You’ve seen the news headline. A senior citizen is upset. “Last year, I paid only $25 for this medication. This year, it’s over $300. Why do the drug companies rip off old people?”
It’s probably not the drug company ripping off seniors; it’s more likely the seniors did not pay attention. During Medicare’s Open Enrollment Period, only 13% of beneficiaries actually check out changes in their coverage and other plans that are available. The other 87% could face some expensive and unpleasant surprises next year.
This year’s Open Enrollment is underway (October 15-December 7). Here are some important observations from 65 Incorporated’s initial reviews for clients that reiterate the importance of paying attention.
- Pharmacies offering preferred retail cost-sharing can make quite a difference.
Jane takes 12 medications. Her favorite pharmacy offers standard retail-cost sharing. Her monthly cost next year would be $281. If she were to switch to a pharmacy offering preferred cost-sharing, her out-of-pocket costs would drop to $162, a savings of $1,400 in 2018.
- However, not all pharmacies offering preferred cost-sharing are equal.
John has two preferred pharmacies in his neighborhood. At one, his copayments for four medications would be $62 a month and, at the other, $18. He would save over $500.
- The network of pharmacies can change. One plan’s network no longer includes pharmacies that offer preferred retail cost-sharing. A second plan is dropping a group of pharmacies from network.
- Cheaper plans are out there. Even those who take no medications should check what's available. In many markets, the cheapest plans in 2017 are increasing premiums by $3-$6 a month. Plus, there may be one or two new plans with lower premiums.
- Those who just started with a Part D drug plan still need to pay attention. No matter how great the 2017 plan may be, things can change. Here's a 65 Incorporated true story from last year.
Tracey enrolled in Medicare in December. She found a good drug plan that covered all her drugs for treatment of a serious medical condition. She was satisfied with the coverage and didn’t see the need to do anything. However, once convinced to take a look, she discovered the current plan would not cover her most expensive medication that costs $20,000 a month. With help, Tracey found a plan to cover every medication and she pays $2,500 a month, an annual savings of over $200,000.
Pay attention now so you don't make headlines later. There are many resources available to help you with Open Enrollment, including 65 Incorporated's Medicare Tune-up (www.65incorporated.com/personalized-medicare-enrollment-consultation/open-enrollment-consultation).
What are the Star Ratings? This is a system Medicare uses to measure the quality of Part D prescription drug plans and Medicare Advantage plans. It posts each plan’s ratings on the Medicare plan finder at www.medicare.gov/find-a-plan/questions/home.aspx.
What does the Star Rating System measure? It looks at how plans perform in several categories, including customer service, quality, members’ rating and experience, ease of getting appointments or medications, complaints, and more.
How many stars are in the system? Star ratings range from 1 star (the lowest or worst) to 5 stars (the higher or best). Plans get a star rating for overall performance and for many individual categories.
Who should pay attention to the stars? Anyone getting into Medicare, be it at age 65 or when retiring and losing coverage, should check out the quality ratings. Then, every year during the Open Enrollment Period, beneficiaries should check out the quality of their plans and compare that to others available to them.
What are these icons? Medicare uses two icons to depict the opposite ends of the scale.
- The 5-star icon (above) identifies the plans that have received the highest rating for the current year. Medicare offers a special enrollment period (December 8-November 30) for beneficiaries to enroll in a 5-star plan. (Learn more about this at www.medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/five-star-enrollment/5-star-enrollment-period.html.)
- The low-performing icon identifies plans that have received less than three stars (only one or two stars) for three years in a row. A beneficiary must call the plan to enroll; Medicare does not permit online enrollment.
Learn about star ratings at www.medicare.gov/find-a-plan/staticpages/rating/planrating-help.aspx.
Medicare beneficiaries are accustomed to cost sharing, paying their share of the cost for a drug or treatment. Deductibles and copayments are the most common method of cost sharing. However, coinsurance is becoming more common in Medicare Advantage and Part D prescription drug plans.
A coinsurance is calculated as a percentage of the amount charged for a medication, service, or treatment. For example, a 20% coinsurance would mean that, on a $100 bill, the beneficiary is responsible for $20. (Compare that to a copayment. This is a fixed amount, such as a $5 copayment for a Tier 1 medication or $20 for a doctor’s visit. Read more at (www.65incorporated.com/topics/out-pocket-medicare-costs/difference-between-copayment-coinsurance.)
Here are some quick points about coinsurance.
- Part D drug plans often use a coinsurance for Tier 4 and Tier 5 drugs.
One plan charges 45% for Tier 4 and 33% for Tier 5. A seond plan charges 30% and 25%.
- Medicare Advantage plans tend to use coinsurance for out-of-pocket costs in preferred provider organization (PPO) plans. Some health maintenance organization (HMO) plans also use coinsurance.
For an out-of-network hospital stay, the plan’s coinsurance is 45% of the cost.
- A coinsurance allows plan to pass increasing costs for drugs and services onto the beneficiary. That means you can pay more as the year progresses.
Jan takes a Tier 3 preferred brand medication. The full cost of the drug when she enrolled in Medicare in June was $550. The coinsurance for Tier 4 was 41% and, in June, she paid $225.50. By December, the cost of the drug had increased to $616 and her coinsurance was up to $252.56.
What can you do?
- Pay attention to a plan’s coinsurance when signing for a Medicare Advantage or Part D drug plan or reviewing the changes in a plan during the Open Enrollment Period. (Learn how to get expert help when picking a drug plan at www.65incorporated.com/personalized-medicare-enrollment-consultation/personalized-medicare-enrollment-consultation and check out the importance of Open Enrollment at www.65incorporated.com/topics/medicare-open-enrollment-period/why-open-enrollment.)
- Look beyond the premium and deductible to the impact of a coinsurance.
Seth takes a Tier 4 non-preferred brand drug with a full cost of $2,440. The coinsurance in one plan is 45% and the other, 30%. Over the course of a year, even if the cost of the drug does not increase, Seth will save $426 with the lower coinsurance.
- Consider setting up an emergency fund. It may be difficult to plan for the costs associated with a coinsurance.
My husband and I are planning to tour Asia for three months. Will Medicare cover any medical issues that arise while we are there?
The best answer is: Don’t count on Medicare for any medical coverage while you’re outside of the United States or its territories. There are some exceptions in which Medicare will cover services but they are very rare. For example, if you are traveling a direct route, without unreasonable delay, between Alaska and another state, and the closest hospital that can treat you is in Canada, Medicare would cover emergency medical services.
Medicare will also pay for medical care on a cruise ship if:
- the ship is registered to the U.S,
- the doctor is registered with the Coast Guard, and
- the ship is in a U.S. port or within six hours of arrival at or departure from a U.S. port.
So, what are your options while traveling internationally?
- Some Medigap policies offer coverage for medical emergencies in a foreign land. These plans cover 80% of the cost of emergency care abroad during the first 60 days of a trip with a deductible of no more than $250 and a lifetime maximum of $50,000. (Emergency care means care that is needed immediately because of an injury or an illness of sudden and unexpected onset.) Given today’s medical costs, that's not great coverage.
- Some Medicare Advantage plans offer coverage for foreign travel, usually for an additional premium. Check details with a plan representative.
- Travel medical insurance provides coverage for medical emergencies and evacuations. It does not cover trip cancellation costs. Know that pre-existing medical conditions can affect coverage. Some plans will offer a waiver for those who buy the policy within 10 to 21 days of making the first trip payment, insure all non-refundable expenses prior to departure, and are considered medically able to travel when purchasing the policy. It is also possible to purchase a pre-existing condition waiver.
When traveling internationally, remember these three tips.
1. Don't count on Medicare.
2. Plan ahead for medical emergencies.
3. Bon Voyage!
“My name is Dave and I give up! I’m turning 65. I tried to figure out Medicare but I just can’t do it. Why does this have to be so tough?”
It seems, for those turning 65, Medicare can be overwhelming. The more you read about Medicare, the less sense it seems to make. It's overwhelming and people just quit. We don’t have a good answer for why it’s so difficult but we can identify some contributing factors.
- The deluge of information: Those approaching their 65th birthday likely need a new mailbox. It seems as though every plan in town sends something.
- The dearth of relevant information: In all that mail, there is not one notice that says, “Hey, it’s time to enroll in Medicare.”
- The variety of enrollment periods: There are six different times for Medicare action that include “enrollment” in the title, such as the Initial Enrollment Period, General Enrollment Period, and Open Enrollment Period. Then, there are more than 25 special enrollment periods, those times when one can take action outside of the Initial Enrollment Period.
- The Social Security Administration: Social Security is in charge of Medicare enrollment, along with dozens of other important concerns. It has only one telephone number, (800) 772-1213, and customer service woes with busy signals and waiting times of more than 15 minutes.
Knowing what you need to do and when to do it is like figuring out a slide rule—so many moving parts that don't always make sense. Where can you turn for help? 65 Incorporated’s mission is to help people make smart Medicare decisions. Check out these resources:
- The Medicare library https://www.65incorporated.com/education
- Individual consultations https://www.65incorporated.com/personalized-medicare-enrollment-consultation/personalized-medicare-enrollment-consultation