If you're a senior on Medicare - or if you help out aging parents with their money matters - it's time to get ready to shop. The annual enrollment period for Medicare prescription drug and Advantage managed care plans is about to begin, and it's one of the best opportunities of the year for seniors to save money.
The new healthcare reform law is reshaping certain parts of the Medicare marketplace, for the most part in ways that benefit seniors. Although the law gradually reduced subsidies to Medicare Advantage - a change that critics derided as "slashing" Medicare - the Advantage and prescription drug markets are doing just fine. The number of plan offerings for 2012 are stable and average prices are steady or falling slightly.
Re-shopping your plan annually makes sense, especially Medicare Part D drug plans. Insurance companies often change their offerings year-to-year in ways that can increase drug costs by thousands of dollars, or make it more difficult to get certain drugs. At the same time, your drug needs may have changed since the last plan selection period in ways that make a plan less beneficial for you.
And this year, it's important to get started on that process earlier than usual - because the enrollment period is earlier this year. The 2010 health reform law moved up the annual enrollment period by several weeks, starting this year. Enrollment will be open from October 15 to December 7 - a sensible move intended to get this time-consuming chore away from the busy holiday season.
You've got two basic choices: traditional, fee-for-service Medicare alongside a stand-alone Part D prescription drug plan, or a privately managed Medicare Advantage all-in-one option (including hospitalization, outpatient services and prescription drugs).
You're free to make as many changes as you want before December 7; your changes take effect on January 1. There's also a so-called "dis-enrollment" period that runs from January 1 to February 14, that can be used by seniors who pick an Advantage plan but then change their minds. During that period, you can switch back to traditional Medicare but not to a different Advantage plan. And, if you do leave Advantage, you can add a stand-alone drug plan during that period.
Avalere Health, a health policy consulting firm, projects that average premiums for both prescription drug and Advantage plans will fall 4 percent for 2012. But the enhanced competition doesn't mean prices are coming down across the board. Although some of the top 10 drug plans, which cover 77 percent of enrollees, are cutting premium prices, six are raising prices.
"This is a year of change," says Dan Mendelson, Avalere Health's CEO. "It's a year where patients really need to shop."
When picking a Medicare D plan, make sure your plan covers the drugs you need. It's important to look closely at plan drug lists, called formularies, to understand if your particular medications are covered and at what cost. Note the co-pays and deductibles involved. Formularies might also feature drug-coverage restrictions, such as requiring direct prior authorization from a physician, which can slow the process, or limit quantities. Some might also require "step therapy" -- a situation where the plan requires that you first try a less expensive option.
The second important consideration: Can you use the pharmacy you prefer? Medicare D plans don't work with all pharmacies. Be sure the pharmacy you use is a preferred network pharmacy, or that a different delivery option is acceptable to you. For example, the Humana Walmart-Preferred Rx Plan has been shaking up the market with an ultra-low premium averaging just $15.10 next year - the lowest in the industry. And enrollees who use the in-store Wal-Mart pharmacy pay less (the plan also has a restrictive formulary and a high deductible).
The health-care reform law gradually closes the notorious "doughnut hole." This refers to how - for 2012 - coverage stops when a beneficiary's annual out-of-pocket drug spending hits $2,930, and it resumes at the "catastrophic" level of $4,700. The doughnut hole is the gap between the stopping and resumption points. This year, the law requires pharmaceutical companies to provide a 50 percent discount on brand-name drugs to low- and middle-income beneficiaries who find themselves in the doughnut hole, and a 14 percent discount on generic drugs.
Low-income seniors can qualify for significant assistance with prescription drug costs under the "Extra Help" program, which subsidies premiums. Single people must have income below $16,335 and total financial resources less than $12,640; married people qualify if they have income below $22,065 and resources less than $25,260. To apply, visit the Social Security Administration website.
Most Medicare Advantage plans are managed-care programs, such as HMOs or PPOs. When you join an Advantage plan, Medicare provides a fixed payment to the plan to cover your Medicare Part A (hospital) and Medicare Part B (medical insurance) coverage. There are usually additional co-payments and deductibles, depending on the type of plan you join.
Starting this year, Advantage plans won't be allowed to charge cost-sharing, such as co-insurances, co-pays, or deductibles, for certain preventive services that don't have cost-sharing under traditional Medicare. These include the program's initial preventive-care visit, annual wellness visits and screening procedures.
Although an Advantage plan will save money for some seniors, it's important to review the plan's network of doctors to make sure yours are in the plan. Also pay close attention to the plan's co-pays, co-insurance and deductibles for in-network and out-of-network care. Pay particular attention to the drug coverage offered by Advantage plans. Because Advantage plans are responsible for all aspects of a patient's care, some offer enhanced drug coverage that might help save them money elsewhere.
The best online tool for shopping plans is the Medicare Plan Finder at the Medicare website. Plug in your Medicare number and drugs (you'll need each drug's name and dosage). The tool then displays a list of possible plans; their estimated cost, premiums, and deductibles; which drugs are covered; and customer-satisfaction ratings. The finder also will give you advice about drug utilization and restrictions.
Reuters contributor Mark Miller has posted more detailed tips on shopping for Medicare D and Advantage plans on the http://RetirementRevised.com website.