Medication costs can make up a large part of seniors citizens' budgets, but a few simple steps can easily save hundreds of dollars a year. The biggest single cost-saver? Picking the right Medicare plan. Whether you are preparing to renew your Medicare enrollment, or signing up for Medicare for the first time, you will want to make a careful selection so you don't end up spending more than you need to. Asking your doctors a few key questions—such as, Is there a generic?—can save you a bundle more.
First, focus on choosing the right drug plan, which depends in part on which drugs you take. The majority of seniors are enrolled under original Medicare, which includes hospital insurance (known as Medicare Part A) and medical insurance (Medicare Part B).
Getting drug coverage requires one of two additional extra steps. Seniors can either get drug benefits via a private plan regulated by the government, under what's called Medicare Part D, or they can get drug coverage bundled with a private Medicare Advantage plan. For a Part D plan, members pay between $15 and $165.40 a month in premiums for 2013, depending on plans and regions, according to the nonprofit Kaiser Family Foundation.
The alternative is a Medicare Advantage plan, also called Medicare Part C, which replaces original Medicare and often provides prescription-drug coverage as well. It is essentially a way to get Medicare A, B, and D all lumped into one. Medicare beneficiaries can enroll in Medicare Advantage to receive their benefits in a private health plan, such as a health maintenance organization (HMO). Across all Medicare Advantage plans with drug coverage, the average premium is $51 per month, according to the Kaiser Family Foundation. Consumers should evaluate on an individual basis whether this is the best option. Depending on your prescriptions and other health care needs, Medicare Advantage may or may not be better for you than original Medicare.
Comparing drug plans or Medicare Advantage plans can feel overwhelming.
There are several free, simple tools online that will help you wade through the options. One tool, PlanPrescriber.com, could save its users an average of $654 a year by helping them find the right health plan, according to a study the company conducted during the 2012 Medicare enrollment period. The study analyzed 12,000 users who entered their then-current drug plan and at least one prescription they were taking. The average savings were calculated by subtracting the customer's total estimated out-of-pocket spending on their then-current plan from their estimated spending on the plan recommended by PlanPrescriber. (Disclosure: U.S. News & World Report has a revenue-generating agreement with eHealthInsurance, which owns PlanPrescriber.)
Another tool is available through the federal government at Medicare.gov, which, like PlanPrescriber, allows users to compare up to three plans at a time. The main difference: PlanPrescriber CEO Ross Blair says using his site's tool takes seniors an average of three to four minutes versus about 15 minutes on Medicare.gov. They can also talk to agents over the phone.
ExtendHealth.com is another option, especially for people who may be uncomfortable submitting their information online. Though the tool also allows you to do a Web search and compare up to five plans at a time, the company has 1,200 advisers during enrollment season who can help you over the phone, says Bryce Williams, the company's CEO.
These three websites will also allow you to see drug pricing by pharmacy based on your location; each pharmacy can charge a different amount.
Regardless of which Medicare plan you settle on, keep these other money-saving tips in mind.
Have Drugs Delivered
For medications you take regularly for a chronic condition, opt for the convenience and potential cost-savings of mail-order. In addition to sparing you unnecessary trips to the pharmacy, mail-ordering can sometimes include a 90-day supply at a reduced cost, depending on your insurance company and what kind of meds you need. Once you enroll in an insurance plan you should be able to go that insurer's website to order your prescriptions delivered, or you can do it over the phone. Be sure to ask your doctor whether he or she needs to sign off on a 90-day supply. And take care to order refills before you need them so there isn't a gap of time when you don't have any pills.