Pick a plan man!
We have a sister website called MedicareDrugPlans.com, where you can find basic information about, well, Medicare drug plans, and read reviews of the plans written by people who have used them, and rate your own plan if you have one. We’ve updated our data to include the plans that will be available in 2017.
Why? It’s that time again to pick a Medicare Part D plan. Doors opened today, October 15, and will close on December 7. If you’re one of 57 million Americans, most of them over 65, who are enrolled in Medicare then you either have a plan or are newly eligible for one. There are many plans (although fewer than there once were) and picking one can be highly aggravating. While online pharmacies, drug prices, and personal drug importation are PharmacyChecker.com’s forte, each year since we started PharmacyCheckerBlog, I’ve tried to write something educational, practical, even funny, about the plans and how to pick one at enrollment time. This year I went nuts. Still, if you read through this post carefully, it will teach you about Part D Medicare drug plans: the good, the bad, and the ugly and give you resources to learn even more. First a very little history…
Medicare was born in 1965 under legislation amending the Social Security Act. In 1966 all older Americans were entitled to health insurance. At 65 years old, Americans automatically get Part A of Medicare, which provides coverage when you go to the hospital. But for Part B, which covers out-patient services, such as checkups and other visits to your healthcare providers, you’ve got to enroll. Parts A and B are known as traditional Medicare, which you can learn more about here. But, initially, and for a long time thereafter, 40 years, Medicare did not include a pharmacy benefit plan! Ok, flash forward…
The same year that PharmacyChecker opened its virtual doors in 2003, Congress passed and the president signed the Medicare Prescription Drug Improvement and Modernization Act of 2003, which gave birth to Part D of Medicare – a program in which Medicare enrollees can choose a pharmacy benefit plan. Before Part D, millions of older Americans were even more hard pressed to afford medications than they are today – although they still are! But Part D finally brought older Americans justice.
If you’re enrolled in traditional Medicare then you’re eligible for Part D. You can enroll in a Part D plan (in fact you have to under most circumstances) after you’re signed up for Medicare pretty much at any time. But the general enrollment period is now: October 15 – December 7. [FYI: there’s a Part C, called Medicare Advantage, which is more expensive but potentially offers better coverage than traditional Medicare, but we’re not discussing it herein. For more on Part C click here].
Part D plans change each year and to maximize your prescription savings, you have to do the research every year. It doesn’t matter if you are new to Medicare and haven’t picked a Part D plan or you’ve been on Medicare for ten years and already have a Part D plan: you can avoid big headaches by digging in and finding the best plan for 2017. DON’T BE COMPLACENT.
Can you save money by not signing up for a plan, avoiding the premiums that go along with them (not to mention the hassles) and using online pharmacies and prescription discount cards instead? You might BUT I STRONGLY RECOMMEND THAT YOU ENROLL IN A PLAN. The plan not only helps cover your basic prescription costs but it’s insurance!! If you get really sick and need very expensive medication, then you’ll need pharmacy coverage through Medicare. There may be situations during the coverage gap, also known as the “donut hole,” that you could choose to buy online to save money, but that’s for another blog post. To be clear: while safe international online pharmacies provide lower cost medication – you still need to sing up for a Part D plan.
Also, there is a penalty for not signing up for a plan when you are first eligible to do so. If you don’t have other credible coverage – meaning a pharmacy benefit from other insurance that has the same or better coverage than a Part D plan– you must sign up for a plan pretty much right away (within four months of starting Medicare). The penalty is that your premium will increase (when you finally do choose a plan) by 1% of the national average premium per month that you do not enroll in a plan. In theory, you have the choice not to sign up for plan but, again, if you get really sick you could be in big trouble financially. You can always pick the play with the lowest premium and deductible to keep your costs down, keeping in mind that those plans won’t necessarily cover the drugs you’ll need.
As stated at the outset, you can use our site – www.MedicareDrugPlans.com – to find basic information about Part D plans: meaning premiums, deductibles, and whether or not a plan offers gap coverage (donut hole) – but our site is most unique because you can find ratings and reviews of the plans written by people who have actually used them. But you can’t enroll in a plan from our site. For that I strongly recommend the government’s Medicare Plan Finder website – https://www.medicare.gov/find-a-plan/questions/home.aspx – where you can do a deep dive to research those plans that cover the drugs you take. You can also go to the companies’ websites that offer the plan to enroll – but they are marketing to you not giving you objective choices.
Now I’m warning you, most people that leave ratings and reviews on www.medicaredrugplans.com are angry about their plan: it’s become a place to vent! But many if not most Part D enrollees are pretty satisfied with their Part D plans – and if you’re one of them we’d like to see some positive reviews as well so come rate your plan.
How the plans work
Once you pick a plan, you’ll deal with…
Four coverage phases.
- Deductible
You will pay a deductible, unless your plan does not have one, which cannot exceed $400, an increase from $360 last year. There’s more on this below.
- Initial coverage
During the initial coverage period, you will pay about 25% of your drug costs up until $3700 in total spending (by you and the plan). That would be about $825 out of your pocket and the plan would pick up $2875).
Keep in mind that that doesn’t include the deductible or your premiums. Let’s say you do have a $400 deductible and your monthly premium is $35. Your annual costs for prescriptions would be $420 (premiums for 12 months) + $400 (the deductible) + 825 (your share of drug costs) = $1645.
- Coverage Gap (the “Donut Hole”)
When you and the plan have spent $3700, you’re in the hole! The hole is $4950 deep, comprising total drug spending by you, the plan, and even the manufacturer (above the initial coverage phase).
When the plans first launched, Medicare enrollees were fully responsible for out-of-pocket costs through the donut hole. Love it, hate it, or don’t care one way or the other, Obamacare did bring discounts and continues to close the hole. When you’re in the hole, for brand name drugs, the manufacturer will pay 50%, the plan will by 10%, and you will be 40%. For generic drugs, you will pay 51% and the plan will pay 49%.
So if your drug costs are actually $4950 then you might be forking over $2000 when you’re in the hole.
Some plans, usually ones with higher premiums, will cover part of the donut hole. But the coverage amount varies and I recommend checking in with the plan sponsor (like Humana, Aetna, UnitedHealth, etc.) for the most detail possible on gap coverage.
More on the Donut Hole from the government
- Catastrophic
If your prescription costs have gone “catastrophic” – a total of $8071 that you, the plan, and the manufacturers have spent – then from that point on you will only be responsible for 5% of your drug costs; the plan will pay 15% and the government will pick up 80% (thanks Uncle Sam).
Plan Costs
As you know, there are deductibles, premiums, and for many plans you’ll be paying co-insurance, which is when you pay a percentage of a medication’s cost instead of a co-pay, on some drugs, usually expensive ones.
The Part D standard deductible, which means the maximum a plan can require, has increased from a $360 for 2016 to $400 for 2017. But most plans have much lower deductibles with 38% of plans having a $0 deductible.
The base premium is $35.63 for 2017, a 4% increase from last year. The lowest premium is $14.60 and the highest is $179. The average premium for 2017 is $51.96.
Number of plans to choose from
There are fewer plans to choose from for 2017 than last year: 746; down from 886 for 2016; down from 1001 in 2015. In fact, the number of plans keeps decreasing year after year. There were 1875 plans to choose from in 2007! These numbers seem insane but that’s because they represent national totals. Per state there are a more manageable number of plans to choose from: a low of 18 in Alaska, to a high of 24 in Alabama and Tennessee. There used to be over 50 to choose form in some states.
Why are the number of plans shrinking each year? I believe it’s due to competition and we can expect the trend to continue for a few more years.
Are people happy with Medicare Part D?
One satisfaction survey from 2012, initiated by the Health Leadership Council on which big drug companies are well represented, showed that 90% of Medicare part D enrollees are satisfied with their plans. I don’t believe the plans are that popular but I do believe that older Americans are well-served by Part D, and as the coverage gap closes further under Obamacare, they will be even better served. But the exceptions are many millions of older Americans who are dissatisfied and even feeling ripped off by the Part D plans. If you do your homework, then you’re less likely to be one of them!
From a public policy view point, taxpayers are ripped off because Medicare is not able to negotiate drug prices with pharmaceutical companies – which is why the drug companies LOVE Medicare Part D. You can read about that here.
Why are people frustrated and angry sometimes about their plans?
On MedicareDrguPlans.com, you’ll read reviews by people who are decidedly not happy about their plans. Below I give you some of the main reasons for discontent with a real life quote from a review.
- Drugs the needed were not covered by their plans.
“Been receiving same drug for 12 years and now they won’t fill the drug.”
- Premiums spiked without the consumer noticing.
“This plan was $39 in 2015…increased to $77…I received no notification of the increase, and did not realize it had changed until I received my Jan credit card statement by then it was too late to make a change….I would absolutely not choose this company in the future. Major rip off for senior citizens!”
- Prior authorization (a process in which your provider has to argue with your plan sponsor that you need a certain expensive drug) failed.
“SilverScript will fill a first prescription then you go for a refill, your told by the pharmacist it’s not covered. You call SilverScript and they say, “Yes it’s covered” so you try again & it’s not. You call SilverScript again, again & again. Bottom line: A constant run around!!! You go thru your doctor, he or she fills out the proper papers for the medication prior authorization or exception. SilverScript gives a run around again, now a month has passed and you phone them every time you think about it. After a complete hassle for over a month you finally get an answer of denial in the mail. Now, this has happened to me with two different medications. Well, there was three but one of them I just paid outright. Long story short, I’m exhausted with the hassle and am changing to a different Medicare RX plan!”
- Customer service was poor.
“Horrible! Run away! Each time you call for customer service assistance, you will be given incorrect or conflicting information. They mail correspondence with incorrect dates. You can only pay them with a written check through mail. No phone payment or online payment. Usually when I call for help, they don’t know the answer. They are incompetent!”
Bottom line
Check out MedicareDrugPlans.com to read ratings and reviews, which will help you know what to look out for and not get blindsided. If you’ve used a plan already, then please rate it here. Shop around for the plan that covers the medications you are taking by using the government’s Plan Finder and then pick one.
Be patient when trying to pick the best Part D plan you can find because you’re stuck with it for the whole year.
Good resources for deeper dives on understanding using the plans:
Kaiser Family Foundation on 2017 Plans: http://kff.org/medicare/fact-sheet/the-medicare-prescription-drug-benefit-fact-sheet/
Medicare: https://www.medicare.gov/Pubs/pdf/11163.pdf.
Q1 Medicare – good aggregate data: https://q1medicare.com/PartD-2017MedicarePartD-PlanStatistics.php
