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Special coverage: Medicare

Drug benefit Round 2 looms

By STEPHEN NOHLGREN
Published November 13, 2006

After a shaky beginning and strong recovery in 2006, Medicare's drug benefit faces a murky future as it prepares for its second year.

Democrats will control Congress, and many want to eliminate dozens of private plans and have Medicare negotiate drug prices directly with manufacturers. But such an overhaul could take years. So people who want a Medicare drug plan next year still face a smorgasbord of choices.

In Florida, 26 companies offer 58 Part D drug plans for 2007. Premiums range from $10.20 a month to $83.70. Sign-up begins Wednesday and runs through Dec. 31. Here is a guide to Medicare's Part D, Round 2.

How do drug plans work?

They supplement Medicare's traditional Part A and Part B programs. You pay an extra monthly premium, co-payments and often a deductible. After drug bills reach $2,400, most plans require that you assume all the costs. This is the infamous "doughnut hole." After you have paid $3,850 out of pocket, "catastrophic coverage" kicks in and your share is quite low.

What if I belong to a Medicare HMO?

Often called Medicare Advantage plans, these cover various medical services as well as drug coverage. You cannot mix a Part D plan with an HMO. If you belong to an HMO and sign up for a Part D drug plan, Medicare will boot you off the HMO. Some companies offer both HMOs and Part D plans, so make sure you know which is which.

What if I don't want a drug plan?

Even advocates who dislike Part D advise you to join a bare-bones plan now. In Florida, WellCare offers a plan for $10.20 a month. AARP's plan goes for $12.30. They give you instant coverage if you get sick and also protect you from massive premium penalties if you need a plan later. (Tip: The penalty is 1 percent a month, based on the average Part D premium. A delay of four years means you pay a 48 percent premium penalty the rest of your life.)

What if I have coverage through work?

Labor unions, businesses, the VA and other groups already offer drug coverage to retirees. You can keep this coverage without penalty as long as the benefits are considered as good or better than Medicare's. If not, you probably should switch to a Medicare plan.

I like my plan for this year. Should I just renew it?

Not necessarily. New plans are available and existing plans have dropped and added drugs. Premiums also have changed. You should review your choices for 2007.

How do I sign up?

By calling the plan's toll-free number (available on the Medicare Web site at medicare.gov) between Wednesday and Dec. 31. Coverage begins Jan. 1. Last year, you could sign up anytime before May 15 because the program was new. Not this year.

What if I'm on Medicaid?

You must get your drugs through Medicare, either with a Part D plan or an HMO. If you do not pick a plan, you will be assigned to one randomly and it may not cover the drugs you need. Medicare offers a few cheap plans at no charge for people on Medicaid. But if none covers all the drugs needed, check out more expensive plans, even if you have to pay a small premium to get all your drugs covered.

I'm not on Medicaid but can't afford my drug bills, even with a Medicare plan. What should I do?

1. Consider joining a Medicare HMO. They usually cost less.

2. Talk to your doctor and use generics, mail-order drugs and your plan's preferred brands whenever possible.

3. Apply for a low-income subsidy, which gives you breaks on premiums, deductibles and co-payments. You can qualify if your income is less than $14,700 ($19,800 for a couple) and your liquid assets are less than $11,500 ($23,000 for a couple). Your house, car and personal effects are not included in this calculation, and there are other exceptions. If you fall anywhere near these thresholds, contact the Social Security Administration to see if you qualify.

4. Apply for free or reduced drugs offered by some drug companies. Rules for these patient assistance programs have fluctuated, so check them out even if you have previously been turned down. Go to needymeds.com for a list. Or call the companies that make your drugs.

How do I pick a plan?

Go to medicare.gov and follow the instructions for "Compare Medicare Drug Plans." Make sure you enter your drugs and their dosage. Click "no" when asked if you want a specific pharmacy. Eventually you arrive at "Your Personalized Plan List," which appears to show the five cheapest plans for your drugs.

But that list can deceive. For each plan that might interest you, click on the "lower this cost" option in column two. Calculate the monthly savings under each plan if you switch to generics or the plan's preferred bands. Now click on the "Show Mail Order" option at the top right of this list. Multiply possible monthly savings by 12 and subtract that from each plan's yearly cost. This step is very important. Some plans offer big savings; others don't.

In one St. Petersburg Times test, a $4,100 AARP plan was ranked as the fourth-cheapest on the original list, but offered more than $2,000 in possible savings.

Meanwhile, the $3,700 plan ranked first on the list offered only $450 in possible savings. Discuss any proposed drug substitutions with your doctor before choosing a plan.

What if I can't use a computer?

Call 1-800-633-4227 and a government adviser will check the computer for the cheapest plans. They are trained to give you three options and will not use the "lower this cost" function unless you ask.

Insist that they check at least five plans and calculate the "lower this cost" option for each one. Before you pick a plan, ask for a copy of their research, including the "lower this cost" results for all five plans.

Where else can I get help?

Florida's SHINE program helps people with insurance issues. Call 1-800-963-5337 between 8 a.m. and 5 p.m. and ask for SHINE. Someone will take your name and telephone number, and a volunteer will call you back.

[Last modified November 13, 2006, 06:06:59]