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6 Reasons to Choose a New Medicare Part D Plan for 2014

Check out the alternatives before sticking with your current plan

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Pharmacist Talking to Client
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By Emily Brandon

Retirees have the option to switch Medicare Part D prescription drug plans between now and Dec. 7. Most seniors who stick with their current plan in 2014 can expect to pay higher premiums and other out-of-pocket costs than they did in 2013. Only 13 percent of participants picked a new prescription drug plan voluntarily during this annual enrollment period between 2006 and 2010, according to a Kaiser Family Foundation analysis of Centers for Medicare and Medicaid Services data, but many of these retirees were able to significantly decrease their premium costs. Here's why you should consider picking a new Medicare Part D Plan for 2014.

Medication changes. Your medication needs could change throughout your retirement. If you are now using new medications or think you might in the coming year, you should consider evaluating which plan will cover you best going forward. Plans can and do change which medications they will cover each year and how much participants are charged for each medication. Just because your medications were covered with a given copay in 2013 doesn't mean they will continue to be covered at the same level or at all in 2014.

"Because plans can change pretty much every feature of the benefit design, including the list of drugs that they cover, people might want to switch out of a plan if, for example, the plan stops covering a drug that they are taking," says Juliette Cubanski, a policy analyst at the Kaiser Family Foundation. "It might cost them a lot of money if they had to pay for it out of pocket outside of Part D."

Find lower premiums. The average premium is expected to increase by 5 percent from $38.14 in 2013 to $39.90 in 2014 if retirees stay in their current Part D plan, according to a recent Kaiser Family Foundation analysis of 2014 plan offerings. Many beneficiaries (44 percent) will pay between $1 and $10 more if they remain in their current plan in 2014, and 14 percent will experience a monthly increase of more than $10. Premiums will increase by more than 50 percent next year in United HealthCare's AARP Medicare Rx Saver Plus and First Health Value Plus. Retirees enrolled in the First Health Essentials and the Humana Preferred Rx Plan will also face double-digit premium increases unless they switch plans.

Avoiding high premiums is the most common reason retirees select new prescription drug plans. Nearly half (46 percent) of enrollees who switched plans paid at least 5 percent less in premium costs the following year, compared to 8 percent of those who did not switch plans, KFF found. More than a quarter (28 percent) of beneficiaries facing a monthly premium increase of $20 or more switched prescription drug plans during the annual enrollment period, versus 7 percent of those facing a more modest premium increase of up to $10 or no change in their premium.

"Some plans do increase their premiums quite considerably from one year to the next," Cubanski says. "When faced with that kind of sticker shock, that can motive people to go and look at what other plans are available that the person might think is more affordable."

Seek lower copays and other cost sharing. Besides premiums, Medicare Part D beneficiaries face a variety of other out-of-pocket expenses, including deductibles, copayments, coinsurance and costs in the coverage gap. When both premiums and cost sharing for drugs are considered, 44 percent of retirees who switched plans had overall costs that were at least 5 percent lower than the previous year. Only 28 percent of seniors who didn't switch plans saw their out-of-pocket costs decline by at least 5 percent.

"If the particular drugs you use are on more expensive tiers or not on the formulary, that can lead to higher out-of-pocket costs," says Jack Hoadley, a health policy analyst at Georgetown University. "Go on the online plan finder on Medicare.gov and use your current mix of drugs to calculate your total out-of-pocket costs and not just the premiums."

Reduce your deductible. Just over half of prescription drug plans will charge a deductible in 2014, and most charge the maximum possible amount of $310 before any drug costs will be covered. The share of plans with a smaller deductible has declined from 24 percent in 2010 to just 4 percent in 2014. However, 47 percent of plans will charge no deductible in 2014, meaning retirees will get coverage on their first prescription, often in exchange for a higher monthly premium.

"If you are worried about how your costs will be spread over the year, you could pay a little bit more in premiums to not have a deductible," says Elizabeth Hargrave, a senior research scientist at NORC at the University of Chicago.

Consider gap coverage. The Medicare Part D coverage gap begins once a retiree incurs $2,850 in prescription drug costs and ends after total drug costs hit $6,691 in 2014. No prescription drug plans will offer full gap coverage for all drugs on their formulary in 2014, but about 15 percent of plans will offer some coverage of generic or brand-name medications in the coverage gap beyond what the law requires in exchange for higher monthly premiums.

"The plans that provide some additional coverage in the gap often have premiums that could be higher than the extra value that they get," Hoadley cautions.

Ease of using your benefits. Prescription drug plans are increasingly creating preferred pharmacy networks, and charging retirees higher prices if they don't fill their prescriptions at the preferred pharmacies. For example, copayments for a preferred brand drug will be $20 in a preferred pharmacy and $30 in another network pharmacy through the AARP Medicare Rx Saver Plus prescription drug plan.

"Some people are willing to switch to the pharmacy that offers the best deal in a given plan," Hoadley says. "It's definitely important to take a look at whether the pharmacy you prefer is in the plan at all or in the preferred network."

Even if you are happy with your current prescription drug plan, the coverage and out-of-pocket costs could change in 2014. "It makes sense to look beyond the premiums, because while that might be the amount people see every month, there are also the ongoing costs of how much you pay when you fill your prescription and ... the deductible, and those can affect the total amount of money a person needs to spend out-of-pocket to be enrolled in their drug plan," Cubanski says. "It does make sense for people to take a little bit of time to see how their plan might be changing and what that means for them on an individual basis."


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18 Comments

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Emilio Paletta

Sorry about the error in my article. That's $480 per year, not month

October 29 2013 at 11:15 AM Report abuse rate up rate down Reply
Emilio Paletta

SUGESTION: "IT'S UP TO YOU"

1. Rounding the monthly payment for the Medicare drug plan, amounts to approx $480 per month. Drop the plan

2. To this add the amount the pharmacy charges for each refill order you place.

3. Call Canada Drugs @ 1-800-226-3784 for price quotes on generic equivalents. Example: Plavix 75 mg (generic) 84 ct __$$47.04, based on my last refill. All there med's either come from the U.S.,Canada, or the United Kingdom. Also, at any time you may speak to the pharmacist. Their are also other perks. A. They will call or email you when you need a refill. In the event your doctor decides you need a different drug, you can send the unused potion back and they will credit your account. ( By Canadian law they must discard any returned drugs)

I have been using Canada drugs for approx 10 years and have had no problems. I'm certain you will find, as I did, you will be saving money.

* Here's another little available savings idea if you decide to go this route. Mention my name Emilio Paletta, and on your first order, you'll save an additional $25. This option is up to you. When you do the same, the person you that mentions your name will also save an additional $25 on first order.

This is how we the people beat the Pharmaceutical Companies' Drug Lobbies (at their own game), who are ripping the American people off.

October 29 2013 at 8:23 AM Report abuse +1 rate up rate down Reply
Shirley

I was naive. Expected the Affordale Care Act to lower drug costs. Jokes on me.

October 29 2013 at 3:00 AM Report abuse rate up rate down Reply
bostonpd203

I would like to ask the world this question: WHY won't insurance companies (Humana, etc.) insure people with millions of diseases pre existing BUT WON'T insure people with Renal Kidney failure disease. Can anyone explain why?

October 29 2013 at 2:16 AM Report abuse rate up rate down Reply
2 replies to bostonpd203's comment
Shirley

Not sure what you are asking. Until Obama care, insurance companies would not insure pre-existing conditions. Not certain if end stage renal is covered under the Affordable Care Act. Some would after 1 year as a customer. It has to do with money/profits. If money can not be made the insurance companies do not want to cover it.

October 29 2013 at 2:43 AM Report abuse rate up rate down Reply
tjcnopops2

Medicare covers dialysis for kidney failure no matter what age.
I read that it costs $250,000 a MONTH for dialysis.

October 29 2013 at 11:25 AM Report abuse rate up rate down Reply
flowkay3

What is a person to do who takes only one drug? Very expensive and I could not afford it.

October 29 2013 at 12:03 AM Report abuse rate up rate down Reply
1 reply to flowkay3's comment
Shirley

Your stuck. If we don't buy it now we get penalized later :(

October 29 2013 at 12:12 AM Report abuse rate up rate down Reply
1 reply to Shirley's comment
Shirley

In 2014 I could buy my monthly scripts for $400 less then what medicare will cost. I can even pay cash for an Epipen and still be ahead of the game. Side note: I read the company that makes the Epipen is not allowing it to go generic. I thought there was a time limit?

October 29 2013 at 12:22 AM Report abuse rate up rate down
Shirley

2014 will cost much more team 2013. The insurance companies have switched the tiers of so many drugs into a higher tier. A couple of my drugs went from zero co-pay to $33, $38. One went from $35 to $90 (if I change companies). If I stay with the same company it will $120. But if I change companies I will have a $310 deductible. News reports do not speak of the tiers, co-pays, and deductibles. The public hears only what the insurance companies want reported: Small increase in priemum. Also, there is no way to compare the cost of future prescriptions. Each company has a different cost and the drugs can be in different tiers. I have paid cash for most of my drugs in the past. My out-of-pocket cost was 1/3 to 1/8 of the cost the insurance companies claim their costs are. Who are they trying to fool. Unfortunately our hands are bond by our government. Yet our government retirees receive ample benefits when they retire while we are forced to decide between medication, food and utilities. Long story short. Long term employer went bankrupt and after settlement went back into business. My small retirement benefit was cut by 2/3. My gosh, when all the baby-boomers are gone, will the next generation be expected, not only to cover, but continue to contribute to the over-all profit increases for all companies as well. At some point this cycle has to stop before we become a third world nation. Rambled enough. Thanks for listening. Now back to searching for a part D plan.

October 29 2013 at 12:02 AM Report abuse rate up rate down Reply
wurkinman1

Glad I read this...learned my premiums could or will increase by 50%....with AARP United Healthcare....I see a change a coming

October 28 2013 at 11:07 PM Report abuse rate up rate down Reply
betty_brock

If your insurance is strewed up and you voted for Obama, you have no right to complain.

October 28 2013 at 9:54 PM Report abuse -3 rate up rate down Reply
am0714

Wait a minute, isn't this plan D the one that bush 'forced down our throats' ?.....Where is the OUTRAGE, why isn't the house chasing bush down and asking him what the hell he was trying to do to the American people ?....remember his web site problems ?

October 28 2013 at 3:16 PM Report abuse rate up rate down Reply
3 replies to am0714's comment
Daniel Owen

Not a very helpful article.

The essential information for an informed choice among plans is:
1. What is the average out-of-pocket cost of prescriptions for people of may age and health condition, and
2. What the chance that my out-of-pocket cost for prescriptions will significantly exceed the average?

October 28 2013 at 3:03 PM Report abuse +1 rate up rate down Reply