The cost of prescription drugs has become a major source of
concern for many Americans, especially for those on Medicare. The Medicare open
enrollment period lasts from November 15 to December 31 and is the only time
when you may change your prescription plan, opt to stay with your current
coverage or drop your plan altogether. It therefore is imperative to carefully
consider the available options, as the plan you choose will determine the cost
and availability of your medication for the remainder of the year. During this
years’ enrollment period, it is especially important to practice due diligence
as there have been several changes that will affect costs and coverage.
Currently, 27 million people are registered for Medicare
Part D, two thirds of which are enrolled in a private standalone plan (PDP). According
to a report released by the Henry J. Kaiser Family Foundation, the average
monthly premium for PDP’s will most likely increase by 11% or $38.94 a month in
2010. Furthermore, 60% of PDP’s will require an annual deductible that may be
as much as $310. Premiums and deductibles vary considerably by the type of plan
and region and you should therefore check to see if your PDP options are
subject to these changes.
The Medicare Part D “doughnut hole”, which is the gap
between two set amounts that Medicare will cover, has been widened. In 2010, coverage
stops at $2,830 and resumes at $6,440, which means your personal expenses could
reach $3,610. If there is a likelihood that you may need a medical procedure or
service in the coming year that falls within this range, you should take this
potential cost into account.
Those who are enrolled in the Medicare Advantage plan should
also expect to pay additional fees. The Henry J. Kaiser Foundation found
that the Medicare advantage plan monthly premium is expected to rise by 32%.
Advantage plan users can expect to pay a premium of $48 a month for their
current plan. Furthermore, the healthcare bill, which has already been passed
by the House of Representatives and awaits the decision of the Senate, would
reduce the Medicare Advantage budget by 4.5%, which will affect
beneficiaries.
Regardless of what your plan is, if you take prescription
drugs, you need to factor the rising cost medication into your decision. In the
past year wholesale prices of brand name drugs rose by 9% for a total increase
of $10 billion. For the three quarters of adults aged 45 and older who
currently use prescription drugs, this means their annual drug expenditures
will be around $2,810. These prices are likely increase even more during the
coming year, which may have a significant impact on your costs.
During this open enrollment period, you should be on the
look out for additional or increasing costs and how this may affect your coverage.
As you will be unable to leave you plan for a year, erring on the side of
caution is a safe bet and you should take this time to fully explore your
options.
A more in depth version of this article can be found in the
current edition of Retirement Weekly, a
MarketWatch publication.
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