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Plans ahead

Medicare changes mean now may be a good time to shop around for drug coverage

Joe and Mary Velardi of Burlington learned their Part D plan with Harvard Pilgrim would be canceled in January and decided to opt for two different prescription plans. Seniors enrolling in Medicare Part D plans have until next week to make their choices. Recent guidelines for health insurers may make it easier to find a good deal. Joe and Mary Velardi of Burlington learned their Part D plan with Harvard Pilgrim would be canceled in January and decided to opt for two different prescription plans. Seniors enrolling in Medicare Part D plans have until next week to make their choices. Recent guidelines for health insurers may make it easier to find a good deal. (Wendy Maeda/Globe Staff)
By Arlene Weintraub
Globe Correspondent / December 19, 2010

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When Joe and Mary Velardi learned their Harvard Pilgrim Medicare Part D prescription drug plan would be discontinued in January, they only had two months to find another option. So the retired couple, who live in Burlington, drew up a list of the medications they take, and started researching their insurance choices on the Internet with the help of a financial planner.

The Velardis ended up enrolling in separate plans, which they estimate will save them about $900 a year in drug costs. Her WellCare Signature plan has a monthly premium of $53.50 and no copayments for prescriptions. His Community CCRx plan has a $31.70 premium, a $310 deductible, and $2 copays.

“We have to do our homework to find what suits us best,’’ Joe said.

Seniors who are enrolling in a Medicare Part D plan or looking for different coverage have until Dec. 31 to make their choices. And now may be the best time since Part D was enacted in 2006 for Medicare beneficiaries to improve coverage and reduce their payments. That’s because the Centers for Medicare & Medicaid Services — which oversees Part D — issued new guidelines in April for health insurance companies that require them to pare down their offerings to no more than three plans apiece, and to show a meaningful difference between standard and enhanced plans.

The guidance resulted in a massive overhaul of the Part D market, said Margaret Nowak, a director at Washington, D.C., consulting firm Avalere Health. Her advice? “Shop around. You need to look at your coverage today vs. what it could be in 2011,’’ she said.

Insurance specialists advise seniors to consider not just monthly premiums, but also the total bill for all the drugs they take. Several websites, including the Centers for Medicare & Medicaid Services’ www.Medicare.gov and www.PlanPrescriber.com, a division of eHealth Inc. — which receives commissions from insurance companies if people sign up for plans through its site — offer easy-to-use calculators that will estimate annual costs for all available plans based on where a senior lives and what medicines they take.

One reason it is important for Medicare patients to scrutinize their drug costs now is that many plans are moving from three tiers of coverage to five or even more tiers. So rather than charging, say, a flat $5 copay for all generic drugs, many plans will charge more for another category — “nonpreferred generics.’’ Because these generics are more expensive for insurance companies, a growing number of carriers are shifting more of the cost to con sumers. The added layer makes it more challenging to figure out which plan is most economical.

According to a study Avalere released last month, 41 percent of plan offerings will have at least five tiers of coverage in 2011, up from 27 percent in 2009.

What’s more, several insurers will base their charges on the particular pharmacy a senior chooses. For example, a member of Humana’s Wal-Mart-Preferred Rx plan would pay $588 in annual copays for the rheumatoid arthritis drug Enbrel, Avalere found. But that same member would pay $849 for Enbrel purchased someplace other than Wal-Mart.

Another factor to consider is the infamous coverage gap known as the “doughnut hole.’’ Once the total cost of a Part D member’s covered drugs reaches $2,840 in a year, he or she falls into the doughnut hole. Under the original rules of Part D, that meant the person had to pay 100 percent of remaining drug costs for that year until out-of-pocket costs on copayments and deductibles reached $4,550. But the new federal health reform law requires insurers to kick in half the cost of brand-name drugs and 7 percent of the price of generics for seniors whose drug spending puts them in the coverage gap during 2011.

That’s why it’s more important than ever for Part D members to make sure the medications they plan to take next year are part of their insurer’s “formulary,’’ or list of approved drugs.

“The doughnut-hole discounts don’t apply for drugs that are not in the formulary,’’ said Ross Blair, chief executive of PlanPrescriber, based in Maynard.

Blair said it is crucial for seniors to think ahead when they evaluate Part D options. For instance, he said, “Has your health situation changed, and if so, will the new drugs you’ll have to take be covered? You need to check every year to make sure you’re in the right plan.’’ PlanPrescriber has collected data showing that the average senior who switches Part D plans saves more than $500 annually.

Brandy Bauer, a spokeswoman for the National Council on Aging, suggests searching for additional sources of savings on prescription drugs. For example, some Massachusetts residents may qualify for Prescription Advantage, a Massachusetts program that provides subsidies to low-income seniors to help cover drug copays.

Seniors can get information about Prescription Advantage and other cost-savings programs from a state agency called Serving Health Information Needs of Elders, at www.mass.gov/elders, or by calling 800-243-4636. “These state assistance programs are free, and you can get objective information from them,’’ Bauer said.

And with all the changes affecting Part D next year, people need all the help they can get in choosing a plan, health care planning specialists say.

“In Massachusetts, there are 40 different options for Medicare drug coverage,’’ said Stuart Millard, a certified financial planner in Scituate, who advises the Velardis and others on their Medicare choices.

“Everyone needs to navigate the maze to find the best options.’’