As prescription drug prices continue their upward climb, Medicare beneficiaries should pay close attention to the coverage they choose during open enrollment.
During this window, which lasts through Dec. 7, you can choose drug coverage (Part D) either as a standalone plan that serves as a supplement to original Medicare (Parts A and B) or as part of a Medicare Advantage Plan (Part C).
Either way, experts say that while you should ensure that any medications you take are covered, don't stop your search at the first choice meeting that basic minimum.
"It's really important to compare plans, because they can be very different in pricing and the pharmacies included," said Matt Chancey, a certified financial planner based in Orlando.
Americans spent $457 billion on prescription drugs in 2015, according to recent data from AARP. With Medicare prohibited by law from negotiating drug prices, retirees — whose budgets often already are often stretched thin — face differences in drug prices from plan to plan that can reach hundreds of dollars.
For instance, the Senior Citizens League compared the prices of the top 10 most-prescribed drugs among 23 prescription plans available in one ZIP code.
"The average difference between high and low prices on that particular list was $593 per month," said Mary Johnson, senior policy analyst for the advocacy group.
Source: Kaiser Family Foundation's Medicare Part D report
Prescription drug coverage, or Medicare Part D, is optional. However, if you fail to sign up when you first qualify for coverage and change your mind later, you will pay a life-lasting penalty unless you meet certain exclusions (i.e., you receive acceptable coverage through a union or employer).
If you have Original Medicare and are looking for a standalone drug plan, the average monthly premium for 2018 is expected to be $43.48, according to the Kaiser Family Foundation. This is a 9 percent increase from the $39.90 in 2017 and a 68 percent increase from $25.89 in 2006.
Among the 10 standalone plans with the highest enrollment, the average premium next year will range from a low of $20.21 per month ($243 yearly) to a high of $83.68 monthly ($1,004 annually). (Click on chart below to enlarge.)
Also be aware that higher earners pay a monthly surcharge in addition to the monthly plan premium. For individuals earning $85,000 or more and married couples with $170,000 of annual income, the extra monthly cost this year has ranged from about $13 to $76 monthly, according to the Centers for Medicare and Medicaid Services.
If you are shopping for a Medicare Advantage Plan, the good news is that most also include prescription drug coverage.
"It's like grits on your plate in the South," said certified financial planner Hans "John" Scheil, CEO and owner of Cardinal Retirement Planning in Cary, North Carolina. "You don't order it. It just comes with it. It might not be the best [drug] plan for you, but that's what you get."
This makes it all the more important to make sure that the Advantage Plan that you like for other reasons — i.e., maybe it includes vision or dental — also will make sense for your medications. For instance, if you pick an Advantage Plan and the pharmacy you have to go to is far away, you're stuck with that until next fall's open enrollment. Same goes for a standalone plan.
It's also important to keep in mind that most drug plans — whether as a standalone or as part of an Advantage Plan — have a gap in coverage called the donut hole.
Basically, the "Medicare doughnut hole" starts when you have spent a government-determined amount, which changes every year. In 2017, it was $3,700.
If you hit that threshold, you enter the "doughnut hole" and will pay a higher share of drug costs until you reach the so-called catastrophic coverage phase. In 2017, this starts once your annual out-of-pocket drug costs hit $4,950.
Not everyone will ever reach the "doughnut hole," and people who get government help paying drug plan costs will not face it. To find out if you qualify for the Extra Help program that assists people with limited income pay for Medicare prescription drug coverage, contact your state's Medicaid agency or the Social Security Administration.
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