If you are over 65 and enrolled in Medicare, or if your parents (or grandparents) are over 65 and enrolled in Medicare, check on coverage for prescription drugs and make any changes during the Medicare Part D open enrollment period, November 15-December 31, 2007.  (NOTE: if you are over 65, enrolled in Medicare, AND have prescription drug coverage through a Medicare Advantage plan OR are receiving prescription drug coverage through an employer sponsored retiree health plan, enrolling in Part D may cancel some of your insurance coverage and generally should NOT be done without consulting your current insurance plan.)

This insurance program is nationwide, authorized by the federal government and managed through Medicare.  However, specific health plans are offered in each state, governed by that state’s insurance regulatory authority.  Accordingly, a nationwide comparison of cost and benefits is difficult to formulate.  Choice among 50 or more plans in each state is not unusual.

In one sample of plans, monthly cost ranges from $22.00 per month to $94.00 per month.  Half are increasing rates for 2008, half are decreasing.  The plan that offered the lowest cost in 2007 ($1.67 per month) is increasing rates to $24.80 per month.  Other plans are changing deductibles and/or co-pays.  (For comparison, in Minnesota, the Medicare baseline premium will be $30.61 per month for low income residents eligible for subsidized enrollment.)  Changes in rates and coverage, not to mention changes in health, make it prudent to review your personal situation regarding current or potential Rx usage, recommendation of your  physician regarding generics, trade-offs between insuring and self paying, and the monthly cost.

Part D coverage is unique among health insurance plans in its “doughnut hole” coverage gap.  After annual retail drug costs reach $2,520 in one calendar year, Medicare offers zero coverage for the next $3,206 in drug costs.  After that amount, coverage by Medicare is 95%.

Coverage for the “doughnut hole” is one big factor in monthly cost for plans.  Many insurance plans offer no coverage for this gap.  The ones that do are generally the most expensive.  For people who do not have chronic health conditions and have adequate emergency savings to cover the “doughnut hole”, the cheaper plans may make sense.

The other big issue to consider is what drugs are covered (aka, the “formulary”), either in baseline coverage or the “doughnut hole” gap.   Many plans cover only generic drugs or require higher co-pays for brand name drugs.  This suggests a review of your current prescriptions and/or consulting with your physician regarding substitution of generics before deciding on a drug plan based solely on the monthly premium.

We (at MWBoone and Associates, LLC) do not offer Medicare related health insurance though we recommend retirees over 65 consider coverage as part of overall retirement planning.  Some information for this post used an Article Launched October 8, 2007 by Pioneer Press (TwinCities.com-Pioneer Press), a comparison of Minnesota Part D programs that illustrates the general issues to think about.  Also see http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/ , the Medicare website for Part D prescription drug benefit.