Transcript of Why Medicare Part D Will Drive You Nuts Video
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 costs $300 a month, that's what you paid for it. We had clients back then who regularly spent $5,000, $7,000, or even $10,000 or more each year on their medications. I used to call it BYOD, for bring your own drugs. Fortunately, Medicare Part D relieved this enormous burden on Medicare beneficiaries in 2006. And we are very lucky to have it. But here's the deal. Part D plans are not perfect. They have formularies and pharmacy networks and a coverage gap. Most plans have a deductible upfront, which is something people are not used to having with their employer coverage. When you fill a prescription, you'll also pay a flat copay or a percentage of the cost of the drug, depending on which tier the medication falls into. Some drugs under Part D will have restrictions on them, like quantity limits and prior authorizations. Worst of all, resolving common problems with these plans is time-intensive. Here at Boomer Benefits, we field hundreds of inbound calls every month from our policyholders involving Part D problems that they need our help resolving. We are always helping our clients resolve issues with Part D. Think about that for just a moment. I employ over 25 people full-time who spend the bulk of their time fixing all the hiccups the Part D program causes for Medicare beneficiaries just like you.
So, if you're new to Medicare, you will probably soon find out that Part D is no bed of roses, no matter which insurance company you buy your Part D plan from. Nonetheless, Part D is so worth it as I have witnessed on countless occasions with our own clients, and which I will demonstrate in this video. Let's start by going over some common reasons why people sometimes feel let down by their Part D. This will help you build some realistic expectations for what your Part D plan will do for you. Then we'll talk about why Part D is necessary and even awesome, despite the hiccups and annoyances. Medicare Part D costs come in several forms. There are monthly premiums, deductibles, copays, and coverage gap spending. The Center for Medicare and Medicaid Services sets the Part D deductible each year and it is currently over $400. This is a lot to pay upfront on a fixed income and it seems to go up a little bit every year. The deductible set by Medicare is the maximum that any plan can charge you upfront before your copays for the medications begin to kick in. Some insurance companies will charge you a lower deductible or no deductible. But generally, these plans have higher premiums or higher drug co-pays to offset that. When we analyze the most cost-effective plans for our own clients, the results often show us that the plans which require the deductible upfront often give our clients the lowest overall annual costs.
Something else you will see when searching for a drug plan is that 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 a $20 monthly premium and a deductible of over $400. But the deductible is waived for drugs in tier one and tier two. This encourages generic drug use, and beneficiaries will ask their doctors to prescribe generics so that they can hopefully avoid incurring the deductible that year. There is a side effect of these tier-specific plans, though. People who enroll in plans with tier-specific deductibles often forget that their plan has a deductible. You get used to filling drugs in tiers one and two, and you're probably just paying an ordinary copay. You forget all about the deductible that applies to drugs in tiers three, four, and five or higher. Then you go see to your doctor mid-year for a sinus infection, and the doctor prescribes a brand new allergy medication that just hit the market. You go to fill this medication, and, wham, the pharmacy charges you $300. Why did this happen? Because you forgot that the deductible applies to drugs in tier three, and the retail cost of that medication is $300. That spending gets applied toward your deductible and you have to meet the whole deductible before you will start having just a copay for those drugs in tier three and higher.
So, how can you prevent this unpleasant surprise? Read the plan's summary of benefits carefully when you're enrolling in your plan. Make a mental note of what your plan's deductible is and which tiers that deductible applies to. Then, always remember to ask your doctor for generic options at every appointment. If he or she can prescribe you a drug in those lower tiers, you'll avoid the deductible bill shocker at the pharmacy. Here's the tip. You can also carry your plan's drug formulary with you to any of your doctor appointments. When your doctor suggests a medication, look it up in the formulary first to see if it's covered and find which tier it's in. If you can't afford the medication ask your doctor for an alternative. And a bonus tip, if you forget your formulary, but you're a client of Boomer Benefits, you can call the client service team while you're at the doctor's office, and we can check your formulary for you while you're there.
Everyone hates the Medicare Part D coverage gap, also known as the donut hole. It's not fun when you've gotten used to paying a $45 copay for a medication during your plan's initial coverage phase, and then suddenly it goes up to $100 when you hit the coverage gap. Unfortunately, there's usually no getting around the coverage gap unless you have Medicaid or the Part D low-income subsidy. The gap 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 would go up substantially. Here's a tip. Make a list of your medications and what you are paying for them when you go to the pharmacy. Present this list to your doctor so that he or she can see which ones cost you the most and which ones are also likely doing the most damage towards you hitting the coverage gap. Doctors are often unaware of how much the medications they're prescribing actually cost the consumer. Your doctor may be able to help you find lower price alternatives that could keep you under the gap threshold. We know this works because our client service team helps our policyholders pull together this information to show their doctors all the time. We helped one of our clients show her doctor how a particular medication for her cost over $2,000 a year when she was in the coverage gap. Using a printout from medicare.gov that we provided her, our client was able to get her doctor to prescribe an alternative medication with a monthly cost of $26. Winner winner, chicken dinner, that's a tip you can take to the bank.
Premiums are another sore spot for lots of people in Part D. Drug plan premiums change annually, 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 like you to know in relation to Part D premiums. Number one, premiums do not indicate the best plan for you. Part D plan premiums can range from as low as around $7 a month to well over $150 a month depending on where you live. But a higher premium might not necessarily mean better coverage for you. It just means that 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, any coverage gap spending, and catastrophic spending that you might incur. You want to find the plan that offers you the lowest overall annual cost. Sometimes that could mean the analysis recommends a plan with a $50, $60, or even $70-plus premium. But even though the premium is higher, we know that it will save considerably more money over the other options because the plan happens to be the one that covers your specific medications at the lowest cost, and it varies for each person. Here's a tip. Use the plan finder tool inside your My Medicare portal to estimate which plan is best for you, or call us here at Boomer Benefits and we'll help you find the right plan.
Number two, drug plan premiums may be different for you based on your income. Some people with very low incomes can qualify for assistance with the premiums for Part 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 plan's summary of benefits. On the flip side, if you have a higher than average income, the plan premium listed by the insurance company may not be all that you spend. People with higher incomes pay more for Part D. Medicare tracks your income via your tax return submitted to the IRS so that when your agent quotes you a Part D premium, that's the base premium for the plan. Only you know if your annual income over the last two years has exceeded the threshold, your agent does not have access to that information. So, if your income is higher than the threshold, 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 be adding on top of your existing premium. Here's a tip. Head on over to Boomer Benefits and review the Parts B and D premium charts on our Medicare cost page to estimate whether you will owe any additional Part D premiums due to IRMAA.
Number three, premium deductions don't always happen like you want them to. Your Medicare 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 sometimes a source of problems. It takes time for Social Security to set up this deduction after being notified by the Part D company that you have enrolled. In the meantime, you'll need to pay the premium directly to the insurance company and people just don't realize this. They ignore the bill and then they get dis-enrolled from their drug plan. There have also been several national incidents where some sort of glitch has caused a failure to deduct the premiums from beneficiaries' Social Security checks. Then the Part D plan fails to get your payment and kicks out a bill to you. You are surprised to get a bill and you don't know whether or not you should pay it. Here's a tip. The easiest way to avoid this is to opt for monthly bank draft or direct billing to pay your Part D premiums.
Number four, premiums can go up due to late penalties. If you skipped Part D without prior coverage for a number of months or years, you will be subject to a Part D late enrollment penalty. Your agent has no way of knowing whether you have had prior months when you went uncovered. So, he or she can't estimate the penalty for you unless you tell him that there were some times where you went with no drug coverage. Expect a late penalty to be applied if you had any months where you were eligible for Part D and had no other credible coverage but still opted not to enroll. Furthermore, if you are new to Part D and you did have credible 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 company shortly after your enrollment. The forms will ask 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. In fact, it's so common that it's one of the mistakes I dive into in my book about, "10 Costly Medicare Mistakes You Can't Afford to Make." After all, who wants to open and read mail from your Part D insurance carrier? Boring. However, this form is really important because if you miss it, Medicare will apply the penalty and you will owe it. To get it corrected, you have to appeal with Maximus and wait months for it to be corrected, and you'll be paying the penalty that entire time. Here's my tip. Watch your mail carefully for communications from your new drug plan carrier and always open all the mail you receive from them. Respond promptly to any request for information from your carrier.
Okay. So, that's a wrap on the issues revolving around your drug plan premium. Let's move on to other reasons why Part D will drive you nuts. Utilization management tools. Say what? As if you didn't have enough to learn, Medicare Part D plans also have restrictions on various medications. So, I guarantee whichever drug plan you choose, you'll have them, too, because they all do. 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 commonly see quantity limits on pain medications. Your drug formulary will indicate which medications, if any, have limits. And 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, of course, 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 here helps our Part D members manage this process all the time. Sometimes just a nudge to your doctor's office to get them to fill out the form is necessary. If you enroll in Part D without an agent, you'll be the person doing all of the nudging on your own. So, check the drug formulary anytime you enroll into a new plan.
Sometimes the plan will list a drug in its formulary, but will have 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're standing at the pharmacy counter. When you fill the prescription, your pharmacist will note the restriction and then notify the plan to send out a prior authorization form to your doctor. Usually, this is a one or two-page form that can be quickly completed by your doctor's office staff and sent back to your plan. If the doctor's reasons for prescribing this medication are not clear or compelling, the Part D company can deny the medication. At that time, you need to work with your doctor to find an alternative treatment or medication. 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 the requested medication is medically necessary and that none of the other drugs on the formulary will work for you. Perhaps you've already tried the generic option or you're allergic to one of the cheaper alternatives. All of this should be declared by your doctor when completing the form. 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 this until it's too late.
The bright side is that you're given an annual election period each fall to change your plan if you don't like these changes. Here's a tip that you may already have heard in some of our videos — 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.
So, now I've shared with you all the reasons why Part D can drive you nuts. Nonetheless, we don't recommend skipping it for several good reasons. Number one, you will often get out more than you put in. It's very common for us to see someone paying $20 a month for a drug plan. And in a lot of those cases, that same drug plan is charging them only a $45 copay for a $300 medication. It's easy to do the math and see that you're the winner on that deal. Number two, 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. Number three, even in the coverage gap, you are paying no more than 25%. Just a few years ago, people on Part D paid 100% for the brand name drugs in the gap. The ACA legislation changed that. Anytime you can buy a medication for one-quarter of its retail price, that's a win for you.
Number four, 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 bills within just a few months. Part D caps you at a set limit each year, and after you reach that, your meds are only 5% for the rest of the year. 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 taking a few common generics. Then I needed a new leukemia drug that costs about $8,000 a 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. Once you avoid going through these ordinary Part D hassles all on your own, give us a call here at Boomer Benefits to shop your Medigap plan. And we will help you find the most cost-effective Part D plan, 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.