Tuesday, December 01, 2009

Medicare Part D Open Enrollment Period

The annual enrollment and re-enrollment period for Medicare Part D drug insurance opened on November 15, and will remain open until December 31. Medicare Part D is not part of Medicare (despite the misleading name). It is a private drug insurance program that Medicare recipients must participate in (unless they have a comparable employer benefit), or pay a penalty that will remain in place for the duration of the recipient's time on Medicare, and may even escalate in cost.

This period gives new Medicare recipients a chance to sign up for a Part D plan, and gives those already enrolled a chance to change plans. The enrollee pays monthly premium paid for this insurance. According to the Kaiser Family Foundation:
The average monthly PDP premium in 2010 (weighted by 2009 enrollment, assuming beneficiaries remain in their current plan) will be $38.94. This is an 11 percent increase from the weighted
average monthly premium of $35.09 in 2009, and a 50 percent increase from $25.93 in 2006, the first year of the Medicare Part D drug benefit.

The cost of Part D plans vary across the country. The drugs covered by plans also vary considerably, and the plan can change the drugs they cover at any point in the year. The enrollee can only opt out during the open enrollment period at the end of the year. Each state offers over 40 different plans.

There is a significant coverage gap built into the plan, known as the "donut hole." On average, in addition to the monthly premium, there is a $310 deductible. After that, the plan pays for 75% of the drug costs, and the enrollee pays the other 25%.
When the enrollee reaches $3,610 in costs, they hit the donut hole, and must pay 100% of the cost of their prescriptions until they reach $6,440 in total drug costs. After that threshold is crossed, the enrollee pays 5% of their prescription drug costs, the plan pays for 15%, and Medicare pays the remaining 80%. This is known as Catastrophic Coverage. The Health Insurance Reform bill being discussed in Congress contains provisions for closing the coverage gap by 2019.

Since the plan began in 2006, the cost of the plans have steadily increased, as have the deductibles, as well as the size of the donut hole. Medicare Part D was a controversial piece of legislation, because it strictly forbids Medicare from negotiating prices with drug companies. A study done by the Kaiser Family Foundation found that seniors find the plans confusing, feel too many are offered, and on average, did not choose the lowest cost options for themselves. Insurance companies exert a lot of pressure on seniors to choose "brand name" plans.

To see how it works, I went to the medicare.gov site, to shop for a plan in my area. I found my state, and even my county. There were 43 plans for me to choose from in Carroll County, NH. We have a population of 47,408. That does seem excessive.

Themedicare.gov site is very helpful, and will give you a breakdown by state and county of what plans are available, and how those plans have been rated by past enrollees. Most senior centers have folks on hand to help folks who aren't computer savvy negotiate through this overly complicated process.

cross posted at workingamerica.blog

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