Medicare Part D: Choosing a Prescription Drug Plan

Consider costs, coverage, and restrictions when shopping for a Medicare Part D prescription drug plan.

If you are considering enrolling in the Medicare Part D prescription drug program, you need to find out which private drug plans are available in your area and then select the best plan for your needs. (For more information about Medicare Part D, read Nolo's article Medicare Part D Prescription Drug Coverage: The Basics.)

Coverage under the Medicare Part D prescription drug program is not handled by Medicare itself. Instead, it is managed by private health insurers and managed health care companies, which offer different plans in different geographic areas.

If you qualify for Medicaid, you will be automatically enrolled in a Part D plan. However, you may switch plans if you find one better suited to your needs. (To learn more about Medicaid, read Nolo's article Medicare and Medicaid: What's the Difference?.)

Gather Your Documents

Before you contact any agency or counselor for help choosing a Part D plan, have the following information handy:

• a list of the drugs you regularly use including the brand name if you don't use a generic dosage size and frequency, and current monthly cost
• name and address of your current pharmacy
• whether you currently receive Medicaid benefits (Medi-Cal in California ), and
• whether you are, or think you might be, eligible for a Part D low-income subsidy.

Find Available Part D Prescription Drug Plans

You may enroll only in a plan that operates in your geographic area. The following organizations can give you information about the Part D plans available to you.

Medicare. The Centers for Medicare and Medicaid Services (CMS) can tell you what plans are available where you live and can help narrow your options based on the medicines you regularly take. Contact CMS by phone at 800-MEDICARE (800-633-4227) or online at www.medicare.gov.

SHIP or HICAP. The State Health Insurance Assistance Program (SHIP), sometimes called the Health Insurance Counseling and Advocacy Program (HICAP), can tell you about the Part D plans available where you live, can identify the plans that cover the drugs you regularly use, and give you information about plan costs. For the nearest SHIP or HICAP office, check the business listings of your white pages phone directory.

State department of insurance. Every state has a government agency that oversees insurance matters. You can contact your state department of insurance for the names, addresses, and phone numbers of all companies that offer a Part D plan in your state.

 The best information comes from the plan itself. Before you make a final choice, directly contact any plan that interests you and ask for a complete description of the plan, the drugs it covers, and its costs. You can get the phone number and address of any plan from Medicare or your state department of insurance.

Choose a Part D Plan

Deciding which Part D plan is best depends on several factors, including whether you have other health insurance through your employer or union (or your spouse's), whether you qualify for a low-income subsidy, and your age and health. Additional important considerations include:

Your prescriptions. The prescription medications you regularly take, or their generic equivalents, must be included on the plan's formulary (its list of covered drugs). If not, the plan is useless to you. If you cannot find a plan that includes all of your drugs, look for one that covers your most expensive drugs.

Costs. The costs of a Part D plan can vary in several ways. Premium payments often vary, but the copayment amounts are more important. Most plans have tiered copayments, meaning the copayments differ for generic versus brand-name drugs and for different classes of medications. Compare the copayment amount under each Part D plan you're considering for each drug you take.

Coverage gap. Determine whether the plan provides any benefits within the so-called coverage gap (also known as the "doughnut hole"). Once your total yearly medication expense reaches a certain amount ($2,830 in 2010), the Part D plans generally don't provide any coverage meaning you will have to pay the entire amount of your prescription drug costs. Coverage generally begins again when the total expenditures for covered drugs reach the catastrophic coverage amount ($4,550 in 2010).

Access restrictions. You must determine whether a plan places any access restrictions on your drugs, such as prior authorization, generic drug or equivalent drug substitution, step therapy, or supply limits. The fewer restrictions a plan has regarding your drugs, the better for you.

Pharmacies. For many people, obtaining their medications from a nearby, helpful local pharmacist is important. If two or more plans offer similar coverage, the type and location of the pharmacy from which you can get your drugs through each plan may help you decide. Also, not all pharmacies charge the same amount for the same drugs.

Stand-Alone Drug Plan or Managed Care Plan?

Part D drug coverage is available through either a stand-alone prescription drug plan (PDP) or as the prescription drug component (called an MA-PD) of a Medicare Advantage managed care plan. Both options offer equivalent coverage, although each plan is different and costs vary.

Enroll in Part D

You enroll in a Part D plan by signing up directly with the plan you want to join. Private insurance companies administer each Part D plan using their own enrollment forms and procedures.

If you do not enroll in a Part D plan when you are first eligible for it, your premiums will be higher when you do finally enroll because Medicare charges an additional 1% for each month you delay enrolling. So, if you intend to enroll in a Part D plan as soon as you are eligible for Medicare, you should do the paperwork ahead of time.

For More Information

To learn more about Medicare Part D and other health insurance options for your retirement years, get Social Security, Medicare & Government Pensions, by Joseph L. Matthews and Dorothy Matthews Berman (Nolo).