Remember to Look at the Big Picture in Choosing a Medicare Part D Plan for 2012

Saturday, October 1 2011 3:13 PM - by Brett Kappelmann

The open enrollment period for Medicare Part D is underway this year, a month earlier than last year.  The open enrollment period runs from October 15th to December 7th this year.  It is during this time period that seniors may change Medicare Part D plans for the 2012 year.  This month let’s look at how seniors currently on Medicare Part D can decide whether or not they should consider switching to a different plan during the open enrollment period.  There are many different factors to consider beyond just the premium as I will soon explain.

One of the many services that Cooper Drug Store offers its customers is a free Medicare Part D analysis.  We will enter your current medication regimen into an online program that will give you the most affordable plans to consider in 2012.  Each year switching plans can save seniors hundreds of dollars, and in some rare occasions thousands of dollars, over the course of the year.  Choosing the most appropriate plan to meet your needs involves many different factors as I will soon point out.

In choosing a plan, I know it is easy to just focus on the premium.  Premiums are important to consider and represent a fair amount of the plans overall annual costs.  It is important to look beyond just the premium.  Does the plan have a deductible?  I like to think of deductibles as “premiums in disguise.”  After all, when you are paying your deductible, you are not receiving a single benefit from the plan until the deductible is met.  Next year’s standard deductible will be $320.  As a general guideline you can divide that number by twelve and add that to your premium to more or less give you a “net premium.”  A fifteen dollar premium with a $320 deductible would give a “net premium” of around forty-one dollars.  There are more factors to consider but the point is:  a higher premium, no deductible plan can be as good as or better than a low premium, high deductible plan.

What about the plan’s formulary?  Does the plan cover all of your medications?  If so, how well?  An eighty dollar monthly copay on a brand-name medication can add significantly to the annual overall cost when compared to a thirty-two dollar copay on another plan for the same medication.  In some of the scans I have performed this year I have observed that large of a difference among plans in the copay of the exact same brand medication.  Does that fifty dollar difference justify picking a plan with a premium of just a few dollars less?

Another trend that I have observed among Part D plans is that they are making some generics “Tier 2” or even “Tier 3” drugs.  Basically, generics can be classed into two different groups, expensive and inexpensive.  Before 2010 almost all generics were assigned to Tier 1 on most Part  D formularies.  Tier 1 medications all had the lowest copay that the plan offered.  Thus a generic that might cost 80 dollars would be grouped with the same generics that cost only 8 dollars.  The copays would be identical.  For the first time in 2010 and continuing at even a greater rate going into 2012, I have observed that some plans have put some of the expensive generics in the Tier 2 or even Tier 3 class.  So that same 80 dollar generic might cost you a 40 dollar copay rather than a 0, 4, or 7 dollar copay on another plan.  If you do the math just one medication like this might cost a senior almost 500 dollars more over the course of a year just because of this little, easy to overlook difference between one plan and another.

This is just one reason why it is ever so important for seniors to explore their options each year.  It goes so far beyond just picking a plan with the lowest premium or picking a plan because representatives are set up at the local big box company.  Those representatives will probably focus on the premiums, but be careful:  those plans are the plans that seniors are going to have to be the most careful about!