Medicare Part D---A Bouns and a Boon or a Boondogle?

Yesterday, April 19, 2006, I had either the misfortune or the pleasure of listening to a presentation about facts I “really should know” pertaining to Medicare’s Prescription Drug Plans. The U.S. government in its wisdom decided Senior Citizens are suffering due to the high prices of prescription drugs. Prescription drugs are the largest portion of medical expenses for anyone and Senior Citizens on limited incomes are impacted the most financially. To help these seniors, especially those without any prescription drug insurance plans, Medicare came to the rescue. Congress indicated to the decision makers; make a plan that seniors can use to defray the cost of medications in these golden years of theirs.

The one fact that is hard for some senior citizens to grasp is that Medicare D is a separate insurance policy purchased and paid for by the citizens involved. The basic facts and only those facts are presented in the 2006 Medicare and You booklet prepared for each person receiving Medicare assistance. The State of Georgia approved over thirty insurance providers from which to choose. Of those providers, not all are available in all localities. Some are not honored by pharmacies the citizens patronize. Some pharmacies prepared plans of their own. All plans do not approve all medications prescribed to these seniors. What to do now? A check list follows.

yFirst read the booklet prepared for you by Medicare.

ySecond call the pharmacy you patronize and determine which insurance companies they accept.

yMake phone calls to those companies mentioned by your pharmacy, (the phone numbers for most are listed in the Medicare book), and ask if the medications you take are on the list “accepted drugs”.

yFind out what a monthly premium will cost you---yes, you the consumer must pay this cost.

yCompare the lists you have made with the finances you have available and make your final decision based upon what is best for you financially.

Now, all the above is well and good if you were previously paying for all prescriptions out of pocket and received no insurance help. But, it you already have prescription drug coverage, do you need to purchase Medicare D coverage? Yes and no. Maybe. It depends. It depends upon the plan you already have. Some plans in existence are much better than Medicare D and somewhere in the literature provided by your carrier a letter to that affect is listed. HOLD ONTO THAT LETTER. Why? Simple. Because, if you do not have that letter and do not purchase a Medicare D policy by May 15 and later decide that you need to, you could be charged a penalty fee, for life. Do you have to purchase a Medicare D policy? No you do not. But beware. Pay attention to the insurance plan you already have in place. Find out what their position is. Will they keep you under their prescription drug plan, or force you to accept a Medicare D policy? If you do not accept a Medicare D policy and choose to stay with your current provider, will your rates change? Could be. Maybe. It depends. It depends on any number of factors, too many to go into at this time.

How does purchasing a Medicare D plan help if you already have prescription drug coverage? Each scenario is different and only the consumer can make that decision. However, I can say the purchasing of such a plan has not helped this family. Being a retired State of Georgia employ we already had prescription drug coverage. When open enrollment time arrived last year I thought that since we already had good coverage we did not need to purchase a Medicare D plan. I was right and I was wrong. Medicare informed me I did not need to purchase a plan since coverage better than what they would provide was already in place. So I did not. Now here comes a kicker. A real big kicker. The State Health Benefit Plan made a decision that affected me. If I did not purchase a Medicare D plan, then my monthly premiums to the SHBP would increase accordingly. Oh, the SHBP plan was still the best and would be the one used, but I still had to purchase the Medicare D plan. Purchase the cheapest one around I was told, since you already have excellent coverage. The decision of which insurance provider to be used had to be made by December 31, 2005. Being a person not wanting to have a larger insurance fee taken out of my monthly retirement check, I found the least expensive policy around and made my purchase.

It is now going into the fifth month since that purchase. I just received the first monthly statement of use from the insurance provider. Amount they have paid out---$0.00—prescriptions I have purchased in those months—eight. Which policy was used to cover those medications? The SHBP plan of course. Exactly what good has the Medicare D plan done for my family? Not much. We will pay $214.92 a year in insurance premiums to a plan not used. The SHBP would have added another $840 to my yearly premiums if I did not purchase a Medicare D plan. Since I did purchase the plan, that $840 has not been added to my premium.

Who is the winner here? Does a winner exist? According to Carol we need to wait until the end of the year and find out the status of our checkbooks. Only then will we determine a true winner. I am Carol. I am keeping a close watch on my checkbook.

Thank you

Submitted by snark on Sat, 04/22/2006 - 12:45pm.

somewhere in the literature provided by your carrier a letter to that affect is listed. HOLD ONTO THAT LETTER. Why? Simple. Because, if you do not have that letter and do not purchase a Medicare D policy by May 15 and later decide that you need to, you could be charged a penalty fee, for life.

Thank you. I didn't know this. I've just gotten my mother's letter and put it someplace safe. Otherwise it would surely have been shredded at year-end.

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A more balanced view of Medicare Part D

Submitted by mapleleaf on Sat, 04/22/2006 - 10:18am.

There is considerable misunderstanding among the public, not helped by those Medicare Part D explanations proffered by pundits here and there, about the nature and purpose of insurance.

A reasonable person should not expect to make a profit from insurance. The real purpose of insurance is to protect against large losses when they occur, in exchange for the small periodic loss represented by the premium. People pay homeowners' insurance premiums for years without their house burning down, and they don't complain because a fire has not burned down their house and thus enabled them to collect more than they had paid in premiums. People pay car insurance premiums for years, and they don't complain they haven't been hit by a drunk driver and deprived of the opportunity to collect more than they paid in premiums.

So why do folks expect to profit from the Medicare drug plan right away? If their health takes a turn for the worse, the plan will be there to help them, and that's the important thing.

The idea of making money out of the Medicare prescription plan right away is silly (and a bit selfish too). Some people who already have large drug expenditures will benefit right away, others whose health deteriorates later will benefit when that happens, and some people will never recover their entire premium outlay. That's life, and those healthy enough to be spared large drug expenses should count their blessings.

People who are learned in the ways insurance works can tell you about a phenomenon known as anti-selection. Anti-selection is the process by which people seek to tilt the odds against the insurance company. For instance, the fellow who is told by his doctor he has terminal cancer and six months to live may try to go buy a life insurance policy at a standard rate, knowing his beneficiary will collect way more than the premium, and soon. To counteract that, insurance companies perform "underwriting," asking that health questionnaires be answered, and sometimes a medical exam taken, before they commit to the insurance. With Medicare Part D the way to keep people from waiting until they're very sick to get the prescription drug coverage is to provide for a surcharge (penalty) if they don't enroll by May 15. Freeloaders who want to engage in anti-selection don't like it, but that's eminently sensible.

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