Did you know that prior to 2006, there was no retail drug coverage for people on Medicare?
That’s right – if you needed a brand name prescription that cost $300/month, that’s what you paid for it. We had clients back then who regularly spent $5,000, $7,000, even $10,000 or more each year on their medications.
I used to call it B.Y.O.D. Bring Your Own Drugs.
Fortunately, Medicare Part D relieved an enormous burden on Medicare beneficiaries in 2006. We are very lucky to have it.
But here’s the deal:
Part D plans are not perfect. They have formularies and pharmacy networks. They charge deductibles, copays and coinsurance. Drugs have restrictions. Not to mention the dreaded donut hole (which is going away in 2020, by the way, more on that below).
Worst of all, resolving common problems with these plans is time-intensive. Here at Boomer Benefits, Part D issues are responsible for about 70% of my Client Service Team’s time spent on the phones. We are ALWAYS helping our clients resolve issues with Part D.
Think about that for a moment. I employ NINE people full-time who spend the bulk of their time fixing all the hiccups Part D causes for Medicare beneficiaries just like you.
Nonetheless, Part D is worth it, as I have witnessed on countless occasions with our own clients.
Let’s go over common reasons why people sometimes feel let down by Part D. This will help you build some realistic expectations for what your Part D plan will do for you. We’ll also talk about why Part D is necessary and even awesome, despite the hiccups and annoyances.
Deductibles and Donut Holes
Medicare Part D costs come in several forms – premiums, deductibles, copays, and donut hole spending.
The Center for Medicare and Medicaid Services sets the Part D deductible each year. Currently it’s $400. This is a lot to pay up front on a fixed income, and it seems to go up a little every year. The deductible set by Medicare is the maximum that any plan can charge you up front before your copays for medications begin to kick in.
Some insurance companies will charge a lower deductible or no deductible, but generally these plans have higher premiums or higher drug copays. When we analyze for the most cost-effective plans, the results often show us that the plans which require the deductible up front often have the lowest annual overall costs.
Some plans apply the deductible only to drugs in certain tiers, usually the brand name tiers. For example, you might enroll in a plan with an $18 monthly premium and a $400 deductible, but the deductible is waived for drugs in Tiers 1 and 2.
This encourages generic drug use. Beneficiaries will ask their doctor to prescribe generics so that they can hopefully avoid incurring the deductible that year.
The Problem with Tier-Specific Deductibles
There is a side effect of these plans though. People who enroll in plans with tier-specific deductibles often forget about the deductible. You get used to filling drugs in Tiers 1 and 2, and you forget about the deductible for Tiers 3 and higher. Then you go to see your doctor mid-year for a sinus infection, and the doctor prescribes a new allergy medication that just hit the market.
You go to fill this medication and whammo! – the pharmacy charges you $300. Why did this happen? Because you forgot that the deductible applies to drugs in Tier 3, and the retail cost of that medication is $300.
The best way to avoid this is to always ask your doctor for generic options, at every appointment.
Tip: You can also carry your plan’s drug formulary with you to your doctor appointments. When your doctor suggests a medication, look it up in the formulary first to see if it’s covered, and which tier it is in. If you can’t afford the medication, ask your doctor for an alternative.
Bonus Tip: If you are a client of Boomer Benefits, you can call the Client Service Team while you are at the doctor’s office and they can check your formulary for you while you’re there.
Donut Hole Depression
Everyone hates the Medicare Part D donut hole. It’s not fun when you’ve gotten used to paying a $45 copay for a medication and then suddenly it goes up to $200.
Unfortunately, there’s no getting around the donut hole, unless you have Medicaid or the Part D Low Income Subsidy. The donut hole exists for a very good reason. Medicare wants you to have a financial reason to ask your doctor for lower cost medications. Otherwise, everyone would ask for brand name drugs all the time, and Medicare’s costs as a nation would go up substantially.
Fortunately, the donut hole is being phased out in 2020. We may see higher plan premiums because of it, but at least your copay for your meds will stay consistent throughout the year. Learn more about the donut hole here.
Tip: Show your doctor a list of your medications so he can see which ones cost the most and are doing the most damage toward you hitting the gap. Doctors are often unaware of how much the medication they are prescribing actually cost. He or she might be able to help you find lower-priced alternatives that could keep you under the gap threshold.
Valaree on our Client Service Team recently helped one of our clients show her doctor how a particular medication cost her over $2000 a year in the coverage gap. Using a printout from Medicare.gov that Valaree provided her, our client was able to get her doctor to prescribe an alternative medication with a monthly cost of $26. Winner!
Monthly Premium Pandemonium
Premiums are another sore spot for lots of people on Part D. They change often and there are a number of factors that can affect them. Some people are also confused between premiums, deductibles and copays. Here are the facts I’d want you to know in relations to premiums.
Premiums Do Not Indicate the Best Plan for You
Part D plan premiums range from as low as $15/month to well over $150/month. A higher premium might not necessarily mean better coverage. It just means the premium is what that insurance company has decided their plan is worth.
You should estimate ANNUAL spending on all parts of a Part D plan if you want to be sure you are in the most cost-effective coverage available to you. This includes: monthly premiums, copays for your specific medications, and any coverage gap spending you might incur.
We help our Medigap clients find the drug plan that offers the lowest overall annual costs. Sometimes that could mean we recommend a plan with a $70 monthly premium. Even though the premium is higher, we know it will save considerably more money over the other options because the $70 plan happens to be the one that covers your most important medications at the lowest costs.
It varies for each person.
Tip: Use Medicare’s Drug Finder tool to estimate which plan is best for you, or call us at Boomer Benefits and we’ll use it to analyze your Medicare Part D cost for next year.
Premiums May Be Different for You Based on Your Income
Some people with very low incomes can qualify for assistance with Parts B and D. If you qualify for Medicaid or the Part D Low Income Subsidy, you may pay less for the drug plan than the premium listed in the plans’ summary of benefits. Learn more about help with Medicare Part D cost help here.
On the flip side , if you have higher than average income, the plan premium listed by the insurance company may not be ALL that you spend. If you enrolled late in your plan, you’ll have late penalties to pay. Your agent will only know this if you share that with him or her.
Likewise, people with higher incomes also pay more for Part D. Medicare tracks your income via your tax returns submitted to the IRS, so when your agent quotes you a Part D premium, that is your base premium for the plan. Only you know if your annual income over the last two years has exceeded the threshold. If your income is higher and you enroll in a Part D plan, expect a notice from Social Security informing you of an Income Related Monthly Adjustment Amount (IRMAA) that they will add on top of your existing premium.
Tip: Review the Part B and D premium charts on our Medicare Part D Cost page to estimate your IRMAA.
Premium Deductions Don’t Always Happen Like You Want Them To
Your Part D application will offer you several modes of payment. Many people choose to have their monthly premium deducted from their Social Security check. This payment method is a frequent source of problems. It takes time for Social Security to set up this deduction after being notified by the Part D company. In the meantime, you’ll need to pay the premium directly to the insurance company.
Tip: The easiest way to avoid this is to opt for monthly bank-draft or direct billing to pay your premiums.
Premiums Can Go Up Due to Late Penalties
If you skipped Part D without other prior coverage, you are subject to a late enrollment penalty. Your agent has no way of knowing whether you had prior months when you went uncovered, so he can’t estimate the penalty for you unless you tell him. Expect a late penalty to be applied if you had months where you were eligible and had no other creditable coverage but you opted not to enroll.
Furthermore, if you are new to Part D and you did have prior creditable coverage, you must declare that to Medicare via the forms your new Part D company sends you.
You will receive paperwork from the Part D insurance carrier shortly after your enrollment. The form asks you to declare any other coverage you’ve had – such as employer group health insurance or Indian Tribal benefits – since the time you became eligible.
People miss this form all the time. After all, who wants to open and read Part D mail? However, this form is truly important because if you miss it, Medicare will apply the penalty and you will owe it. To get it corrected, you will have to appeal with Maximus and wait months for it to be corrected. You’ll be paying the penalty that entire time.
Tip: Watch your mail carefully for communications from your new drug plan carrier and always open all mail you receive from them. Respond promptly to any requests for information from your carrier.
Utilization Management Tools
Say what? As if you didn’t have enough to learn, Medicare Part D plans also have restrictions on various medications. Every single drug plan has restrictions on various medications, so I guarantee whichever drug plan you choose will too. These tools help drug companies protect their plan members from misuse.
It’s your responsibility to review the Drug Formulary for your chosen plan and see which restrictions, if any, apply to you.
Here’s the skinny on them:
Your plan can limit how much of a medication that you can fill within a certain time frame, usually 30 days. For example, we very commonly see limits on pain medications. Your drug formulary will indicate which medications, if any, have limits.
If your doctor prescribes more than the limit, your plan will kick out a form that he or she must complete explaining why you need more than the allowed amount. This can delay your prescription being filled for several days, so it’s important to know which drugs have quantity limits so that you can be aware of the expected delay.
My team helps our Part D member manage this process all the time. Sometimes a nudge to your doctor’s office to get them to fill out the form promptly is necessary. If you enroll in Part D without an agent, you will be the person doing the nudging all on your own, so check the drug formulary anytime you are enrolling into a new plan.
Sometimes a plan will list a drug in its’ formulary, but will place a Prior Authorization restriction on it. If you didn’t review your formulary ahead of time, this can come as an unwelcome surprise when you are standing at the pharmacy counter.
When you fill the prescription, your pharmacist will note the restriction and notify the plan to send out a prior authorization form to your doctor. Usually this is a 1 or 2-page form that can be quickly completed by your doctors’ office staff and sent back to your plan.
If the doctor’s reasons for prescribing this medication aren’t clear or compelling, the Part D company can deny the medication. At that time, you would need to work with your doctor to find an alternative treatment or medication.
Step Therapy & Drug Exceptions
Particularly expensive medications will sometimes call for Step Therapy. This restriction requires that you try a lower-cost medication (such as a generic) before trying the more expensive drug. If that medication doesn’t work or if you’ve already tried it, your doctor can complete a drug exception form provided by your insurance company.
Your provider must show the insurance company that requested medication is medically necessary and that none of the other drugs on the formulary will work. Perhaps you’ve already tried the generic option, or you are allergic to one of the cheaper alternatives. All of this should be declared by your doctor when completing the form.
Drug exceptions can also be used to request that the plan cover a medication not listed on the formulary.
Tip: When reviewing your Part D options, compare the top 3 – 5 most cost-effective plans for you. Look at the list of restrictions provided by Medicare.gov. Choose the one that gives you the least hassle when it comes to restrictions.
Part D Benefits Change Every Year
Medicare changes the limits each year for the deductible, initial coverage, coverage gap (donut hole) and catastrophic coverage. In return, the plans adjust their premiums, copays, and drug formulary.
What’s important for you to remember is that your plan could drop one of your necessary medications. If you don’t take the time to review what’s changing, you won’t know until it’s too late.
The bright side is that you are given an annual election period each fall to change your plan if you don’t like these changes.
Tip: Look for the Annual Notice of Change booklet in your mailbox each September. Carefully review it to see if anything big is changing in your plan for next year.
Most Agents Don’t Want to Help You with Part D
Our agency is a top national producer with multiple carriers that you know and trust: Aetna, Cigna, Mutual of Omaha, and many others. This status gives us the opportunity to meet dozens of other agents from around the nation each year.
Most of them don’t help their clients with Part D. I can’t blame them.
Part D plans pay dismal commissions. They eat up a huge amount of an agent’s time trying to help their clients with problems that occur on any drug plan. Most agents don’t want to spend 4 hours on the phone fighting with your Part D carrier when their commission for the plan is less than $5/month. It’s easier for him to just refer you to Medicare to enroll.
This tends to leave many beneficiaries in a bind. If your agent doesn’t provide Part D help, watch Medicare’s video on how to use their drug finder tool. You can research your own drug plan, but just remember that you’ll then be on your own for handling problems that may occur.
Tip: Look for an agent who helps their clients with Part D.
Bonus Tip: Be kind to that agent when requesting help with Part D. He or she is being paid almost nothing to help you with it, which means you have found yourself a winner, a saint, an angel, and a hero. Love them and be loyal to them. They are hard to find.
Why You Should Enroll in Medicare Part D Anyway
You will often get out more than you put in. It’s very common for us to see someone paying $18/month for a drug plan. In A LOT of cases, that drug plan is charging a $45 copay for a $300 medication. It’s easy to do the math and see that you are the winner on that deal.
Part D plans have networks that give you special pricing. Insurance companies can negotiate prices for medications that you can’t on your own because they have buying power. Enrolling in Part D lets you take advantage of that.
The coverage gap is shrinking. Just a few years ago, people on Part D paid 100% for their brand name drugs in the gap. The ACA legislation changed that. Now you pay 40% in the gap, and we’ll continue to see that shrink year by year until 2020 when the gap is eliminated.
The catastrophic coverage is critical. Without Part D, there is no end in sight to what you might pay for medications. I’ve seen people on oral chemotherapy medications chalk up $20,000 in bills within a few months. Part D caps you at $4,950 in 2017, and after that you pay only 5%. This alone is worth whatever premium you pay.
Consider this comment from Mark N. on one of our Facebook posts:
“I went for a super saver version of Part D, just in case, for $21 per month because I was just getting a few common generics. Then I needed a new leukemia drug that costs about $8,000 per month. I blasted through the donut hole in January each year and out the other side. But that was the best $21 per month I’ve ever spent. You don’t know when something like this is going to happen to you.”
If that doesn’t show you why Part D is SO necessary, I don’t know what will.
Let Part D Drive Us Nuts
Want to avoid going through these ordinary Part D hassles on your own? Give us a call here at Boomer Benefits to shop your Medigap plan and find the most cost-effective Part D plan for you too. Why let Part D drive you nuts, when we have the most stellar Client Service Team on the planet? We’ll tackle these things for you at zero cost to you.
In fact, we truly prefer that our clients do not call the insurance carriers themselves. You will just get run-around, hassle and heartache. There’s no need for this when you have us on your side.
Get someone on YOUR side with Medicare today: 1-855-732-9055.
Have a question about Medicare Part D that we can answer for you? I’d love to hear from you in the comments below.