Shopping for a Drug Plan

It’s time to take a look around and assess your Part D options

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You've found terrific prescription drug coverage and plan to stick with it this fall. But first consider JoeAnn Foeller, 66, of O'Fallon, Mo. For two years, without a hitch, she paid $35 each month for Humira, a drug that helps control her rheumatoid arthritis. Then, last January, the copay rose precipitously, to $326. "I was angry," she says. "Without Humira, I can't walk." Foeller hadn't realized it, but her insurer had reclassified the drug into a pricier category.

Open enrollment begins November 15, and it's worth keeping stories like Foeller's in mind as you weigh your options. "This is not an insurance product that you want to buy and hold," warns Dan Mendelson, president of Avalere Health, a strategic advisory company based in Washington, D.C., that keeps tabs on Medicare and recently released a report on the Part D market. Nearly everything about prescription drug plans—from the drugs covered to the premiums to the deductible and size of copays—can change significantly from year to year, he says. And this year is no exception.

On average, seniors in the 10 largest Medicare drug plans who stick with their current Part D coverage will see a 21 percent increase in monthly premiums for 2008, according to the Avalere data. In absolute dollars, that amounts to a fairly modest rise of about $5 per month. But the 2 million enrollees in Humana's standard plan, for example, will pay 69 percent more—$26 a month, up from $15. UnitedHealth's AARP Medicare Rx Saver is nearly doubling its monthly premium to $27.

Rising copays. Premiums are only the tip of the iceberg. This year, Coventry is reducing its premiums for its First Health Part D Premier plan by about a dollar a month. Great news, right? Maybe, but there's more to the story. The company is also raising copays: People who choose cheap "Tier 1" generics will pay an additional $2 per prescription, for example, while those who buy more costly brand-name Tier 3 drugs will pay up to $11 more. Indeed, people who insist upon brand-name drugs that have cheaper alternatives are especially likely to experience sticker shock in the year ahead. To get Tier 3 drugs in the Wellcare Signature plan, for example, you'll be expected to pony up more than $105 every time you fill a prescription, as much as $25 more each time than this year.

Likewise, the restrictions your plan places on covered drugs can change. A covered drug, for example, suddenly might no longer be available without prior authorization. Or the number of pills covered is unexpectedly limited. Or a policy of "step therapy" requires trying the cheap drug before its more expensive version will be covered.

The news isn't entirely gloom and doom. People in most areas will have 50 or 60 Part D plans to choose from, at least one of which should still charge premiums of less than $20 per month, according to Avalere. And more plans—about 29 percent in 2008—will pay for generic drugs in the "doughnut hole," that irksome suspension of coverage that starts after a plan has covered $2,510 and lasts until your costs surpass $5,726.

Advantage? So-called Medicare Advantage plans like Foeller's that lump drug benefits in with coverage for hospital and outpatient care tend to feature lower drug premiums than do stand-alone drug plans. But these private plans generally require you to stay within a specific network of doctors or pay extra to get care elsewhere. For many seniors, that's perfectly satisfactory. But a series of government audits has revealed that not a few have been talked into buying Medicare Advantage plans that don't actually meet their needs. (If you were deceived into buying such coverage, call 800-Medicare to find out how to switch Medicare Advantage plans or re-enroll retroactively in standard Medicare.)

Clearly, there's incentive to do some serious comparison shopping. Interactive tools at medicare.gov allow seniors to enter their drugs and compare the anticipated costs, whether they're considering stand-alone drug coverage or the more comprehensive Medicare Advantage plans. Counselors with the State Health Insurance Counseling and Assistance Programs offer one-on-one advice in every state. And be sure to scrutinize every piece of mail—especially "annual notice of change" letters—from your current provider, since there might be a doozy of an update buried in the fine print.