SAN FRANCISCO (MarketWatch) --By Kristen Gerencher, found at MarketWatch
Last Update: 10:00 PM ET Oct. 5, 2005
Hope you enjoy reading the following shopping related news :
Shopping for a Medicare drug plan
Look for big and subtle differences when comparing plans
If you're at least 65 years old or disabled -- or have a loved one who
is either -- expect lots of action at the mailbox starting this month.
Resist the urge to throw out the mailings. After 18 months of a transitional
drug-discount card, the biggest change to Medicare in its 40-year history -- the
prescription drug benefit known as Part D -- is set to begin on Jan. 1. With the
six-month enrollment period starting on Nov. 15, seniors will be deluged with
insurers' marketing materials into next year.
The benefit addition will force many of the 42 million Medicare beneficiaries to
compare their current drug coverage with the new plans and weigh which is best
for their needs. The tradeoffs are complex and require close attention, Medicare
analysts say.
"Rule No. 1 is don't rush" through the decision-making process, said
Robert Hayes, president of the Medicare Rights Center, an independent, nonprofit
national consumer service organization. "Promotional material is not
educational material, so there will be spin and hucksterism."
There are 10 Medicare-approved insurance vendors selling drug plans nationally:
Aetna, Connecticut General Life Insurance, Coventry (CVH: news, chart, profile)
, Medco (MHS: news, chart, profile) , MemberHealth Inc., PacifiCare (PHS: news,
chart, profile) , Silverscript, UnitedHealthcare (UNH: news, chart, profile) ,
WellCare (WCG: news, chart, profile) and WellPoint. Some of the companies will
place sales representatives at pharmacies to get the word out and sign up
seniors.
Medicare's standard benefit, which companies may deviate from as long as they
offer more and not less, is structured so enrollees pay a $250 deductible
upfront before insurance kicks in, plus premiums ranging from about $20 to $37 a
month. Beneficiaries are responsible for 25% of costs from $251 to $2,250. After
that, the plan stops paying in the so-called doughnut hole, where enrollees pay
for costs up to $5,100, after which time the government program picks up 95% of
the tab.
What to do when shopping ?
Of all the considerations potential enrollees need to make, these are among
the most important, according to experts:
Review what kind of drug coverage you have now, if any. Evaluate your income to
determine what plans you can afford or if you are eligible for financial
assistance. To receive federal help, a two-part means test is used limiting
single participants to about $14,000 in annual income and $11,500 in
property.
Don't be blinded by premium costs. A plan that offers a low monthly rate may
have a large deductible, sizable copays or both.
Are the drugs you need most covered by the plan? If not, you likely will have to
pay the full out-of-pocket cost unless you win an appeal. If your drugs are
covered, what's the copay? Are they on the preferred list at the same dosages?
Are there conditions? Ask about layered copays since some drugs can have copays
of as much as $100, raising your out-of-pocket costs significantly. Mail-order
options also can cut the tab.
Do the plans require step therapy, meaning you'll have to start with or switch
to the lowest-cost drug first before trying more expensive ones?
Find out what pharmacy networks are part of the plans you're comparing. Are
their drugstores accessible to you?
Ask how the appeals process works in case you need to argue that the plan cover
a drug not on its preferred list.
Employer coverage, late penalties
If you have retiree drug coverage from your former employer or a union now, it's
wise to find out if the plan will continue into next year.
If so, the employer needs to disclose whether its plan is considered as valuable
as the Medicare drug benefit, which is worth about $1,400 in benefits, said
Marilyn Moon, vice president and director of the health program at the American
Institutes for Research, a nonprofit, nonpartisan think tank.
"Creditable" plans, including Veterans and those with Tricare, allow
you to join Medicare Part D at a later date without incurring a potentially
substantial penalty for late enrollment. The penalty is 1% a month for the time
you go without Medicare drug coverage after the enrollment period ends in May of
2006, she said. "If you wait five years, that would be a 60% penalty. Your
premium would always be 60% higher."
Shopping on the market
At Aetna (AET: news, chart, profile) , potential enrollees can choose from
three stand-alone drug plans with premiums ranging from $27.50 to $66.75 per
month, said Frank McCauley, head of Aetna's retiree markets. One is equivalent
to the Medicare benefit but offers copayments instead of coinsurance.
Aetna also offers a combination plan in 13 states for people who want to buy a
more comprehensive plan that includes both the medical and pharmaceutical
components, which can be cheaper, he said. "It will at times be less than
what the stand-alone is in the market."
Aetna is working with CVS and Rite Aid to have kiosks and representatives
available to answer customer questions about the Part D benefit, he said. The
company has spent $50 million promoting its plans.
Seniors who enroll in Aetna's drug plans while taking a drug that's not on its
accepted list will have 90 days to find a suitable covered replacement or lobby
for its inclusion, McCauley said.
For example, if an older woman is taking cholesterol-lowering Crestor, which
isn't on the list, the company will cover the drug for three months until she
can switch to one that is covered, such as Lipitor, he said. "It's normally
a very good time period to make that transition and holds the member harmless in
terms of out-of-pocket costs."
Another health insurer, WellPoint (WLP: news, chart, profile) , also is offering
a 90-day grace period starting the day a senior enrolls, said Susan Rawlings,
president of senior services.
The company's three stand-alone plans vary: The lowest-cost one follows
Medicare's basic structure with the $250 deductible, but instead of 25-75
coinsurance, it offers copays, she said. "We've converted that to
copayments to make it easier to navigate."
Its lowest-cost plan includes a $5 copay for generic drugs and $25 for brand
drugs, while subjecting more expensive injectable drugs to 25% coinsurance,
Rawlings said.
By contrast, WellPoint's most comprehensive drug plan has no deductible, has
more drugs on its approved list and offers generic coverage in the
"doughnut hole" for $10 a prescription, Rawlings said.
Only a year commitment
For seniors who want to stay in traditional Medicare and have supplemental
insurance known as Medigap, many will have three plans: Medicare, a Medicare
supplemental policy and a new Part D drug plan, Moon said.
"What I recommend for those people who either don't like managed care or
don't have access to good managed care in their area is that they do that even
though they don't have much of an option," she said. "Take three
plans."
Even if seniors choose a plan that displeases them initially, they have a chance
to switch every year in an open enrollment process, Moon said. "The
question is how many people who've gotten one, learned all the rules, are going
to want to change midstream. Most of us are creatures of habit. You have to be
convinced to change next time around."
Overall, most people will benefit by choosing a drug plan to add to their
Medicare insurance, even if it's far from perfect, she said.
"What I would tell my mother if she was still alive is hold your nose and
buy a plan," Moon said. "The government is still subsidizing a chunk
of it. They're not great plans for the most part in terms of the way the
coverage is designed, but they're certainly better than nothing for most
people."
Kristen Gerencher is a reporter for MarketWatch in San Francisco.
Copyright © 2005 MarketWatch, Inc. All rights reserved.
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