by Beth Donner, CRPC
It’s annual Open Enrollment for Medicare, so let’s examine Medicare Part D prescription drug plans.
There are actually two ways to get Medicare prescription drug coverage—either by purchasing a Medicare Prescription Drug (Part D) Plan outright, or by getting a Medicare Advantage (Part C) Plan that already includes a prescription drug plan as part of the coverage. Anyone who is eligible for Medicare is automatically eligible for a drug plan.
One of the more confusing aspects of purchasing a drug plan is determining which plan is best for your situation. Keep in mind that prescription drug plans are sold and marketed by private insurance companies; each offers a different list of covered (formulary) drugs at different co-pay amounts and with different annual deductible amounts. In addition, it’s not uncommon that a person’s medications change from year to year. But all the potential changes is exactly why we’re given an annual Open Enrollment opportunity; so that we may review plan offerings, along with our current meds, and decide if it’s in our (financial) best interest to change Part D plans for the upcoming year.
The quickest way to check Part D plans’ medications and pricing is through the ‘Medicare Plan Finder’ page at www.Medicare.gov. Needed information for the site includes your residence ZIP code, the local pharmacy chain you use (CVS, Walgreens, etc.) and a complete list of all medications, including the dosage and frequency you take the medication each day. Once all information has been entered, the site will offer a list of all Part D plans available to you and will even list them in least to most expensive projected annual price. Here’s a hint—if you choose a 90-day mail order pharmacy, you might find significant savings.
Most of us familiar with Medicare have heard the term “the donut hole.” This term describes a situation where the Part D member has fairly comprehensive coverage for medications, but once a threshold dollar amount of drug costs is reached, has to pay a significantly higher medication cost out of their own pocket (the “hole” in coverage). Once a certain dollar amount has been spent out-of-pocket, the plan reverts back to having fairly comprehensive (small co-payment) coverage. In 2016, once you and your Part D plan together have spent $3,310 on covered drugs, you will enter the donut hole. Once you have then spent a total of $4,850 you will come out of the donut hole and revert to paying co-payments again.
It’s important to pay attention to the Open Enrollment dates of Oct. 15 through Dec. 7, as this is your one opportunity to choose the best plan to meet your needs in 2016.
Donner is a Chartered Retirement Planning Counselor and can be reached at Beth@DiversifiedPlanning.com or 919-601-0501.