Medicare Part D Drug Plans Deadline Looms -12/2/07
Stewart H. Welch III, CFP, AEP
Founder, The Welch Group, LLC
Medicare Part D Drug Plans Deadline Looms
“Medicare Part D Drug Plans Deadline Looms”
Once again it is the open enrollment period for the 2008 Medicare Part D Drug Plans. If you want to change to a different plan or you are choosing a plan for the first time, you must sign up by December 31.
There are a number of plan changes for 2008 so it’s important that you both review your existing prescription medications and your current plan to be certain you are getting the best deal. Picking a plan is individualized and it mainly depends on the prescriptions you are taking regularly. If you have had a lot of changes in your prescription drugs this past year then changing plans may save you money. If you determine that no changes are needed then no action needs to be taken during this open enrollment period.
The reason you should start reviewing your options now, rather than waiting until the last minute, is that there is an abundance of complexity surrounding your options. In Jefferson and Shelby counties alone, there are 53 Prescription Drug Plans and 24 Medicare Health Plans to choose from. It’s important to note that the Prescription Drug Plans are ‘stand alone’ plans and offer only prescription drug coverage. It’s for people who want to stay on the traditional Medicare fee-for-service program for their other health care coverage. The Medicare Health Plans cover both medical services and prescription drugs. It’s for people who prefer more managed care. To do a comparison of the various plans, go to the
2008 plan changes include:
Premiums: Most plans are increasing the premium for 2008.
Deductible: Increased to $275 ($10 dollar increase from 2007). No plan may have a deductible more than $275.
Co-insurance/Co-payments: Drugs are categorized in “tiers.” Each tier requires a different coinsurance amount.
Drug Formulary: Double check all current drugs and make certain your drugs will continue to be covered by your plan.
Prior Authorization Rules: Many plans have added prior authorization rules which require your doctor to contact the insurance company and state why it is necessary for you to take a particular drug.
Gap/ Doughnut Hole: Most plans will cover drug costs up to $2,510. This $2,510 includes your deductible, your co-payments and the insurer’s share of the costs. After the $2,510 amount is reached, you fall into the so-called ‘doughnut hole’ where you become responsible for all additional costs until your out-of-pocket costs reaches $4,050. This can be deceiving because many individuals believe they only have to pay an additional $1,540 ($4,050 – $2,510). However, the $2,510 included the amount that the insurance company paid. Therefore you must subtract the portion that the insurance company has paid to calculate your true out-of-pocket costs.
Some plans do offer coverage during the gap or doughnut hole period but they are only covering generic drugs and are generally best for those seeking only prescription drug coverage.