Decision Time
If you've put off trying to figure out Medicare Part D, the clock is ticking
Mary Favale is a woman on a mission. The 67-year-old resident of Willimantic, Conn., is talking to neighbors in her senior citizens apartment building, hoping to get them to enroll in Medicare's new prescription drug benefit. Fail to sign up for Part D within the next couple weeks, she says, and you might really regret it. After all, most of the costs of Favale's prescriptions now are covered; she thinks she'll save about $600 this year. And those who miss the May 15 deadline will have to wait months to change their minds--and then pay extra. Still, she says, people tell her, "It's too confusing. I'm not going to deal with it."
Favale's friends have plenty of company. A whopping 7 million eligible Medicare beneficiaries--out of 16 million likely candidates--have yet to enroll in Part D, according to the government. (An estimated 27 million don't have a choice to make; they're covered by employer or government programs, for example.) Granted, not all seniors immediately need the new insurance, especially if they don't take many medications. But anyone without drug coverage should examine the benefit, experts say, because the potential for savings is substantial. Low-income seniors stand to benefit most. People who don't have many assets and whose income is no more than 150 percent of the poverty level (right now, that would equal $14,364 for an individual and $19,248 for a couple) get help from the government meeting their deductibles, premiums, and drug costs. "If a person is of modest means and on a lot of drugs, it certainly would be worthwhile to look into it," says Jerry Avorn, chief of the division of pharmacoepidemiology at Brigham and Women's Hospital in Boston.
Ouch. Moreover, procrastinators who come knocking after the deadline will pay a penalty for waiting. For each month that passes after May 15, the premium ratchets up by 1 percent of the average national premium (except in the case of low-income beneficiaries, whose deadline has been extended until the end of this year). A person who signed up on November 15, when the next window of opportunity opens, would pay about an extra 7 percent of the average premium, or probably about $2.25 more per month.
So why the hesitation? Many seniors are overwhelmed at having to choose from among 40-plus plans. The program relies on private health insurance plans, each a bit different: Some have lower premiums but require enrollees to pay more for drugs; some cost more but cover more medications. Plans with higher premiums also tend to provide coverage through the so-called doughnut hole, the point at which help normally stops for a while. In a basic plan, once the total cost of medication for the year reaches $2,250, enrollees have to shoulder any further hit themselves until they reach $5,100. Then catastrophic coverage kicks in and picks up all but a fraction of the cost.
"There's so much information out there that it becomes gobbledygook," says Gloria Shreve, 70, of San Mateo, Calif. "I felt like I was swimming through Jell-O." She asked her sons for help, but they were baffled, too, and didn't have the time to figure out the right solution. Finally, she enlisted California's Health Insurance Counseling and Advocacy Program, a volunteer organization that helps seniors sort through their choices. HICAP is California's version of the State Health Insurance Assistance Program; each state has a SHIP organization (you can find yours at www.shiptalk.org) that seniors can call for help. Though Shreve doesn't take many prescriptions now, she had breast cancer five years ago; just in case, she chose a BlueCross plan that will cover her if her health deteriorates. "I can't tell you what relief I had when I mailed my envelope," she says.
The one-stop source of information on the various plans is medicare.gov, the federal website. You plug in your prescriptions and ZIP code, and the website will compute a list of plans available to you ranked by annual cost. One practical way to zero in on the right plan is to compare how well the three cheapest options would fill your needs, says Jocelyne Watrous, a consultant at the Center for Medicare Advocacy, a consumer education organization.
It's also important, says Watrous, to consider the plan's formulary, or list of covered drugs, as well as the drugs' costs. Though insurers have the right to drop drugs as they see fit, a new ruling announced last week generally will allow people already on a dropped drug to keep coverage until the end of the plan year, when they can switch companies. But as a recent survey of insurers by the Kaiser Family Foundation found, drug costs vary widely from one to the next. Even if the medication is covered, a person could pay anywhere from $15 to $66 a month out of pocket for the popular osteoporosis drug Fosamax, for example. The cholesterol-lowering drug Crestor can cost anywhere from $17 to $62 each month. And you could lay out $20 to $1,276 a month for Enbrel, a drug for rheumatoid arthritis.
Buyer beware. Make sure, too, that you can use a plan at nearby pharmacies; you can check at medicare.gov or by calling drugstores. Many seniors have been confused about whether plans that have partnered with drugstores for marketing purposes--and whose insurance cards often carry the store's logo--can be used at other stores. In a word, yes. Such co-branding has angered many small independent pharmacists, who think the practice costs them business. Medicare says next year it will prohibit pharmacy logos on identification cards.
Healthy seniors who are not on any medications might be tempted to ignore Part D--or they might want to think of it as akin to long-term-care insurance. While they'll be adding another bill if they sign on, they could face stiff penalties later if they wait and eventually need coverage. "What I'm thinking of doing is just taking the cheapest program," says Adriane Roth of Millbrae, Calif., who doesn't take any medications now but intends to pick a plan before May 15. "You never know what tomorrow brings," she says. "I'm not a big risk taker."
Most seniors who have gritted their teeth and done the research say the program is saving them money. A recent Washington Post/ABC News poll found that 63 percent are paying less for drugs now. Favale allows that the process has been challenging during these early months of the program, but would she enroll again? "Absolutely."
This story appears in the May 8, 2006 print edition of U.S. News & World Report.