In my last column I described Medicare and its extensions, Medigap and Medicare Advantage, as a complex system that is both important and difficult to navigate. This column I will tackle Part D coverage and provide some overall tips for decision-making.
Part D Drug coverage began in 2006. Annually since then, the drug companies tinker with their list of covered drugs. Because of this, it is a good idea to enter your prescription drugs onto the Medicare drug plan every year to determine which plan is least expensive and most convenient for your menu of prescriptions.
Unlike Medigap plans, you can choose a new drug plan each year with no penalty. In general, you can choose the plan that is most cost-effective and convenient for your regular medications. One caveat is that if you require a new prescription during that year, you’ll be at the mercy of your current drug plan.
As a hypothetical, if you chose a plan with scant coverage of cancer drugs and were subsequently diagnosed with cancer, you’d be paying for your cancer drugs until you could choose a new drug plan the next October.
Some Medicare recipients live in areas where there is a sufficient population to support multiple Medicare plan offerings by multiple insurance companies. These seniors may have the pleasure of many plans from which to choose.
Our choices in Santa Barbara are more limited and may logically begin with asking others — our doctors and our friends — which plans they use and recommend. Even if their plan is not available to you, you may learn something that helps guide your own decision-making.
Perhaps the clinic or hospital with whom your doctor or specialist is associated only accepts one or two plans. If you want to stick with your doctors, choose their plan. If your friends have had good experiences with their plans, consider those.
Always keep in mind the difference between MA and Medigap (my previous column). Understand the repercussions of your choices.
If you still have a lot of questions when you’ve devoured the official guide (and that’s likely), check out Chaucer’s or Santa Barbara’s other local bookstores. I’ve found the Dummies Guide to Medicare to be very helpful. You can also consult a fee-only financial advisor with expertise in Social Security.
If you have limited resources, you may be eligible for a free, in-depth, one-on-one insurance counseling and assistance from the State Health Insurance Assistance Programs (SHIP). The SHIP closest to us is called HICAP, the Health Insurance counseling and Advocacy Program at 800-434-0222.
A few final suggestions to urge you on your way:
» Your initial Medicare enrollment period begins the third month before your 65th birthday month and finishes at the end of the third month after your birthday month: seven months to make some pretty momentous decisions.
» You can sign up later, at retirement, if your current coverage through an employer is at least as comprehensive as Medicare (“creditable coverage”). Otherwise you may face a permanent financial penalty.
» This year’s Open Enrollment Period — when current insureds can choose a new MA, drug, or supplemental plan, is Oct. 15-Dec. 7, 2020 for coverage Jan. 1, 2021.
» Don’t forget your flu shot!
If, like me, you’re approaching your 65th birthday, make some time for your Medicare decision. The choices can be complex and confusing. Fortunately, the vast majority of enrollees are satisfied with Medicare, so perhaps it’s no worse than what most people have been dealing with in their younger years.
Nevertheless, it is clear our country needs to learn from other countries how to provide better care at lower cost. Otherwise, we can expect to spend an increasingly large share of our retirement budgets on medical care.
— Karen Telleen-Lawton serves seniors and pre-seniors as the principal of Decisive Path Fee-Only Financial Advisory in Santa Barbara. You can reach her with your financial planning questions at [email protected]. Click here to read previous columns. The opinions expressed are her own.