How to Pick a Plan
Lipitor. Nexium. Plavix. Fosamax. You know that slew of pills you take every day? They're going to help drive your choice of a Medicare drug plan
As if the decision about which plan to choose weren't tricky enough, now comes another layer of ground rules. Here are some caveats that various categories of Medicare beneficiaries will want to keep in mind:
You have no drug coverage at all
'Anyone who does not have coverage should seriously be looking at this," says Cheryl Matheis, director of health strategy at AARP. And look now. Enrolling later may carry financial penalties. What if you're one of the fortunate few who haven't taken anything stronger than an aspirin in years? Remember that even if you aren't taking any pricey prescription drugs now, that could change very quickly if you get sick. And you would have to wait until November to sign up for the following year's coverage.
Medicare-eligible seniors with no drug coverage (except those with very low incomes) will also get slapped with a penalty if they delay signing up for a Part D plan after the first enrollment period. The penalty? One percent of the average national monthly premium for every month of delay. If you wait three years past your eligibility date, for example, you'll be paying at least a 36 percent penalty. If the average premium is $40 a month, you'll be paying more than $54. And you'll have to pay that penalty for the entire time you're on Medicare. That's why Medicare administrators are reminding people that this is an insurance program, much like buying car insurance before a fender bender. You'll want to be insured against high drug costs before they strike.
One strategy is to sign up for an inexpensive plan without bells and whistles. You can always change plans later. You won't face a penalty, but you can only do it during two specific times of the year.
You have drug coverage
Medicare beneficiaries who already have prescription drug coverage through employer or union retiree benefits may be tempted to tune out Part D. Don't. You may not end up swapping plans, but you should verify that your current coverage is at least as good as the new Medicare benefit. The official term for that is "creditable coverage," and it's the responsibility of your employer or plan sponsor to tell you whether the coverage meets that standard. Sit tight until you get that notification, which is supposed to be mailed out by mid-November. "We are telling people who have any type of employer-sponsored coverage to do nothing until they find out what that coverage will do," says Bonnie Burns, a policy specialist with California Health Advocates, a nonprofit group in Sacramento.
Under no circumstances should you sign up for a plan, just in case. Enrolling in a Part D plan will automatically boot you off your existing plan, and depending on the plan, you may not be able to get back on it. In a worst-case scenario, you might lose all your medical benefits, not just your drug plan. If your coverage meets the creditable threshold, there's no rush to decide anyway. Those who sign up at a later date won't face any penalties as long as they don't go without coverage for more than two months.
advertisement
