December 3, 2010 > HealthCare...Who Cares?
Part D coverage - prescription drug coverage
By J. Dennis Wolfe
Part D coverage - prescription drug coverage for Seniors - is a huge issue, arguably the most confusing. There are various co-pays for Generic, Preferred Brand Name, Non-Preferred Brand Name, Injectables, and Specialty Tiers. For 2011 we now have a tier for Supplemental Drugs.
Multiply all of these tier levels times the number of available plans in the market times each of the lists of drugs they cover in their plans times the co-pays that each plan requires, and you have mass confusion! Let's simplify it with an action item.
Action Item. Do Not Sign Up For ANY Part D program until you have compared the list of medications you take against the carrier's list of covered drugs and in what category they fall with respect to co-pay amounts.
Any Part D-certified broker can help you compare your list of medications and what the co-pays will be. CMS requires brokers to provide this service without any obligation to buy any product. Your pharmacist can help, but this is not their job. You can always call the carrier but there is little or no accountability with in-house sales reps, especially if they make a mistake in how they advise you.
Prior to Part D coverage, there was very limited coverage for medications and although Part D looks confusing, it functions fairly well. Perhaps the most misunderstood component of Part D is the now infamous "donut hole" - the gap between initial coverage levels and catastrophic loss coverage. To explain why this gap exists in Part D coverage requires an understanding of risk-sharing. Insurance policies charge premiums based on this. The less you pay out-of-pocket for a claim, regardless for what the coverage is - auto, health, home, etc. - the greater the premium. Part D was structured to provide three levels of cost protection while keeping premiums affordable.
The first level is the Initial Coverage Stage. You pay varying co-pays depending on the tier level of medications you need. Examples would be $5-$10 for generic and $25-$50 for a Preferred Brand Name, etc. The maximum benefit changes each year. For 2011, it is $2840.
The second level is the Coverage Gap, widely known as the "donut hole." In 2011 there is limited coverage for drugs. You still only pay the same smaller co-pay amounts for generic drugs in Tier One. However, you pay almost all of the costs for other medications until you reach an out-of-pocket limit of $4,550.
The third and final level is known as the Catastrophic Level. At this level you pay 5% or $2.50 to $6.30, whichever is greater. There is no stop-loss limit.
Once you have determined that the Part D plan you want covers the list of medications you take, then enroll prior to January 1st of next year. There is one task to do that will make your life easier. I highly recommend that you contact your pharmacist with your new 2011 Part D ID Card numbers. It would be best to do this during the last week of 2010 to avoid confusing your pharmacy.
There is one clarification from the comments in my last column. If you decide to disenroll out of a Medicare Advantage product during the new annual disenrollment period, then you can, by California Law, enroll in a MediGap Supplement policy on a guaranteed issue basis, but only from the carrier from whom you just disenrolled. Every other carrier, including the carrier you previously had coverage will likely require evidence of insurability.
Stay healthy. Stay tuned. Get involved. Learn what is being done. Your life now does indeed depend upon it.
Dennis Wolfe is the author of a book discussing healthcare cost-delivery reform, published in 1991, that detailed the problems that we face today and what needed to be done. He is a frequent guest on radio shows all over the country. In 1976 he founded Wolfe Insurance Services, specializing in employee benefits. For his creation in 1977 of what we now call Community Health Fairs he won the nationally-prestigious Dublin Award. In early 2010 Dennis founded Health Care Claims Consulting, LLC. It is a website-based business of experts across the country designed to help people obtain proper health care services and resolve claims issues. He can be reached at email@example.com and is available for speaking engagements.