Dodging Medicare Drug Plan Pitfalls

President George Bush last month at a CVS Pharmacy counter in Washington, D.C.

hide captionPresident George Bush last month at a CVS Pharmacy counter in Washington, D.C., during a stop to talk about his administration's Medicare prescription drug initiative.

G. Fabiano-Pool/Getty Images

The Fine Print

Choosing a prescription drug plan isn't all about the best price — make sure you know what you're getting. Here, items to look for in the fine print of potential plans:

  

Drug Coverage: Plans have varying lists of drugs they cover. Make sure the drugs you take are on that list before signing up. Also, the list can change during the year, but your plan must give you 60 days notice.

  

Pharmacies: Make sure the pharmacies your plan works with are convenient to you.

  

Prior Authorization: Some medications may require that your doctor contact the plan and prove that the drug is medically necessary.

  

Quantity Limits: A potential restriction on how many pills in a prescription you get at a time.

  

Step Therapy: Requires that you try one — or several — lower cost medications first, and show that they didn't work, before your plan covers a more expensive medication.

  

Coverage Gap: Does your plan have a "coverage gap?" This happens when your total drug costs reach around $2,400, and then coverage stops. You then continue to pay your premium as well as the full cost of your drugs. Once your out-of-pocket costs reach more than $3,850, catastrophic insurance kicks back in and you revert to either paying a percentage of a drug's cost or co-pay. If your plan comes with a gap, you're only option may be to shop around for lower-cost drugs.

Drug Plan Help Online

For further information on obtaining low-cost drugs, or for help renegotiating your Medicare drug plan, try these Web sites:

  

Consumer Reports Best Buy Drugs, a free Web site from the nonprofit Consumer Union, has suggestions for more affordable treatment alternatives that patients can discuss with their doctors.

  

BenefitsCheckupUp.org, a service of the National Council on Aging, helps determine if you're eligible for extra Medicare prescription drug coverage due to a limited income, and helps find a cost-effective drug plan that suits your needs.

  

Medicare's Web site compares various prescription drug plans that participate with Medicare, and suggests tips for lowering drug costs during the coverage gap.

  

The Medicare Rights Center provides free counseling to people with Medicare-related issues. It offers an online tool to help you compare Medicare prescription drug plans available at your neighborhood pharmacies.

Open enrollment begins today for seniors and other Medicare beneficiaries eligible for the program's prescription drug plan. Now through Dec. 31, seniors can sign up for new coverage or change their existing plan for 2007, but analysts warn that picking the right plan is likely to be as confusing as it was last year.

The message from the Bush administration about [this open-enrollment season for the Medicare drug plan] has been mostly one of reassurance.

"Eighty percent of seniors who are on this plan are satisfied, and if they are satisfied they don't need to do anything," said Health and Human Services Secretary Michael Leavitt during a visit to a Washington, D.C., pharmacy last month with President Bush.

But some health experts disagree.

Back to the Drawing Board

Tricia Neuman, a vice president with the Kaiser Family Foundation, says seniors with coverage should "go back to the drawing board" because plans they signed onto last year may have changed.

"It's important that people understand if their plans are changing, how they're changing," Neuman says. "It may be that it's OK to stay with the plan that someone selected for 2006, but it may not be the case."

And the only way to find out, says Neuman, is to start all over again.

Neuman says seniors should put together a list of all the drugs they take — which may differ from last year's list — and head to Medicare.gov, which has the most comprehensive information about all the plans participating with Medicare. And just like last year, seniors should enter in their information, then sort through the plans for their best option.

Medicare officials had hoped there would be fewer plans to choose from this year, and thus less confusion. They even encouraged insurers to offer fewer plans. But that didn't happen. Last year, people in most states had around 40 plans to choose from. This year that number is between 50 and 60.

Read the Fine Print

People can learn from all the mistakes made last year, says Bob Hayes, president of the Medicare Rights Center, a New York City-based counseling and advocacy group. For example, although Medicare.gov has a good list of all the plans, it's important to search through the fine print of each one to figure out what specific drugs and treatments are covered — and which aren't.

"Look and see what a 'covered drug' means," Hayes says. "Does it mean you can actually get coverage, or does it mean that you can go to your doctors, get affidavits and other forms of evidence, and make a plea to the insurer get coverage? That was a trick that really did hurt a lot of people in 2006."

Some plans include quantity limits. For example, your doctor may prescribe three pills a day, or 90 per month, but the plan will only cover 60 per month. Other plans require you to try — and fail — with a cheaper medicine before it will cover a more expensive drug.

Another mistake many people made for 2006 was choosing a plan based solely on a low premium, says Neuman of the Kaiser Foundation.

"Premiums aren't necessarily a good indicator of the value of a product," Neuman says.

Coverage costs in general are rising with inflation. Premiums are rising by an average of 10 percent, and deductibles — the amount customers pay out-of-pocket before coverage begins — are also increasing. For example, the 2006 maximum deductible of $250 will grow to $265 for 2007.

Sign-Up Now or Pay More

But while this six-week enrollment period is important for those now in Medicare drug plans, Neuman says it's even more important for the estimated 4 million eligible people who haven't yet signed up yet.

Those who missed their initial sign-up period will pay a 1 percent premium penalty for every month they delay enrolling. And the penalty lasts forever. For instance, if you sign up four months after your initial eligibility period ended, you would have to pay 4 percent of the national average premium on top of your own plan's premium every month for as long as you have coverage.

And those who don't enroll by Dec. 31 won't have another chance until next November, also increasing their penalty.

Perhaps the best advice for seniors is this: Don't be afraid to ask for help in figuring out a complex system.

"Anyone who can find a community organization, a friend or neighbor who has comfort with the Internet ought to ask for help," Hayes says.

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