MEDICARE PART D
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The government's new way to confuse senior citizen's and disabled individuals!
Effective January 1, 2006, the Medicare Modernization Act shuttled in its new prescription plan, Medicare Part D. This new plan should actually save most middle to upper income individuals lots of money on their prescription drugs. The main problem is that most companies' explanations of their plans are so convoluted to the point that shopping and comparing the different plans are a true crapshoot!
While all plans must be sanctioned and approved by CMS, (the Center of Medicare and Medicaid) these plans are all sold and serviced by private insurance carriers.
We took an enormous amount of time and effort evaluating these different plans, by breaking down the numerous different co pays, drug tiers, premiums and benefits or lack thereof in the notorious doughnut hole. We feel quite confident that we can offer our clients the best possible plans that will suit them best. We even offer access to Medicare's drug calculator that helps to estimate total annual drug costs, in order to determine which plan will best suit the individual based on current drug usage. We will set-up a conference call between you, us and Medicare, at absolutely no cost to you!
The base plan introduced by the Federal Government offers a minimum amount of drug coverage, by which all creditable plans are measured. In other words, for a plan to be considered creditable, it must be at least as good as these minimum standards.
The minimum plan has a $250 annual deductible. After the deductible is met the plan is to pay 75% of the next $2,000 of drug costs. After the first $2,000 of drug costs, there is usually a doughnut hole, in which there is no coverage for the next $2,850 of total drug costs. After this doughnut hole is completed, the plan is to pay 95% of all other drug costs for the year. As long as a plan offers equivalent coverage, or what is deemed to be such, it is considered creditable.
Before we discuss creditable coverage in detail, we will discuss some of the fallacies in the standardization of plans. First of all, how is the insurance company measuring total drug costs: the insured's retail costs, the insurance company's wholesale costs, or some other measurement? Buyer beware! We have found that more often than not the minimum plan works out best for most individuals, if selected from the right company. The trick here is to use the Medicare drug calculator to determine total drug usage and therefore the proper plan selection. We will tell you right here that in Pennsylvania there are only 2 plans available with monthly premiums under $20 monthly. Both plans are offered by the same company. We will also tell you that only 5 companies offer coverage in the doughnut hole in Pennsylvania. Of these 5, only 2 companies pay for named brand drugs in the doughnut hole. The same company that offers the 2 lowest priced plans is one of these 5 companies. It's also one of the only 2 companies paying for named brand prescriptions in the doughnut hole! It also calculates based on its low drug cost. However; even this company is not always best, especially when it comes to non-preferred name brands.
A traditional employer plan offered to Medicare eligible individuals is usually considered creditable. Veteran's benefits and PACE and PACENET benefits are certainly creditable. The relevancy of creditable coverage has far more importance than simply a measuring stick for a plan's qualification, because of the stiff penalty imposed on those individuals choosing to opt out of coverage until a later date. CLICK HERE FOR INCOME QUALIFICATIONS FOR PACE AND PACENET.
Here's how it works: If an individual has creditable coverage, he /she may opt out penalty free for as long as the creditable coverage exists. This individual can then join any plan during a normal enrollment period, penalty free. However; if an individual whom has no creditable coverage chooses to opt out, he /she will be penalized 1% for every month he / she does not have creditable coverage.
For example, suppose you are age 65 on Medicare part A or B and you are in perfect health, taking absolutely no medication. You choose to opt out of part D for 3 years (36 months). After 36 months, you choose to pick up a part D plan, rather than pay the regular price; you will pay a 36% penalty for as long as you carry a part D prescription plan. This clause all but forces all individuals to choose a plan before his / her deadline to choose a plan penalty free.
The initial election period (enrollment period) is from November 15, 2005 through May 15, 2006. At the end of this period all eligible Medicare recipient's whom have no creditable coverage will begin to be penalized, should they opt out of part D.
Final comments must be made on delivery of these prescription benefits. We have already noted that these plans are sold and serviced by commercial insurance carriers. The next hoop to jump through is the decision as to the choice of stand alone products or those tied to Medicare Advantage plans. CLICK HERE FOR MORE INFORMATION ON MEDICARE ADVANTAGE PLANS.
Any individual choosing a traditional Medicare Supplement must choose a stand alone plan, because the two products are never combined as one (except for the case of the antiquated H, I, and J plans which are being phased out).
In this segment we are not addressing the debate between Medicare Supplements and Medicare Advantage plans, only the choice between stand alone and combination products. At this point in time we have found that in almost in every case, if not every case it is most advantageous to go with the stand alone product. One reason may be because at least at this point in time, one or two companies have a superior selection of prescription part D plans. The other reason is that the combination products only offer one plan, which may or may not be suited for the individual. The companies with the superior portfolio of prescription products generally do not have the best portfolio of Medicare Advantage products. The converse of this is that the best Medicare Advantage products that we have found are generally offered by companies with a weaker portfolio of prescription products.
Finally we will discuss formularies, which are basically the lists of drugs which are covered by the particular plans. The above referenced company with the two lowest premium plans does cover the top 100 Medicare drugs. The best plan in the world will be of little help, if it does not cover your particular drugs. Again this problem will be easily solved by our conference call to Medicare.