Analysis Provides Overview of the 47 California Medicare Drug Plans
Santa Monica, CA — Beginning November 15th, seniors must choose from a complicated array of private plans to sign up for the new Medicare prescription drug program. Choosing the right plan can be confusing because most states will offer more than 40 plans, all with different monthly premiums and co-pays, different lists of covered drugs and different pharmacy networks. The Foundation for Taxpayer and Consumer Rights (FTCR) has analyzed the 47 plans available in California, and developed tips to help seniors and family members in every state choose the right plan.
“With different drugs, pharmacies and out-of-pocket costs for every plan, the Medicare drug benefit is more complex than the average person’s taxes. Still, every senior should decide now whether one of the plans meets their prescription needs because all of the plans start getting more expensive next summer. To make the process easier, consumers can use our five-point guide to avoid the most common pitfalls of this complicated new private drug program,” said David Fink of FTCR.
Five Questions Every Senior Must Ask Before Choosing A Medicare Drug Plan
1. Are My Drugs Covered? Every plan covers different drugs; make sure you immediately rule out the plans that do not cover all or most of your medications.
2. Does My Drugstore Participate? Each plan is accepted by different pharmacies; make sure the plan you choose is accepted nearby.
3. Will My Drugs Stay Covered? The drugs offered by each plan can be changed at any time, and some plans have already announced changes in their drug lists. Make sure you have the most up-to-date information on your plan’s drug list, and whether they are planning any changes. Enrollees are guaranteed just 60 days notice of the change, and may only switch plans once a year, even when medications are dropped.
4. Should I Enroll Now? In order to avoid penalties seniors must enroll within six months. Anyone who signs up after May 15th, 2006 faces a penalty of 1% of the monthly premium for every month they delay enrollment. Therefore, even seniors with little or no current drug costs may consider signing up for a plan now to avoid paying a penalty in the future.
5. What is the “Doughnut Hole” and How Will It Affect Me? Every plan has a coverage gap, dubbed the “doughnut hole.” Once a senior’s drug expenses reach $2,250 in a year, the senior is responsible for paying 100% of drug costs up to $5,100. At that point, seniors will generally only be responsible for about 5% of additional drug costs that year.
Consumer advocates have criticized the Medicare drug plan for earmarking the plan’s $600 billion 10-year budget to private companies but forbidding Medicare to negotiate bulk drug discounts with the pharmaceutical industry.
“The new drug benefit will be more expensive and more complex than necessary because private companies are the providers, rather than Medicare directly. For example, private companies are likely to spend at least 15%, or $90 billion, of taxpayer dollars on overhead, profit and executive salaries,” said Fink.
California’s Medicare Drug Plans
In California, seniors have 47 plans to choose from. Each offers different drugs, monthly premiums and charges different prices for prescription drugs. Many require a yearly deductible to be met before coverage kicks in and not all pharmacies are included in each plan. Not all 47 plans are available in each county. In Los Angeles County, for example, 19 companies are offering 38 different plans. Click here to view a chart comparing the California plans.
Seniors in California can contact the Health Insurance Counseling and Advocacy Program (HICAP) at 1-800-434-0222 for counseling. HICAP services all 58 counties.
For details about plans across the nation, seniors can phone 1-800-MEDICARE, or visit www.medicare.gov
Key Components Of Every Medicare Drug Plan
* Deductibles: Plans are allowed to charge up to $250 per year deductible (the amount seniors must pay before the drug coverage kicks in). Some plans do not require deductibles but charge other fees.
* Monthly Premiums: All plans charge a monthly premium. For example, in California premiums range from $5.41 (Humana) to $66.08 (Prescription Pathway) a month.
* Premiums Increase As Benefits Increase: Often the high monthly premium plans cover more medications while lower monthly premium plans offer fewer drugs. Higher monthly premium plans generally require enrollees to pay less of the drug costs, but this is not true in all cases.
* Co-Pays: Once the deductible has been paid, each plan requires seniors to pay a different out-of-pocket amount when they buy drugs. Some plans require a percentage of the drug costs, some charge a set dollar amount, “co-pay,” that is lower for generics than brand name drugs. Co-pays can range from a few dollars to forty dollars or more per prescription.
* Enrollment and Late Enrollment Penalty: Seniors can sign up between November 15, 2005 and May 15, 2006. The plans go into effect January 1st. Every senior who enrolls after May 15th will pay a penalty of 1% of the monthly premium every month they delay enrollment. For example, a senior who waits three years, or 36 months, to enroll will pay a 36% penalty every month, for as long as he participates in a Medicare drug plan. Seniors who are not eligible for Medicare before May 15th may not have to pay the penalty.
More Factors To Consider When Choosing A Plan
Seniors must weigh the benefits of signing up against the cost of co-pays, deductibles and monthly premiums. Depending on which drugs a senior needs and the enrollment costs of the plans, it may not be cost effective for all seniors to sign up. Seniors who currently have very high out-of-pocket costs may benefit if they can find a plan that covers most or all of their drugs with a low monthly premium. The poorest seniors can get financial assistance to help defray the costs associated with the program.
* Compare All Costs Of The New Plans. Monthly premiums, deductibles, and co-pays will all differ. Compare them to what you currently pay for a year’s worth of drugs. Not every senior will save money — will you? Are you likely to need a plan to save money in the future? According to Money magazine, more than a quarter of seniors would see their yearly drug spending rise considerably if they join one of the plans, meaning some seniors should not enroll at all.
* Costs Will Change. Recently, prescription drug prices have been increasing at several times the rate of inflation. Therefore, enrollees’ costs will increase as the price of drugs rises if they choose a plan that requires members to pay a percentage of drug costs.
* Switching Plans Is Limited. Seniors may change prescription drug plans once a year without penalty but will have wait to the next open enrollment period (Nov 15 to Dec 31) before re-enrolling in a new plan, even if their plan stops covering the medications they need.
* Details On The “Doughnut Hole.” Medicare drug coverage stops for all participants once drug spending by both the senior and the plan reaches $2,250 over the course of a year, including the deductible (after the $250 deductible is met, Medicare pays for 75% of the a senior’s drugs until the total amount spent reaches $2,250). Coverage picks up again once a senior spends $5,100 and Medicare, generally, will cover 95% of the cost of a senior’s prescriptions. In other words, after spending $3,600 out-of-pocket in one year, a senior is generally only responsible for about 5% of drug costs until the end of that year. These requirements start again at the beginning of each year. (Some plans do not charge a deductible but instead increase the size of the doughnut hole).
* Beware of Fraudulent Drug Plans. Do not give out private financial information over the phone — Medicare approved plans are not allowed to ask for this information, nor can they send someone to your door. Do not sign up for any plan not listed as a government approved Medicare plan (check at www.medicare.gov or call 1-800-MEDICARE).
* Low-Income Senior Assistance. Seniors may qualify for added help if their income and resources are limited. An individual with 2005 income below $14,355 ($1,196/month), or $19,245 for a couple ($1,604/month), and financial resources less than $11,500 for an individual or $23,000 for a couple (not including the value of a home or car), may qualify for added help. Seniors approved for added help still have to enroll in a drug plan to receive the benefit, and many who fall just above the threshold will not qualify at all.
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The Foundation for Taxpayer and Consumer Rights (FTCR) is a nationally recognized nonpartisan consumer advocacy organization.