Choosing a Medicare Part D Prescription Drug Plan

Nolo

Consider costs, coverage, and restrictions when shopping for a Medicare Part D plan.

Coverage under the new Medicare Part D prescription drug program is not handled by Medicare itself. Instead, it is managed by private health insurers and managed health care companies, which offer different plans in different geographic areas. If and when you decide to enroll in Part D, you need to find out which private drug plans are available in your area and then select the best plan for your needs.

If you need basic information about Part D before you select a plan, check out the new edition of Nolo's Social Security, Medicare & Government Pensions, which contains more detailed information on Medicare Part D.

Read on even if you're automatically enrolled. If you qualify for Medicaid, you will be automatically enrolled in a Part D plan. However, you may switch plans if you find one better suited to your needs.

Finding Available Part D Plans

You may enroll only in a plan that operates in your geographic area. The following organizations can give you information about the Part D plans available to you.

Medicare. The Centers for Medicare and Medicaid Services (CMS) can tell you what plans are available where you live and can help narrow your options based on the medicines you regularly take. Contact CMS by phone at 800-MEDICARE (800-633-4227) or online atwww.medicare.gov.

SHIP or HICAP. The State Health Insurance Assistance Program (SHIP), sometimes called the Health Insurance Counseling and Advocacy Program (HICAP), can tell you about the Part D plans available where you live, which ones cover the drugs you regularly use, and how much the plans cost. For the nearest SHIP or HICAP office, check the business listings of your white pages phone directory.

State department of insurance. Every state has a government agency that oversees insurance matters. You can contact your state department of insurance for the names, addresses, and phone numbers of all companies that offer a Part D plan in your state.

The best information comes from the plan itself. Before you make a final choice, directly contact any plan that interests you and ask for a complete description of the plan, the drugs it covers, and its costs. You can get the phone number and address of any plan from Medicare or your state department of insurance.

Choosing a Part D Plan

Deciding which Part D plan is best depends on several factors, including whether you have other health insurance through your employer or union (or your spouse’s), whether you qualify for a low-income subsidy, and your age and health. Additional important considerations include:

Your prescriptions. The prescription medications you regularly take, or their generic equivalents, must be included on the plan’s formulary (its list of covered drugs). If not, the plan is useless to you. If you cannot find a plan that includes all of your drugs, look for one that covers your most expensive drugs.

Costs. The costs of a Part D plan can vary in several ways. Premium payments often vary, but the copayment amounts are more important. Most plans have tiered copayments, meaning the copayments differ for generic versus brand-name drugs and for different classes of medications. Compare the copayment amount under each Part D plan you're considering for each drug you take.

Coverage gap. Determine whether the plan provides any benefits within the so-called coverage gap. Part D plans are allowed to provide no coverage after you and the plan have spent a certain amount — $2,250 in 2006 — on medications and until you have paid an additional amount out of your own pocket — $2,850 in 2006.

Access restrictions. You must determine whether a plan places any access restrictions on your drugs, such as prior authorization, generic drug or equivalent drug substitution, step therapy, or supply limits. The fewer restrictions a plan has regarding your drugs, the better for you.

Pharmacies. For many people, obtaining their medications from a nearby, helpful local pharmacist is important. If two or more plans offer similar coverage, the type and location of the pharmacy from which you can get your drugs through each plan may help you decide. Also, not all pharmacies charge the same amount for the same drugs.

Stand-Alone Drug Plan or Managed Care Plan?

Part D drug coverage is available through either a stand-alone prescription drug plan (PDP) or as the prescription drug component (called an MA-PD) of a Medicare Advantage managed care plan. Both options offer equivalent coverage, although each plan is different and costs vary.

Enrolling in Part D

The initial deadline to enroll in Medicare Part D was May 15, 2006. The next opportunity to enroll will be the open enrollment period during November and December. Unfortunately, anyone eligible for coverage who did not sign up by May 15 will pay a penalty of 1% per month in higher premium payments if and when they do enroll.