Americans planning to buy their drugs through Medicare's prescription drug program -- Medicare Part D -- have until Dec. 31 to sign up for coverage during 2008. But they shouldn't wait until the last moment.
Many plans will change for the coming year, increasing or in some cases decreasing by various amounts their premiums, deductibles or drug co-pays. Among the changes that Californians in particular can expect are:
* More coverage choices, especially among Medicare Advantage plans, which give beneficiaries medical care and prescription drugs but may limit choice of doctor and hospital.
* More plans providing generic drug coverage for the doughnut hole, the gap in coverage after beneficiaries and insurers jointly spend $2,510. From that point, beneficiaries have to pay the full cost of their medicines until their prescription drug spending reaches $3,216.25, after which the government pays 95% of their drug costs.
Consumers need to do some research to make sure they're getting the least expensive plan for their needs, says Robert Hayes, head of the Medicare Rights Center in New York City.
In ZIP Codes in five states (New York, Illinois, California, Texas and Florida), the nonprofit Consumers Union compared January 2007 Medicare Part D Plan out-of-pocket prices for five common drugs and monthly premiums with those advertised for January 2008. At least 82% of plans in each state had increased their overall costs, and, of the total 247 plans, 39 plans, or 16%, had increased their costs 25% or more.
"A plan that was a bargain this year may be the exact opposite next year," says Bill Vaughan, senior policy analyst for Consumers Union in Washington, D.C. "Beneficiaries have just a few weeks during open enrollment to avoid being stuck with a high-cost plan in 2008," he says.
To stay or change?
Drug coverage via Medicare was begun three years ago. It allows people 65 and over (and many younger people who have been receiving Social Security disability benefits) who don't have other prescription drug coverage to sign up each year with a plan in their area that has been authorized by Medicare to provide drug (or drug and healthcare) coverage. The number of plans authorized for 2008 in California will increase from 200 in 2007 to 237, though not everyone is eligible for every plan. Some plans are limited to certain counties, for example.
People who had coverage this year and want to stick with the same plan don't have to do anything to maintain that coverage, says Kerry Weems, administrator of the Centers for Medicare and Medicaid Services in Baltimore. But that could be a financially poor choice.
Nationally, people who stay in the same plan (if that's an option -- each year, a few insurers end their Medicare drug coverage) will see premiums increase an average of 17%. People in California will be hit harder; those who stick with the same plan can expect premiums to soar 31% on average, according to research done for the California Healthcare Foundation.
But changing plans can have its pitfalls as well, which is why many beneficiaries should get assistance (see box), especially those who can't easily navigate the Medicare website to compare costs.
Many plans will raise co-payments
Although many plans have a relatively low monthly premium of $25 and often no deductible, drug co-pay costs have gone up in many plans, says Juliette Cubanski, a Medicare policy analyst for the Kaiser Family Foundation in Washington, D.C. Finding out those costs requires beneficiaries to input all of their drug information, which can be tedious, she says.
Generally speaking, plans have four co-pay categories, better known as tiers -- generic, preferred brand, non-preferred brand and specialty -- with each tier being slightly more expensive. For 2008, for example, Wellpoint will raise the monthly co-pay for preferred brand name drugs (including Lipitor and Plavix) from $29 per drug to $44.30, or an annual increase of $183.60 per drug in that tier, according to an analyst from the Kaiser Family Foundation.
And fair warning: Drug prices for Medicare beneficiaries are often much higher than for people who are covered through private health insurance. That's because Medicare recipients use more medications than privately insured younger people, Weems says.
Low-income Californians especially could use some assistance choosing a plan this year, says Chris Perrone, senior program officer for the California Healthcare Foundation. The plans for about 100,000 low-income state residents who paid no premium out of their own pockets last year have now increased their premium, which may be higher than the limit set by Medicare for low-income subsidies. Low-income beneficiaries who stick with these plans will have to pay the difference, between $1.20 and $13.10 per month.