Healthcare Today Medicare and Insurance

What to Consider When Choosing a Part D Plan

For many seniors, the most daunting aspect of the new Medicare Part D program is selecting a single drug plan from the menu of alternatives. In some parts of the country, dozens of plans are vying for your business.

So how do you know which plan is right for you? Here are some pointers to help you get started.

Decide how you want to get your drug coverage: There are two ways to get Medicare Part D drug coverage. If you are in original Medicare, you can add drug coverage by enrolling in a standalone prescription drug plan. The other way is through a Medicare Advantage plan, like an HMO or PPO.

If you are currently in a Medicare Advantage plan that will offer drug coverage in 2006, you can simply stay put. (If that option doesn't appeal to you, you can drop your current Medicare Advantage plan and switch to another one with a better drug plan, or you can switch back to original Medicare and enroll in a standalone drug plan.)

Find out what drugs are covered: Each Medicare drug plan maintains a "formulary," or list of drugs that the plan will cover. To find out whether a plan covers a particular drug, call the plan directly or visit the Medicare Prescription Drug Plan Finder at www.medicare.gov.

Plans must include at least two drugs in every therapeutic class. However, Medicare excludes certain types of drugs by law, including prescription vitamins and minerals, over-the-counter drugs and certain anti-anxiety and seizure medications. You may want to find a plan that covers all of the drugs you take or at least the drugs that you take most often.

Should your doctor prescribe a drug that isn't on the formulary or requires greater cost-sharing, you may be able to get an exception. Plans must cover non-formulary drugs or offer non-preferred drugs at the preferred rate when it's considered medically necessary to do so.

Add up your costs: How much you'll pay for Part D coverage depends largely on where you live and which drug plan you select. Plans have a great deal of discretion to design the benefit as they see fit. Some will match Medicare's standard Part D benefit, while others will offer enhanced benefits. No matter how they're designed, all plans must offer equal or better value than the standard benefit.

In general, you'll pay a monthly premium, meet an annual deductible and have some out-of-pocket cost-sharing as you use the benefit. It's important to compare these costs across drug plans because some plans will waive the deductible or require co-payments (a fixed dollar amount) instead of coinsurance (a percentage of drug costs).

In 2006, the average premium will be less than $37 a month or $440 a year, according to government estimates. The deductible is capped at $250 for 2006. After that, you'll pay a varying portion of your drug costs.

Once you've rung up $2,250 in drug costs in a year, you'll pay 100 percent of the cost of your drugs. That gap in coverage, sometimes called the "donut hole," persists until you've spent $5,100 in medication costs. After that, "catastrophic" coverage kicks in and Medicare begins paying 95 percent of the cost of your drugs.

If you have limited income and assets, you can get extra help paying for Part D coverage. Many seniors who qualify for this financial assistance will pay little or nothing for their prescriptions.

Check for convenience and other features: Once you enroll in a Part D plan, you'll have to use the pharmacies in that plan's network. If you prefer a pharmacy that's close to your home, make sure it's in the network.

Plans must provide out-of-network access, but only in situations in which beneficiaries are unable to fill their prescriptions at network pharmacies, say, in the emergency department or when they are traveling. If you spend part of the year in another state, The Medicare Rights Center, a senior advocacy group, recommends enrolling in a national drug plan that partners with pharmacies across the country.

A drug plan may offer "preferred" pharmacies within their pharmacy network. Your cost-sharing may be lower at a preferred pharmacy than at other network pharmacies.

In addition, plans may offer beneficiaries the option to receive their drugs at home via mail order. Some seniors find mail order to be a convenient, cost effective way to fill their prescriptions, especially drugs for many chronic conditions. However, plans are not allowed to require enrollees to use this option.