plans must offer a standard set of drug benefits as required by Medicare. Moreover, drug plans may include additional medications on their formularies.
The cost to join a plan depends on whether the plan offers benefits beyond those mandated by Medicare. The following may cause the monthly premium to be more expensive:
- The plan covers additional medications on its formulary
- The plan does not have a deductible at the beginning of the year
- The plan covers the cost of generic medications during the coverage gap. or "donut hole."
For example, the state of Massachusetts has 31 Part D drug plans for the year 2011. The least expensive plan, with a premium of $14.80 each month, has an annual deductible of $310 and no drug benefit during the coverage gap. The most expensive plan, with a premium of $120.10 each month, has an annual deductible of $250 (just for some drugs)and pays for "many" generic drugs during the coverage gap.
One of the most helpful online resources is the government's Medicare site. which allows you to compare PDPs, learn about plans offered in your state, and view each plan's drug formulary. You can compare plans side-by-side and display only those plans that cover your medications.
Additionally, the site has suggestions for lowering costs in the coverage gap. If you are comfortable using the Internet, you can select and enroll in a plan online. You can get the same information by calling the Medicare help line at 1-800-Medicare.
Where Else Can I Get Help When Choosing a Part D Drug Plan?
Before joining a Part D drug plan, it is important you understand and are comfortable with your choice. Many communities have senior centers with staff that can help guide you through the selection process.
If you look for information online, try to avoid sites that are sponsored by insurance companies that provide prescription drug plans. Instead, take a look at the websites of these organizations:
The Medicare Rights Center, an independent, non-profit group, is the largest organization in the United States (aside from the federal government) that provides information and assistance for people with Medicare. Its site has a section about Medicare Part D drug coverage, including information about programs that could help you pay for your prescription drug costs. A unique feature of the site is the Medicare Interactive Counselor, a tool that walks you through the process of finding the drug plan that makes sense for you.
The State Health Insurance Assistance Program provides one-on-one counseling and assistance to Medicare patients and their families. Select your state and county to find a local organization that will help you.