Medicare Part D Enrollment for 2012 Comes Early This Year
The Medicare Part D enrollment period has changed to October 15 through December 7 in 2011. It is not too early for clients to think about the annual coordinated election period.
September 12, 2011
Healthcare reform made significant changes to the Medicare Part D prescription drug program. The annual coordinated election period will be October 15 through December 7 in 2011 and future years; in prior years the election period ran from November 15 through December 31. In addition, changes introduced in 2011 remain in place including higher monthly premiums for individuals with incomes over $85,000 and couples with incomes over $170,000.
Other changes in 2012 include the continued shrinking of the “doughnut hole” (or “gap”) that began in 2011:
The doughnut hole represents a gap in coverage. After the beneficiary and the insurance company have spent $2,930 (the “initial coverage amount”) in 2012 for covered drugs, the beneficiary pays all costs by until “catastrophic coverage” is reached. In 2012, the beneficiary must pay $4,700 in total out-of-pocket costs in order to reach catastrophic coverage. Total out-of-pocket costs include the deductible, co-payments and payments made in the doughnut hole. Once catastrophic coverage is attained, the beneficiary pays $2.60 for generic drugs and $6.50 for brand-name drugs. Finally, participants must pay an annual deductible in 2012 of $320, up from $310 in 2011.
Private insurers offer the Part D plans that the Centers for Medicare and Medicaid Services (CMS) must first approved. The plans may vary from the standard benefit (for example, some plans offer lower or no annual deductible, while others may offer some coverage in the doughnut hole) as long as the alternative plan design is “actuarially equivalent.”
The Open-Enrollment Period
The open-enrollment period that begins on October 15th impacts clients who have “original Medicare” that includes Part A (hospital insurance) and Part B (medical insurance covering doctor and other healthcare costs). In order to secure prescription drug coverage, these clients must elect Part D. Coverage under Part B and Part D is voluntary. But if individuals opt out, they may pay a penalty in the form of a higher monthly premium should they elect coverage later. The penalty can be avoided only if the Medicare participant had other coverage (such as an employer’s group health plan), which is creditable -- equal to or better than the coverage they could have obtained under Part B or Part D.
Some clients may have enrolled in a Medicare Advantage Plan (MA Plan). Private insurance companies offer these plans and combine Parts A, B and usually Part D. If prescription drug coverage is included in the MA plan (called a MA-PD plan), the Medicare participant does not need to elect separate coverage.
Insurance agents do sell these plans, but participants can also enroll or make changes during the open enrollment on their own through www.medicare.gov.
Medications Make the Difference
During the open-enrollment period, clients may select a new prescription drug plan. If a client selects a new plan, they will automatically be unenrolled from their 2011 plan as of January 1, 2012. There is no medical underwriting to make the change.
Unfortunately, many Medicare beneficiaries focus too much on the monthly premium in making their decision. Often the plan with the lowest monthly premium is selected even though the overall cost of the plan is much higher than other available plans. It is the total cost of the plan that clients should focus on, including the premium, the deductible, co-payments and any payments made in the “doughnut hole.” The total cost of the plan is driven by the client’s prescription drug regimen. Which Part D plan is least expensive in terms of the total annual cost differs from client to client.
Fortunately, the Medicare website will do the total cost analysis for the client.
Once on the landing page, click on Compare Drug and Health Plans. A general search can be done quickly when the participant enters their zip code and clicks on Find Plans. For a personalized search the user may enter their Medicare information in the box below the box requesting the zip code.
Clicking on Find Plans takes the participant to Step 1 of 4: Enter Information. Here participants are asked which type of Medicare coverage they have and whether they receive a subsidy (“Extra Help”) for the cost of Part D. Most clients will answer that they have original Medicare and are not receiving Extra Help.
After answering the questions, the participant clicks on Continue to Plan Results arriving at a page labeled Step 2 of 4: Enter Your Drugs. The user is asked to enter their medications. If you do this for a client, ask them for a list of their medications, name and dosage. Don’t ask for the names of the medications over the phone -- most drug names are hard to pronounce and even harder to spell. If the client does it themself, recommend they have their medication bottles in front of them. After a drug has been entered, click on Find My Drug. Select the drug from the provided list. Drug and dosage information will be requested before the drug is added to the list. Once completed, click on Add drug and dosage. You can save the data for later retrieval (see the box on the right of Name of Drug). Saving the data is recommended especially if the client has entered several drugs (many seniors take eight or more prescription medications). Write down the drug list ID number and password date.
After entering all the drugs, click on My Drug List is Complete to move on to Step 3 of 4: Select Your Pharmacies. Users are asked to select the local pharmacy where they purchase their medications. This is not a required step (in which case, users can either click on I don’t want to add pharmacies now or Continue to Plan Results), but is recommended to obtain a more accurate pricing result. After clicking on Continue to Plan Results,the participant is taken to Step 4 of 4: Refine Your Plan Results.
The participant may wish to elect an option under Refine Your Search (left side of the screen). For example, users may want to limit the plan results list by clicking on Select Drug Options. Here there are four options to choose from including selecting plans that provide coverage in the gap (the doughnut hole); offer mail order (which is frequently less expensive than using a local pharmacy); has no restrictions on drugs (such as pre approval) and has all the participant’s drugs on the formulary. On the right side of the screen, the participant can also limit the results to just a Prescription Drug Plan.
After refining the results, click on Continue to Plan Results. The resulting list will include all the Part D plans in the participant’s area ranked by annual cost. Through a drop-down menu on the right of the screen, the user can also rank the plans by lowest deductible, plan name, plan rating and more.
Once a plan is selected, users can click on Enroll and complete the enrollment process online.
By following the easy instructions provided above, your clients can easily enroll or can do so aided by you.
James Sullivan, CPA, PFS, works with his wife, Janet, who is an elder law attorney in Naperville, IL.
* PFP Section members, including PFS credential holders will benefit from additional Eldercare resources in Forefield Advisor on the AICPA’s PFP website at aicpa.org/pfp. Non-members can click here to join the section.