Don't Put Your Medicare Part D Plan on Autopilot

Some 43 million of the 60 million people with Medicare have prescription drug coverage under a Medicare Part D plan, according to a new report published by the Kaiser Family Foundation.

According to that report, most (58%) are covered under a stand-alone prescription drug plan (PDP) but a growing share (42% in 2018) are in Medicare Advantage prescription drug plans (MA-PD), which also provide other Medicare-covered benefits. The report also noted that more than 12 million Part D enrollees receive premium and cost-sharing assistance through the Part D Low-Income Subsidy program.

The report said three firms -- UnitedHealth Group Inc. UNH, Humana Inc. HUM, and CVS Health Corp. CVS -- account for more than half (55%) of all Part D enrollees in 2018.

Other key findings from the report:

Premiums: Monthly Part D prescription drug plan premiums average $41 in 2018, but premiums vary widely among the most popular prescription drug plans, ranging from $20 per month for Humana Walmart Rx to $84 per month for AARP Medicare Rx Preferred. Overall, average monthly prescription drug plan premiums increased by a modest 2% in 2018.

Deductibles: More than four in 10 prescription drug plan and Medicare Advantage prescription drug plan enrollees are in plans that charge no Part D deductible, but a larger share of prescription drug plan enrollees than Medicare Advantage prescription drug plan enrollees are in plans that charge the standard deductible amount of $405 in 2018.

Cost sharing for generics and brands: Most Part D enrollees face modest cost-sharing amounts for generic drugs but can face much higher cost sharing for brands and non-preferred drugs, and a mix of copayments and coinsurance for different formulary tiers. For example, for prescription drug plan enrollees, median cost sharing ranges from $1 for preferred generics to $37 for preferred brands, and a 40% coinsurance rate for non-preferred drugs.

Specialty drugs: More than four in 10 Part D enrollees are in plans that charge 33% coinsurance for specialty tier drugs, defined by CMS as drugs that cost at least $670.

So, what do experts have to say about this report? What advice do they have for current and would-be Medicare beneficiaries?

Review Your Plans Each Year

"My best advice would be to take the time to compare plans carefully during the annual open enrollment period," says Tricia Neuman, a senior vice president, a director of the Program on Medicare Policy at Kaiser Family Foundation, and co-author of the report.

Neuman notes, for instance, that Part D plans vary in terms of premiums, cost-sharing, and the specific drugs they cover, all of which can have a big impact on out-of-pocket costs. "So many people choose a Part D plan when they first enroll in Medicare and stick with it, which is understandable given the complexity of these choices and the large number of plans offered in their area," she says. "But, consumers can find big savings if they are willing to compare plans, based on their individual drug needs. This is important for people in stand-alone drug plans, and for the growing number of Medicare beneficiaries enrolled in Medicare Advantage prescription drug plans."

Others share this point of view.

Jae Oh, the managing principal of GH2 Benefits, author of Maximize Your Medicare: Understanding Medicare, Protecting Your Health, and Minimizing Costs, and chairman of the Great Humanity Healthcare Foundation, says 2018 is a year where the most efficient plan for many Part D enrollees has changed. "In other words, the 'best' plan in 2017 changed more than usual in 2018," he says.

The report, Oh notes, points out that the copays for preferred generics for many plans has declined. "Further, anecdotal evidence suggests that certain pharmacies have teamed up with Part D plans, to provide further cost savings," he says. "If anything, this means that yearly checking of Part D and Medicare Advantage plans is in order.

Oh also says that many Medicare Advantage prescription drug plans have also been affected, as the deductibles and copays among Medicare Advantage prescription drug plans has become even more competitive. "This is, yet even, more evidence that annual reviews of Medicare Advantage prescription drug plans should be conducted, as the Medicare Advantage prescription drug plan landscape becomes more competitive, which benefits consumers," he says.

When reviewing plans, make your decision based on your personal needs, says Eric Hausman, a Medicare education consultant. "I would always suggest that they would not want to make a decision based on any of the larger market trends highlighted in this report but ideally, their decision should be based on their own personal needs," he says. "Which plan provides the lowest cost for their drugs with the fewest restrictions."

Hausman also recommends, as did other experts, that beneficiaries re-evaluate their plan choice each year in the fall when new info becomes available. That's because their current plan may no longer be the best plan for them in the new year. "In my view, that is better than selecting UnitedHealth because it is the largest plan and that they market under the AARP name," he says. "But I respect that for many beneficiaries being in a large plan with name recognition may be reassuring and sticking with the same plan year after year regardless is simpler than having to re-evaluate. I know I do that myself with auto, homeowners and other insurance."

For his part, Kip Piper, president of Health Results Group and CEO of Medonomics, also says beneficiaries should be smart buyers and focus on what matters most such as coverage of the drugs you need, out-of-pocket cost, access to your preferred pharmacy, and quality of service. "Don't be swayed by how a plan is named or branded. Insurers pay organizations like AARP for the right to use their name in marketing," he says. "The plan itself may or may not be right for you."

Overall, a Good Deal

Overall, Medicare Advantage plans remain the best financial deal for both the Part D drug benefit and regular Part A and Part B hospital and physician services, says Piper.

"The Medicare Part D benefit is an exceptionally good deal," he says. "Strong competition, substantial subsidies from taxpayers and states, performance oversight, and federally mandated drug price discounts combine to help keep costs in line and coverage reasonable for most seniors."

According to Piper, one of the reasons a Medicare Advantage plan is often better for drug coverage is that these plans are responsible for your other Medicare services - Part A and Part B benefits - as well. "They have a stronger financial interest in making sure you have access to the right medications," he says. "They all are able to see your health needs and services more broadly, not just your prescriptions."

More Practical Advice

Piper also recommends being aware of and understanding the situations that present the greatest risk of a big, surprise cost. "Such as when a drug prescribed for you is a high-cost specialty drug, where your share may be a percentage of the drug's cost rather than a fixed $10 or $25 co-payment," he says. Or when a drug you need is no longer on your drugs plan's formulary -- the list of medications it covers."

If you are taking a brand-name drug, Piper recommends talking to your doctor and pharmacist to learn if a less expensive generic version is available. "Next time you visit your physician, bring a bag with all your prescriptions and over-the-counter medications," he says. "Ask your doctor to look at each and verify that they are still right for you."

And, if your income is low, Piper suggests checking with your local Social Security office if you qualify for the Part D Low-Income Subsidy program, which can significantly lower a beneficiary's costs.

New Part D IRMAA Tier for 2019

Not this year, but next year there will be a new tier of Income Related Monthly Adjustment Amounts, or IRMAA for Part D, says Oh.

"For certain households, that has meant that a person or household may need to pay a higher IRMAA amount in future years," he says. "It is important to note that there are now five IRMAA tiers in Part D, but that the Part B IRMAA continues to have four tiers."

Of note, Section 53114 of the Bipartisan Budget Act of 2018 added another IRMAA tier for both Part B and Part D beginning in 2019. The tables below reflect these changes for 2019. Beyond 2019 these amounts, with the exception of the $500,000 and $750,000, are indexed to the CPI. The indexing of the $500,000 and $750,000 amounts doesn't start until 2028. 

Beneficiaries who file an individual tax return with income:

Beneficiaries who file a joint tax return with income:

Applicable percentage

Less than or equal to $85,000

Less than or equal to $170,000

25

Greater than $85,000 and less than or equal to $107,000

Greater than $170,000 and less than or equal to $214,000

35

Greater than $107,000 and less than or equal to $133,500

Greater than $214,000 and less than or equal to $267,000

50

Greater than $133,500 and less than or equal to $160,000

Greater than $267,000 and less than or equal to $320,000

65

Greater than $160,000 and less than $500,000

Greater than $320,000 and less than $750,000

80

Greater than or equal to $500,000

Greater than or equal to $750,000

85

Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return from their spouse:

Applicable percentage

Less than or equal to $85,000

25

Greater than $85,000 and less than $415,000

80

Greater than or equal to $415,000

85

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