By Mark Miller
Tribune Media Services
Seniors can shop around for Medicare D prescription drug plans or Medicare Advantage managed care plans during an annual enrollment window that runs from November 15 to December 31. With dozens of plans available in most parts of the country, Medicare shopping can be a complex chore.
These aren't mandatory plan options, although Medicare D makes sense for anyone with significant prescription drug expenses. But if you use a Medicare D or Advantage plan, you should re-shop your plan annually. Insurance companies often change their offerings in ways that can increase premiums by thousands of dollars, or make it difficult to get certain drugs. And, your health needs may change, too.
Shopping around is even more important for 2011, as the new health care reform law and other policy changes begin to reshape certain parts of the Medicare marketplace. Here's a run-down of the new and noteworthy trends for 2011, along with a few tips on how to shop smart;
Some prescription drug plans will be eliminated as federal Medicare policymakers push insurers to offer only plans that are clearly differentiated from one another.
"We've been saying for a while that there are too many plans, and that it's too hard to choose, says Vicki Gottlich, senior policy attorney at the Center for Medicare Advocacy. "The consolidation this year will make it easier, since the plan choices really will have meaningful differences."
Premiums are expected to rise an average of 10 percent among the top prescription drug plans, according to Avalere Health, a research company specializing in health care. "Many people don't shop around, and they should," says Dan Mendelson, Avalere's CEO. "Prices are rising because people are using more drugs, and the drugs are getting more expensive."
An example: More Medicare D plans this year are adding coverage in the doughnut hole, the coverage gap that starts when a drug plan beneficiary's annual drug costs hit $2,830 and continues up to $4,550, when "catastrophic" coverage kicks in.
One-third of D plans are expected to offer some form of gap coverage in 2011, up from 20 percent in 2010. Gap coverage is worth paying for if you expect to enter the doughnut hole, but might not be worth the higher premiums for enrollees who don't expect to have very high drug costs.
Separately, the new Affordable Care Act (ACA) gradually closes the doughnut hole entirely between now and 2020; next year, pharmaceutical companies will provide a discount of 50 percent on brand-name drugs to low- and middle-income beneficiaries who find themselves in the gap.
Most Advantage plans are HMO or PPO managed care networks. ACA's critics have predicted that the new law's provisions will send Advantage premiums through the roof and decimate plan offerings, but there's no evidence of that yet.
Premiums actually will dip an average of one percent next year. Some plans won't be continued-mainly those that don't meet new requirements that all Advantage plans create provider care networks. Overall, Advantage plan choices remain robust, and enrollment is projected to rise five percent in 2011.
It's more important to get your choices right during the fall annual enrollment period, because the ACA curtails the following "open enrollment period" that lets beneficiaries make changes to their selections. Open enrollment next year will run only from January 1 through February 15th (six weeks less than in previous years). And the only change permitted during that window is to drop out of Medicare Advantage and opt for traditional Medicare, and a Medicare D plan, instead.
The ACA has improved the Extra Help prescription drug subsidy for low-income seniors, which pays 100 percent of premiums for enrollees with annual income of $16,245 a year (single) or $21,855 (married couples). The number of Extra Help plan options will increase next year, and the number of beneficiaries who find themselves shuffled among various plans will plunge 57 percent, according to Avalere.
When shopping for a Medicare D plan, don't look only at premiums. It's important to confirm that all your prescriptions will be covered in the correct quantity-and whether they require any prior approval from the insurance company. "Cheaper isn't always better," cautions Joe Baker, president of the Medicare Rights Center. "For example, prior approval can be a big hoop to jump through. It can be just like a denial, and you might need to get it approved more than once a year."
And look closely at Advantage plan provider networks to see whether your preferred doctors and hospitals are covered. "Ask your doctors if they are in the network you're considering, and what they think of the plan," says Baker.
The best online shopping tool is the Medicare website's Plan Finder (http://bit.ly/cK3At8). For more personalized help, visit your local State Health Insurance Assistance Program (http://bit.ly/8NtGXI), a network of non-profit Medicare counseling services. The Medicare Rights Center also offers free counseling by phone (1-800-333-4114).
If you're willing to pay to get advice and help with paperwork, hire an independent, fee-based, counseling service such as Allsup. For $200 to $300, Allsup assigns an adviser who will provide a written personalized plan analysis and offer phone consultations.
Mark Miller is the author of "The Hard Times Guide to Retirement Security." He publishes http://retirementrevised.com, recently named the best retirement planning site on the web by Money Magazine. Contact him with questions and comments at firstname.lastname@example.org
This column was originally printed in the November 7, 2010 - November 20, 2010