I’m not speaking about your portfolio, of course. I’m referring to your Medicare Part D plan. Many retirees opt for Medicare Parts A and B, also known as “Original Medicare,” and then add a Part D plan to cover their prescription costs. These choices are made at the beginning of retirement, and too many retirees just let it ride year after year.
This can end up being a very expensive approach.
Chances are something has changed since you first selected your Part D plan. These changes create important reasons to revisit your choice.
Your health may have changed. Maybe your blood pressure has become more difficult to control, and you need a more expensive prescription to manage it. Or perhaps you’ve found time to get back to the gym since retirement. Now you’ve lost weight and no longer need that prescription to keep your blood sugar under control.
The medications available to you may have changed. A new brand name medication may control your cholesterol better than anything you’ve tried previously. Or your cholesterol medication is finally available as a generic.
The third possibility is that your Part D plan has changed. Medicare allows annual changes to Part D plans. So the prescription that once required a $20 co-pay now may require $40. Or it may have been completely removed from the formulary – the insurance company’s list of approved drugs.
The bottom line is that the Part D plan you chose just last year may not be the best plan for you anymore.
Fortunately, Medicare offers participants the opportunity to reevaluate their Medicare choices, including Part D, once per year. This occurs during Open Enrollment from October 15 to December 7. You’ve still got a couple of weeks left this year.
Medicare makes it easy to shop on their website, with a simple tool for comparing all the Part D plans available to you.
This tool allows you to determine, based on the medications you take now, which plan will be the least expensive for you. Following are steps for evaluating plans on the Medicare website.
First, go to this page and enter your zip code in the general search box. Then you’ll be asked to enter information about your current coverage. Just check the appropriate boxes.
Next gather up any prescriptions you take and enter them in. Be precise – name, dosage, frequency and how many days’ supply you purchase. If you are happy with generic, enter the generic name, as this can yield big savings. If you require the brand name, enter that.
Up next you’ll select your two favorite pharmacies so specific prices can be quoted for you.
At last you will check the box that says “Prescription Drug Plans” and it will show you all the Part D plans available to you. In my trial there were 31 Part D plans for me to choose from. Scroll past the first entry which is “Original Medicare” (Part A and Part B plans.)
Your results will be listed in order of the lowest cost to you annually. This number can be found in the left hand column, and includes premiums, deductibles, and all the costs you will be required to pay for prescriptions for the year.
It’s important not to let yourself be drawn in by low premiums. The lowest premiums don’t necessarily come with the least expensive plan. In one of my test cases, the plan with the $80 premiums was less expensive on an annual basis than the plan with $16 premiums. In another test, case premiums and annual costs did coincide. You can see by the range of annual costs that you can save significantly by choosing wisely.
But, don’t stop at the lowest annual cost. Look over at the column that says “Drug Coverage, Drug Restrictions and Other Programs.” This is where you can see if your particular prescriptions are on the plan’s formulary, and if there are any restrictions for their use. If a plan is marginally cheaper but requires frequent hoop-jumping by you and your physician, it might not be the right plan for you.
Use the check boxes on the left to choose the plans that are the least expensive and have restrictions you can live with. Then click “compare plans” at the bottom or top of the screen. This will let you do a side by side comparison of your top plans.
It also shows you the amount you can expect to spend each month in handy chart form. This can be a great help for budget planning if you have drug costs that will exceed $2,960 annually. This is the threshold for the “Donut Hole,” where you will begin to pay a bigger portion of your prescription costs. Once you reach $4,700, you are out of the donut hole and reach “catastrophic” prescription coverage.
If you are enrolled in Medicare Parts A and B, you may choose a different Part D plan every year based on your health, your specific prescription needs, or changes in your plan. If you are married, it may be that you and your spouse end up choosing completely different plans, and that’s okay. You can work this system to get the best coverage and spend the least amount possible for your medications. You can and should do it every year.
Then you can drop that savings into a passively managed index fund.
Amy Rogers MD is not a practicing physician and nothing written here should be taken as medical advice from either Amy or AssetBuilder. Medical decisions should be made with care in consultation with your health care provider.