October 7th, 2014 | Miller Advisors

It’s time for medicare open enrollment

Falling leaves and pumpkins are a sign of autumn–and, yes, of Medicare open enrollment, too. As the season’s chore list grows, you may be tempted to stick with your current Medicare Advantage or Part D prescription-drug plan. But that plan may no longer be your best option.

Medicare open enrollment runs from October 15 to December 7 for 2015 plans. Even if you’ve been happy with your current plan, it’s important to review alternatives. Insurers are boosting premiums and other out-of-pocket costs. They’re also adding expensive drug-pricing tiers, charging extra if you don’t go to approved pharmacies, imposing new restrictions on drugs and dropping from plans.

As a result, your current plan’s coverage may change significantly next year. And it definitely makes sense to check out other options if you’ve been prescribed new drugs, your health has changed and your favorite doctors have left your Advantage plan. “People tend to pick a plan and stick with it,” says Tricia Neuman, senior vice-president of the Kaiser Family Foundation. “But if their needs have changed and they go through the process of comparing plans, they might find that they could achieve significant savings by switching plans.

To find a new Part D or Advantage plan, go to the Medicare Plan Finder (www.medicare.gov/find-a-plan) or contact your local State Health Insurance Program (find your local SHIP at www.shiptalk.org or call 800-633-4227). A SHIP adviser will run through the best options either by phone or in person. Plans will begin offering information on the Plan Finder starting October 1.

Find the Best Prescription-Drug Plan
For seniors who take many expensive medications, here’s the good news about Part D: The “doughnut hole” continues to shrink. Those who enter the coverage gap in 2015 will get a 55% discount on brand-name drugs and a 35% federal subsidy for generic drugs.

The doughnut hole works like this: For 2015, after you pay a $320 deductible, the plan provides coverage until your drug expenses reach $2,960 (including both your share and the insurer’s share of the costs). Then the doughnut hole begins, and you pick up 45% of the cost of brand-name drugs and 65% of the cost of generic drugs. When your out-of-pocket costs reach $4,700, the government picks up most of the tab.

Average Part D premiums are rising by just $1 a month in 2015, to $32 a month. But those stable premiums could mask changes within plans that could boost your costs. Here’s what to watch out for.

Beware changing formularies. Insurers have been changing their formularies — the list of drugs that are covered — and adding more pricing tiers. Such moves can increase your out-of-pocket costs. “You can’t assume that just because the drug was covered last year that it’s on the formulary again this year,” says Paula Muschler, health care operations manager for Allsup Services, a company that helps people pick Medicare plans.

And Muschler says that a drug could cost “a lot more” because the Part D plan is placing it on a higher-cost pricing tier. Most plans have five pricing tiers, generally with preferred and nonpreferred generics, preferred and nonpreferred brand-name drugs, and specialty drugs. Some insurers that previously charged the same co-payments for all brand-name drugs, for instance, have started charging more for certain brand-name medications by adding a nonpreferred tier.

Cost sharing for brand-name drugs has increased by about 50% since 2006. For drugs at the highest tier, which includes specialty drugs, insurers are charging patients from 25% to 50% of the full cost, potentially adding thousands of dollars to a beneficiary’s out-of-pocket tab for medications.

Buy at preferred pharmacies. The number of plans with preferred pharmacies jumped to 72% from 7% over the past three years. While an insurer will pay a portion of the costs of drugs bought from pharmacies in its network, it pays a greater share at preferred pharmacies. It’s not enough to go to a network pharmacy. “You need to go to a preferred network pharmacy to get the lower cost sharing,” says Elaine Wong Eakin, executive director of California Health Advocates. (An insurer generally won’t cover drugs purchased from out-of-network pharmacies.)

For example, the Humana Walmart Rx plan currently charges a co-payment of just $1 for Tier 1 preferred generics and $4 for Tier 2 nonpreferred generics — as long as the medications are bought at Walmart or Sam’s Club, which are preferred pharmacies. There’s a $0 co-pay through the RightSource mail-order pharmacy. But you are charged a $10 co-pay for Tier 1 and a $33 co-pay for Tier 2 drugs at nonpreferred pharmacies in the plan’s network. You pay 39% of the cost for Tier 4 brand-name drugs at the preferred pharmacies, but 50% at nonpreferred network pharmacies.

Overcome obstacles. Even if your drug is on the formulary, you may need to clear some hurdles before an insurer will cover it. For example, some insurers use “step therapy” for some expensive drugs — requiring you to try a lower-cost medication first before they will cover your drug.

Or they may require “prior authorization,” asking for your doctor to fill out a detailed form explaining why you need that medication. And insurers are imposing limits on the number of dosages.

The first step in determining whether to stick with your current plan, or to switch, is to review your “annual notice of change,” which explains any changes in coverage and costs for 2015. Notices are due at beneficiaries’ homes by September 30.

Before you change coverage, ask your doctor if you can switch any of your brand-name medications to generics. The plan with the best deals for generics may be different from the one that offers the best rates for brand-name drugs. With the Plan Finder, you plug in your zip code and then your drugs and dosages. The tool then pulls up the plans in your area, including details on premiums, deductibles and co-payments, and whether all of your drugs are on the formulary.

You can find out how much you can expect to pay out of pocket under each plan. Focus on that number rather than on the premium cost. The Plan Finder also notes the plans that impose restrictions such as preauthorization and step therapy.

The Plan Finder lets you choose local pharmacies, which can help if you have an established relationship with the pharmacist. However, compare coverage for several pharmacies — the tool shows your expected out-of-pocket costs for all pharmacies you choose. “If you’re willing to switch from your pharmacy to another one that may be across the street, there may be huge savings,” Muschler says. You could also save money by switching to a mail-order pharmacy for your regular prescriptions.

Source: Kimberly Lankford, Kiplinger

Image: Thinkstock

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