Medicare beneficiaries have until only December 7 to make choices for their 2012 insurance plans. The good news for 2012 is that Medicare premiums will be lower for many people. The bad news is that some insurers have changed how they charge for certain prescription drugs. Even plans with lower premiums may not have lower out-of-pocket costs, depending on the specific prescription drugs needed by a plan participant.
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On the premium front, Part B premiums for basic Medicare are rising by only $3.50 a month for many people already on Medicare. The resulting $99.90 monthly premium will represent an actual decrease for people who began receiving Medicare in the past two years. They've already been paying higher premiums.
Average premiums for Medicare Advantage plans and subscription drug plans (Part D of Medicare) will also be lower in 2012 than this year. And drug subsidies mandated by the health reform law are raising government payments for drugs that Medicare beneficiaries must buy when they are in the drug-plan coverage gap known as the "donut hole." This insurance gap will be reached in 2012 when payments for covered drugs total $2,930 and will end when out-of-pocket costs exceed $4,700. (For details on the donut hole, see pages 88 and 89 of the 2012 Medicare & You handbook.)
Avalere Health, a Washington-based consulting firm, studied the 2012 drug plans of the largest Part D insurers. It found that most plans will be covering fewer drugs in 2012 than this year. Also, some plans are raising co-pays on their drugs. Many also are making more use of drug-pricing tiers in their plans, and have added drugs to higher-price tiers.
These changes make it difficult to generalize about 2012 drug costs for Medicare beneficiaries. But consumers should not assume that their current drug plan will continue to be their best choice, said Bonnie Washington, senior vice president at Avalere. "What our analysis has shown is that if you look at premium alone, the monthly premium has gone down," she said, "but the cost-sharing for particular drugs may be going up."
Fortunately, if you know the prescription drugs you will need to take in 2012, the government's Medicare Plan Finder will calculate out-of-pocket costs for drug plans, Washington noted.
Washington walked through the Plan Finder with U.S. News, using a hypothetical Medicare participant in Chevy Chase, Md., who takes two prescription drugs: Cimzia for rheumatoid arthritis and Cozaar for high blood pressure. Cimzia is an expensive drug that is placed in the top pricing tier of many drug plans, she said. Cozaar has a generic equivalent, but the branded version was retained for this price comparison. Based on these two drugs alone, there was more than a $1,000 difference in projected 2012 out-of-pocket costs for the 10 cheapest plans out of more than 30 available in Chevy Chase. Plans with the lowest premiums did not always have the lowest out-of-pocket costs.
"There is more than $1,000-a-year difference in just these 10 cheapest plans," Washington said, and urged consumers to use the Plan Finder to compare plan costs. "You can't assume that your plan's coverage is going to be the same next year as it was last year," she said. To help make comparisons easier, the Plan Finder lets users click on a "2011" cost option once it has calculated projected plan costs for 2012.
At least three large health plans have developed discount prescription pricing agreements with leading pharmacy chains. Humana has a deal with Wal-Mart, Aetna with CVS Caremark, and Coventry Health Care with Wal-Mart, Target, and Walgreens. In reviewing drug plans from these insurers, Washington said, consumers should check to see if Plan Finder cost projections can be lowered by picking a partner pharmacy.
Lastly, she noted, the Plan Finder is only useful in projecting prices for the specific drugs already being prescribed. Many Medicare beneficiaries will wind up taking newly prescribed drugs in 2012.