If you’re over 65, you’ve probably come to rely on Medicare to help you pay your medical bills. Medicare Part A, financed by taxes paid throughout your working life, covers hospitalization; part B pays for doctors’ services, diagnostic tests and equipment such as wheelchairs and walkers.
Traditional Medicare is straightforward. You show your card at the doctor’s office, and you are billed for whatever Medicare does not pay. Because there are deductibles and co-pays that can be substantial, most seniors also have a supplemental MediGap policy.
Over the past decade or two, medications have become an increasingly important part of medical care. To meet this need, prescription drug coverage was added through the Medicare Modernization Act of 2003. With this legislation, the Medicare program became considerably more complex. So if you’re just turning 65, you have some decisions to make.
Even if your drug costs are low now, you cannot be sure they will stay that way. Newer drugs for multiple sclerosis, rheumatoid arthritis and other diseases can easily cost a thousand dollars a month or more. If you don’t have good drug coverage through an employer or union plan, you should think seriously about signing up for a prescription drug plan (PDP).
All Prescription Drug Plans (PDPs) are offered by private insurance companies, and the basic structure includes: a premium; a deductible; co-pays after the deductible is met; a coverage gap or “doughnut hole” that kicks in when med costs exceed $2,520 and a five percent co-pay for covered meds after yearly costs of $5,726.25 are compiled.
Rates and plan details vary a great deal. You can find a list of plans in your state and tools to compare costs and benefits by going to or
If your prescription costs at present are low, your best choice is probably the plan offering the lowest premium. By paying a higher premium, you can lower or eliminate the deductible or reduce the size of the doughnut hole. Do not assume, however, that you will save money by getting rid of the deductible.
To determine what is best for you, you will have to look closely at benefits and costs of each plan:
• Make a list of the meds you take.
• Find out which PDPs are available in your state that cover those meds.
• Then lay out what you would pay for your meds (plus premiums) with each plan
Whatever plan you chose this year might not be your best choice next year. As a result, the open enrollment period runs from November 15 through December 31.
The issues become more complicated when you start considering Medicare Advantage plans–which are private alternatives to Medicare. Medicare pays managed care companies a set fee for every Medicare-eligible person who enrolls, and the provider determines premiums, benefits, deductibles and co-pays, often incorporating prescription drug coverage. Benefits must be at least comparable to those of traditional Medicare.
Some Medicare Advantage plans have low or no premiums (aside from the $96.40/month paid for Medicare Part B), and they offer benefits excluded from traditional Medicare such as limited coverage for vision, dental and routine physical examinations.
It is possible to choose a Medicare Advantage plan that meets your individual needs, and an increasing number of Medicare recipients have chosen that option. Be aware, however, that premiums may be lower and benefits higher while the company is trying to attract new customers and gain market share. Before jumping into Medicare Advantage, it’s important to read for yourself all of the details of the contract. Doctors are known to move in and out of plans. Can you be assured of keeping your regular doctor? How much will you have to pay to visit a specialist who is outside the network? What if you need chemotherapy, heart surgery or a hip replacement?
Traditional Medicare coverage is basically set by law and can be relied upon. Medicare Advantage plans are set up to control costs by stressing preventive practices, by providing care through its own network of doctors...and sometimes by denying care that the plan considers unnecessary. Be sure this is what you want before you sign up.
Consider all of your options for prescription drug coverage before making any decisions. Compare the options that are available and base your decision on what fits your needs the best.
By: Kerri Musselman, Pharm.D.
