Medicare Prescription Plans: The “D” Is for “Difficult”

by | Jan 20, 2006 | Cash Flow, Weekly Column

There’s one thing about Medicare Part D that isn’t confusing—its name. The “D” clearly stands for “Difficult.”

One of my associates has done some research on Part D on behalf of an elderly parent. Here are her suggestions to guide your own research.

Anyone on Medicare should have received a booklet called “Medicare and You, 2006.” Read this for an overview of Part D. It also should have a list of plans available in your state.

If you already have Medicare Supplement insurance, ask your insurance agent for information on a Part D plan. If you belong to organizations such as AARP, you probably received information on their plans. It’s a good idea to get information on three or four plans and then compare them.

Compare more than just monthly premiums and deductible amounts. Before you choose a plan, you need to know the answers to three questions:

1. Will this plan cover the drugs I take?

2. How much will my co-pay be for those drugs?

3. Will my pharmacy accept this plan?

In order to answer those questions, the first thing you need is a list of all the drugs you take. If necessary, you can get that list from your pharmacy.

Secondly, ask your druggist what plans the pharmacy accepts. Larger chain drugstores will accept almost all the major plans. If you use a locally-owned pharmacy, you need to find out specifically whether that store will accept a plan you are considering.

Probably the most complicated step is to find out whether a plan covers your prescriptions. Each plan has its own list of approved drugs. In most cases, those lists are then divided into three or four tiers. The first tier, with the lowest co-pay amount (often $5), covers common generic drugs. The second tier, covering common brand-name drugs, has a medium co-pay amount from about $25 to $35. The third tier covers more expensive brand-name drugs, with a higher co-pay that may be about $50 to $75. A fourth level may cover high-cost specialty drugs, with the co-pay a percentage of the prescription cost rather than a set amount. Other drugs may not be covered at all by a particular plan.

You need to check each plan to find out which of your drugs are covered and at what level they are covered. To do this, you can talk to your insurance agent, call the company offering the plan, or look up the plan online. If you are comfortable using the Internet, or can get help from someone who is, this is probably the fastest and easiest way to check your prescriptions against a particular plan.

Once you have figured out a plan’s coverage of your prescriptions, there is one more puzzle piece to be aware of—the “coverage gap.” Most plans will cover your drugs for approximately the first $2250 of your total prescription costs for a calendar year. If you go above that level, you will need to pay 100% for your prescriptions until the yearly total reaches about $3600. Then the insurance kicks in again, usually with lower co-payment amounts.

The key to learning about Part D is to ask for help. Start with your pharmacy, your insurance agent, or a community senior citizens’ center, then follow the leads they give you. Enlist a family member or friend who can help you wade through the details and find out what you need to know. KFG clients can attend, in person or online, our Part D workshop on Wednesday, February 1, at 10 am MST (lunch will be served). Call or email Licia at 605-343-1400 or lindsay@kahlerfinancial.com to reserve your seat.

Sign up for a plan before May 15, or you’ll pay more to enroll later. In spite of its annoying complexity, Medicare Part D will probably save you money. Good luck as you fight your way through the Part D thicket.

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