Like crisp mornings, harvest pumpkins and returning snowbirds, Medicare's Part D shuffle has become a fall fixture.
Colorful posters pop up at pharmacies. Fliers clog mailboxes. Newspaper ads promise to take care of you — just sign on the dotted line.
Though Part D drug coverage now enters its fourth year, sorting through various options can be as time-consuming and demanding as ever.
Among other things, insurance companies keep changing their prices and drug formularies. A plan that worked well for you this year may leave you high and dry next year.
This go-around, for example, fewer plans are covering generic drugs in the so-called doughnut hole. Perennial favorites Humana and AARP have raised the price of their basic drug plans by 77 percent and 46 percent.
This special section of LifeTimes is designed to help you pick the arrangement that works best for your particular circumstances.
Do you want traditional Medicare or an HMO? Are you willing to switch to generics to save money?
Given the drugs you take, which plans cost the least?
A good place to start is by reading the rest of this story, which is an explanation of how Medicare works. That will help you understand the plan comparison charts that follow.
Lastly, take a look at the step-by-step guide to Medicare's Web site, medicare.gov. This is the only thorough way to figure out which plans work best with the particular drugs you take. If you aren't comfortable with computers, find a friend or family member who can help. Picking the wrong plan can cost you hundreds, if not thousands, of dollars.
There's still plenty of time. Medicare's signup window for 2009 begins Nov. 15 and ends Dec. 31.
Just don't skip the research.
Here's how the Medicare puzzle fits together:
"Traditional'' Medicare is managed by the government. Its premiums, copayments and deductibles can cost more than a private managed care plan, but you get to pick and switch doctors and hospitals at will.
Traditional Medicare has three parts:
• Part A mainly covers in-patient hospitalization. You pay no premium.
• Part B covers doctor bills and other services. You pay a $96.40 monthly premium to qualify, which is usually deducted from your Social Security check (higher-income people now have higher premiums).
• Part D stand-alone drug plans are administered by private insurance companies, which get payments from Medicare when you sign up. The plan negotiates discounts from pharmacies and pays for some of your drugs. You make copayments and pay a monthly Part D premium.
Medicare supplement policies are optional private insurance plans that pay some Part A and Part B deductibles and copayments. Supplement polices do not cover Part D drug copayments and are not used with private health plans.
"Medicare Advantage'' plans are sold by private insurance companies as alternatives to traditional Medicare. Medicare pays these private plans a stipend to administer your care, including doctors, hospitals and other Medicare-covered services. Copayments and deductibles are often less expensive than with traditional Medicare, but the plans restrict the doctors and hospitals you can use.
Medicare Advantage plans often provide special benefits not covered under traditional Medicare. They may pay all or part of your Part B premium. They may cover hearing aids or eyeglasses. Many plans also cover prescription drugs.
There are several types of Advantage plans:
• HMOs, where treatment comes from the plan's network of doctors, hospitals and other providers. Sometimes, your primary doctor must make a referral before you can see a specialist. Some HMOs allow out-of-network care for higher prices.
• PPOs also have networks of providers, but give you more flexibility in seeking care outside the network. The PPOs are usually more expensive than comparable HMOs.
• Special Needs Plans are HMOs or PPOs that serve people living in nursing homes, people with chronic illnesses and some poor people who qualify for Medicaid.
• Private Fee for Service plans try to negotiate rates from doctors and hospitals on your behalf. A sales agent might tell you that you get to pick your own doctors, but that's only partly true. In practice, many providers refuse to treat PFFS patients. If choosing your doctors is important, make sure they accept payments from the plan before signing up.
Review your options
If you do not pick new coverage by Dec. 31, Medicare will continue your current arrangement. Remember, copayments, premiums and drug formularies change from year to year. Even if your plan seems to work well, it's a good idea to review your options before signing up for 2009.
Explore outside drug coverage
If you qualify for drug coverage outside of Medicare, you probably don't need a Part D stand-alone drug plan or a Medicare Advantage plan with drug coverage.
VA, Tricare and the Federal Employee Health Benefits program offer good drug coverage, for example, as do many retiree plans run by employers and unions.
Make sure your employer or union can certify that its coverage is "creditable'' or you could face a penalty down the road. "Creditable'' means that the plan is as generous as Medicare drug coverage.
Get drug coverage of some kind
If you do not have "creditable'' drug coverage outside of Medicare, you should buy either a stand-alone drug plan or a Medicare Advantage plan with drug coverage as soon as you become eligible for Medicare or you will face a premium penalty if you need coverage in the future.
The penalty is an extra premium of 1 percent for each month you delay coverage after you become eligible for Medicare. This can be especially onerous because it is calculated against a "national standard'' plan, not the cheapest plan or the plan you happen to choose.
For 2009, the premium penalty comes to an extra 30 cents for each month you have delayed coverage.
Say you were eligible for drug coverage when Part D began in 2006, but didn't buy a plan. And now you want coverage for 2009. You can enroll in a stand-alone plan for as little as $16.70 a month. But because you delayed coverage for 36 months, your premium penalty adds up to $10.80, boosting the monthly cost of the cheapest plan to $27.50.
That's a 65 percent penalty, and you will face a similar penalty for the rest of your life.
In recent years, Target, Kmart, Wal-Mart and other retail outlets have offered generic drugs and some brand drugs for $4 or less. Pharmaceutical companies sometimes give away free or low-cost drugs to people with low incomes.
Even so, it's still a good idea to sign up for some kind of plan, even if you don't use it right away. For less than $200 a year, you can protect yourself against penalties and also gain drug coverage in case you get sick.
Buying a Medicare Advantage plan with drug coverage also protects you against penalties.
Learn the specifics of coverage
Whether you buy a stand-alone plan or a Medicare Advantage plan, Medicare's drug coverage formula follows a basic pattern:
• Medicare pays the plans a stipend to defray the cost of your drugs.
• The plan negotiates discounts from pharmacies and establishes a "formulary'' of drugs it will cover, at what prices. You get your drugs through a retail pharmacy or through the mail.
• You pay a premium for coverage, though some Medicare Advantage plans waive that premium.
• You pay a $275 deductible before coverage kicks in, although many plans waive the deductible.
• After any deductible is met, you pay a portion of your drugs' cost until you reach the "coverage gap,'' which has been nicknamed the "doughnut hole." These copayments might range from nothing for a generic medication to $50 or more for brand-name drugs.
• You reach the coverage gap when the total cost of the drugs reaches $2,700. Note that the total cost is what the drug plan pays the pharmacy, not what you pay the plan. If your plan buys your drugs for $500 a month, but charges you only $100, for example, you will hit the coverage gap after 5 1/2 months.
• In the coverage gap, you pay 100 percent of the cost of the drugs, though some plans still cover generic drugs and a few brand name drugs in the gap. The coverage gap continues until your out-of-pocket payments for drugs total $4,350.
• After your drug costs reach $4,350, you qualify for "catastrophic'' coverage. In this phase, your copayments for both brand and generics are quite low.
Insurance premiums do not count toward out-of-pocket costs. People who take a lots of drugs and expect to reach catastrophic coverage should consider buying a lower premium plan with a deductible, instead of a higher premium plan with no deductible. The lower premium saves you money up front and paying the deductible helps get you into catastrophic coverage more quickly.
Look beyond premiums and deductibles
Many people simply pick plans with the lowest monthly premiums and plans with zero deductibles. But beware: That could cost you money — not save money — depending on your drug usage and how the plans cover those drugs. Make sure to consider each plan's overall cost.
Compare plans online at medicare.gov
The only thorough way to compare plans is on Medicare's Web site, medicare.gov. That's because you can enter your particular drugs into the program, which then calculates how much each plan will cost. Prices of different plans can vary widely depending on which drugs you need.
The Web site also contains quality ratings from people who have used many of the plans.
Compare plans on paper here
The following pages contain a chart about stand-alone Part D drug plans that complement traditional Medicare and two charts about Medicare Advantage plans with drug coverage.
Note the low and high estimated costs for each plan, as calculated by Medicare. These costs include all your out-of-pocket expenses, including premiums, deductibles and copayments.
Plans that seem economical for a younger person in good health may not be best for someone who is older and needs more care. Plans that pay Part B premiums might seem like a bargain, but may cost more because they skimp on benefits.
Note that stand-alone drug plans are generally cheaper than Medicare Advantage plans. That's because they only cover drugs, whereas Medicare Advantage plans cover a wide variety of services, like doctors and hospitals.
These estimated costs are general guidelines. Your actual costs could be thousands of dollars higher if a plan's formulary fails to cover a few of your drugs. That's why it's so important to use Medicare's Web site to calculate your true costs.
Check low-income subsidies
People with little income and minimal assets may qualify for special subsidies that can dramatically lower their out-of-pocket costs for a drug plan. The income limits are $15,600 for a single person and $21,000 for a married couple, including Social Security. Your liquid assets (stocks, cash, savings accounts, etc.) must be lower than $11,990 for a single person and $23,970 for a couple.
If you fall below these thresholds, call the Social Security Administration toll-free at 1-800-772-1213 to sign up for extra help or sign up online at www.socialsecurity.gov.
Enroll in a plan
Once you choose the plan, call its toll-free telephone number to enroll. Have your Medicare card ready when you call.
Florida's Department of Elder Affairs has excellent volunteers who help people 65 and older and disabled people with insurance issues. The program is known as SHINE.
You can call for an appointment, and a trained volunteer will call you back. The volunteers can use Medicare's Web site to help you find a suitable plan. To contact a volunteer, call Florida's Elder Hotline toll-free at 1-800-963-5337 between 8 a.m. and 5 p.m. They will refer you to the nearest SHINE office.
You can also call a Medicare office toll-free 1-800-633-4227 for help. This office has hundreds of employees trained to take calls but they usually don't spend as much time with callers as SHINE volunteers do. If you have a formal complaint about an insurance company, you should call the Medicare number.
Stephen Nohlgren can be reached at email@example.com or (727) 893-8442.