Disability Issues

How Medicare Drug Coverage Works Understanding the basics of Part D

Before deciding whether to sign up for Medicare drug coverage, you need to understand how the program works together as a whole.

Extra Help Paying for Drugs

A better deal if your income is limited

Extra Help is a special part of Medicare drug coverage that gives much more assistance to people with limited incomes. If you qualify, you can save a lot of money.

In and Out of the Doughnut Hole

Navigating the Part D coverage gap

In any one year, the drug benefit gives you initial coverage up to a certain level. But then in most cases there’s a gap in coverage when you pay 100 percent of your costs.

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As Americans tighten their belts in a scary economy—facing layoffs, mortgage foreclosures and loss of health insurance—Medicare beneficiaries on fixed incomes are also anxiously wondering how affordable their health care will be next year.

On the plus side: Medicare Part B premiums, covering doctor visits and outpatient services, will not rise in 2009 but will stay at the 2008 level of $96.40 a month. And Social Security benefits will go up by 5.8 percent, the largest cost-of-living increase in 26 years.

The bad news is that the premiums and copayments of many Medicare Part D plans, which cover prescription drugs, will be more expensive for most enrollees next year unless they take action to find a less costly plan during open enrollment, which ends Dec. 31.

Consumer advocates urge enrollees to look carefully at how the costs and benefits of their current Part D plan will change for 2009 and compare them with other plan options to find the best deals.

Beneficiaries can go to Medicare’s Drug Plan Finder at www.medicare.gov to find out how much they’ll pay under any Part D plan next year by entering their specific drugs, dosages and how often they take them. The plan finder also suggests generics or older brands that reduce costs.

Doctors and others who help beneficiaries struggling to afford drugs in the doughnut hole often advise them to take advantage of the $4 prescriptions for generics now offered at many supermarket pharmacies, or to apply to manufacturers’ patient assistance programs for free or low-cost supplies of brand-name drugs.

With the economy in a nose-dive, the number of people looking for help (the uninsured, the underinsured and Part D enrollees in the doughnut hole) is rapidly increasing.

Among people applying to the drug manufacturers’ patient assistance programs for free or low-cost supplies, “there was about an 11 percent jump between the first of July and the end of September,” says Ken Johnson, senior vice-president of PhRMA, the drug companies’ trade group. “In some states that are experiencing really troublesome times, like Michigan, Ohio and Pennsylvania, we’ve seen increases of 15 to 25 percent among people looking for help.”

NeedyMeds.com, a 12-year-old website that offers information on many sources of assistance in paying for medications, normally receives around 9,500 hits a day, says its founder, Richard Sagall, M.D., of Gloucester, Mass. “Over the past few months, I’d say its gone up by 300 to 500 a day,” occasionally hitting the 11,000 mark.  A new listing of free and low-cost health clinics, he adds, has rapidly become “one of the most popular pages on the website.”

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WASHINGTON — Health insurance companies that serve the elderly and disabled in Medicare are realizing significantly higher profits than they anticipated, resulting in the companies getting $1.3 billion more than projected, congressional auditors say.

Under a program called Medicare Advantage, the federal government pays insurers for delivering Medicare benefits. The insurance companies’ payments are based, in part, on their anticipated revenues and expenses. If the companies had been more accurate, they could have spent much of that $1.3 billion on enhanced health benefits or lower monthly premiums, and they still would have maintained their expected profit margin, the Government Accountability Office said in a report expected to be released Thursday.

Rep. Pete Stark, D-Calif., who requested the analysis, said the government spends more on beneficiaries when they’re in Medicare Advantage than if they’re in traditional Medicare, about 13 percent more on average.

“This puts to bed this idea the plans are offering tremendous extra benefits with the overpayments,” said Stark, a frequent critic of the program. “The overpayments are going to profits.”

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Brenda Hanson was staring at $1,700 in unpaid hospital bills for treatment for a rare form of uterine cancer when she got another blow. In late October she found out that her $1,294-per-month Social Security check—her only income—would be slashed by $96.40 as of Dec. 1, because the state of California will no longer pick up the tab for her Medicare Part B premium, which pays for doctor visits and outpatient treatment.

Hanson, 61, of Burbank, is one of about 57,000 older or disabled Californians who lost the medical care subsidy to help the state save $63 million each year. And those affected had only a month to prepare for the cut.

“I am trying to stay alive, trying to survive, not just financially,” says Hanson, a former legal secretary who is disabled because of her cancer. “Then they tell you they are going to deduct almost $100 from an already very limited income. I couldn’t believe it.”

Ironically, if Hanson’s Social Security check were $100 lower, her entire Part B premium would be paid by the state. But because her monthly income slightly surpasses the state’s poverty line, she now must pay the premium—and she already has to pay up to $675 each month to meet her deductible before the state or federal government will pay her medical costs. When her Social Security payment increases next year due to a cost-of-living raise, so will her deductible or “share of costs.”

“It might not be so bad if I didn’t have chronic cancer,” which requires constant CT scans and hospital visits, Hanson says, “but I do.”

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By Aliza Marcus

Aug. 21 (Bloomberg) — Elderly Americans in Medicare’s prescription drug program are more likely to pay at least $300 a month for medicines than those on other plans, a study found.

Eight percent of senior citizens in the U.S. government’s Medicare plans spent that much out-of-pocket for drugs, compared with 5 percent of those covered by workplace insurance or by the Veterans Affairs Department, according to a survey published today on the Web site of the journal Health Affairs. Medicare recipients were also more likely to delay or forgo filling prescriptions because of the cost.

About 24 million elderly Americans have signed up for Medicare’s Part D drug coverage since it took effect last year, and surveys have found high satisfaction among participants. The lobbying group AARP and Democrats in Congress have pressed for legislation requiring Medicare to negotiate drug prices directly with manufacturers in an effort to bring down costs.

“In general, Part D offered less financial protection to seniors” than employer plans or the Veterans Affairs program, according to authors of the study of 16,000 Medicare beneficiaries.

The Veterans Affairs department negotiates prices for drugs it covers. It also limits the medicines that are offered to an approved list, a restriction that Democrats oppose for Medicare.

One reason that seniors in Medicare-subsidized plans pay more may be a gap in coverage, the study said. The gap, known as the “doughnut hole,” begins after total drug spending reaches $2,400 in a year. Seniors must pay all of the next $3,051.25 before insurance starts paying again.

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Social Security disabled persons signed up with Medicare’s Part D drug coverage as well as the elderly pay more due to a gap in coverage known as the “doughnut hole”.