now, chances are very good that you can help your grandparents or parents save
some big bucks on medicine. If they’re over 65 and eligible for Medicare’s
Prescription Drug Plan (aka Part D), they can save about $1,200 a year, compared
to people who are eligible, but not participating.
Open Enrollment in Part D, when seniors can re-enroll in their
current plan or change their plans/providers, runs from November 15, 2007
through December 31, 2007 – for coverage beginning on January 1, 2008. But
eligible elders can begin looking over their 2008 options starting now, which is a good
idea, because the federal prescription drug program is complicated, and the
choices are sometimes not easy.
To help your loved ones out, devote some time to helping them consider their current insurance options. You can
do it all online at Medicare’s site, assuming you have their current list of prescribed
medications, including dosage and quantity. Medicare believes that it has made
the site more user friendly. Let us know what you think.
There’s plenty of info on the site, but you can also call 1-800 MEDICARE (1-800-633-4227) with any questions,
24/7.
If your seniors are resistant, you can tell them that the
program’s statistics are encouraging. According to Medicare:
-
Over 4.75 million people have been enrolled.
-
About 100 million prescriptions are being filled for
participants every month. Premiums are lower than had been originally estimated
– much lower. Medicare predicts that the average 2008 monthly plan premium will
be 40% less than had been expected. -
Most participants are satisfied with the program. Surveys show
that over 75% give it good ratings. -
Over 90% of people already enrolled in Part D, will find at
least one plan in 2008 with a cheaper premium than the one they paid in 2007.
-
The average monthly premium in 2008 is expected to be $25.
Medicare expects that seniors in every state will have access to at least one
plan with premiums of under $20 a month and at least five with premiums under
$25 a month. -
Extra help of up to $3,600 is available for seniors with limited income and resources.
The Two Big Downsides
1. It Costs Too Much.
As Consumers Union (CU) asks, “Why are seniors paying nearly twice the price for
their prescriptions as veterans, even though the government runs both
programs?”
CU provides the answer to
its own good question: “Because Congress specifically prevented Medicare from
negotiating lower drug prices for seniors. In a time of record budget deficits,
that just doesn’t make sense.”
I hope you’ll send a letter
to your elected officials in Washington and tell them to pass legislation that
gets Medicare to negotiate for lower drug prices. I just did. Consumers Union
makes it easy. Just click here.
2. It’s way too
complicated. Consider the donut, just one of the program’s essentially
inexplicable features, which Medicare explains this way:
"Medicare drug plans may have a ‘coverage gap,’ which is
sometimes called the ‘donut hole.’ A coverage gap means that after you and your
plan have spent a certain amount of money for covered drugs (no more than
$2,510), you have to pay out-of-pocket all costs for your drugs while you are
in the ‘gap.’ The most you have to pay out-of-pocket in the coverage gap is
$3,216.25. This amount doesn’t include your plan’s monthly premium that you
must continue to pay even while you are in the coverage gap. Once you’ve
reached your plan’s out-of-pocket limit, you will have ‘catastrophic coverage.’
This means that you only pay a coinsurance amount (like 5% of the drug cost) or
a copayment (like $2.15 or $5.35 for each prescription) for the rest of the
calendar year.”
Fortunately, I can recommend a good place to go if you want independent
information or if you’re having trouble understanding what program to recommend
to the seniors in your life: The Medicare Rights Center, which also runs a Medicare hotline at 800-333-4114 (9 to 6,
Eastern Time, M –F).
If you’re going to do this good
deed, please don’t wait until the end of December. Procrastination could
mean that there’s a problem getting prescriptions filled in January. I
recommend you shoot for filing during the first week in December, which means
you and Grandma should start nosing around during the next couple of weeks.
Please let us know how you make out!
Nancy
Castleman – Co-author of "Invest in Yourself: Six Secrets to a Rich
Life" and founder of Good Advice
Press. Nancy has spent the last 23 years teaching people how to get out of
debt, save money, and live better on less. She writes on all these subjects for
CreditBloggers.com.
{ 2 comments… add a comment }
I would like to know where you got your data to support the claim of saving $1,200 per year.
Thanks
Hi Mike.
I got the information from a fact sheet put out by the Center for Medicare and Medicaid Services: “Strong Competition and Beneficiary Choices Contribute to Medicare Drug Coverage with Lower Costs than Predicted.” You can read it here: http://www.cms.hhs.gov/apps/media/press/factsheet.asp?Counter=2402&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date
On the off-chance that this 249-character URL doesn’t come through clearly, here’s a TinyURL for it: http://tinyurl.com/yph5qf
I also thought it would be interesting to see what further information I could get about this statistic, so I nosed around online. I saw quotes about it from the Secretary of HHS, but couldn’t find a definitive study.
Then I traded emails and phone calls with a press officer and here’s what she just sent me: “This is analysis comes from the Office of the Actuary (OACT). They explain the $1200 in savings as follows:
‘This is referring to the average value of the basic Part D benefit for 2007. Based on our estimates from the FY 2008 Budget Mid-session Review, the average Part D benefit for the standard coverage is roughly $1,430 in 2007. Beneficiaries are estimated to pay an average of $263 in premiums for this coverage. Therefore, the average value of the benefit is $1,167. (This amount is commonly cited as about $1,200.)
Note: that this amount should be characterized as the average value to the beneficiary for Part D rather than beneficiary savings. We do not have enough information to determine what beneficiaries would have paid for their prescriptions had Part D not existed.’”
Those actuaries must just *love* to see $1,167 rounded up like that to $1,200, huh? Seems to me they should have gone with the $1,167 number. Using $1,200 instead makes me wonder about their other statistics. You, too?
Still, if my mother and her cronies are any indication, they are paying a lot less for their meds than they did before the program. And I still think it’s worth everyone’s time to help their elders enroll and choose their best plan … every year.
Hope this helps!
Nancy