Блог Анкара

In This Chapter

^ Knowing what you pay and what you get in Extra Help

^ Qualifying automatically or applying for Extra Help

^ Seeing whether Extra Help affects other assistance you may receive

^ Selecting a drug plan, enrolling, and switching

^ Finding out whether you’ll still qualify for Extra Help all year and next year ^ Figuring out what to do if you’re denied or lose eligibility for Extra Help

#«^remiums, deductibles, co-pays, and that huge chunk of change that is V The doughnut hole — yes, a lot of consumer costs go along with Part D. And for many people, they’re just not affordable. That’s where Extra Help comes in. This is the name of the program-within-a-program that’s specifically designed for people with limited incomes and savings and has the most generous benefits that Part D provides. If you qualify, you’ll receive drug coverage throughout the year, and your out-of-pocket expenses will be much smaller than in the regular Part D program.

Millions of older Americans and those with disabilities are thought to qualify for Extra Help but, for one reason or another, they aren’t receiving it. Could you be one of them? It may be worth applying even if you’re not sure you’d qualify. Or do you think that someone you know — a relative, a friend, a neighbor — could use some Extra Help? If so, you may want to encourage or help that person to apply.

In this chapter, I explain how Extra Help works, depending on whether you qualify for it automatically or need to apply, and how it could affect other government assistance you may receive. I also explain Extra Help in the context of choosing and enrolling in a Part D plan or switching to another, the all-important question of continuing to receive Extra Help from year to year, and what to do if you’re denied or lose eligibility for Extra Help.

This chapter explains the Extra Help program as it works in the 50 states and the District of Columbia. Similar but different assistance is available in Puerto Rico, the U. S. Virgin Islands, and other American territories.

For information and help in Puerto Rico, call the Medicare Platino program at 866-596-4747.

In the U. S. Virgin Islands, call the Department of Human Services at 340-774-5265 (St. Thomas/St. John) or 340-773-2323 (St. Croix).

For contact information for other U. S. territories, call Medicare at

800-633-4227.

Understanding the Value of Extra Help

Millions of people in Medicare have been able to save many hundreds or even thousands of dollars a year on their drug bills under the Extra Help program. Even more crucially, Extra Help has allowed many folks who didn’t previously have any drug coverage to fill all the prescriptions they need for the first time. For them, Extra Help has been a godsend.

At the same time, there are many who aren’t much better off with Extra Help than they were before — and a few who may be worse off. People enrolled in Medicaid are automatically transferred to Part D for their drug coverage when they join Medicare. Those in states that require Medicaid recipients to pay small co-pays for their prescriptions won’t see much difference in their out-of-pocket expenses under Part D. However, people who are used to getting their meds completely free from their state’s Medicaid program should expect to have small co-pays for the first time.

Is there much red tape to go through? Compared to many assistance programs, Extra Help is easy to get into. Some people qualify automatically and don’t have to apply. Others must apply, but navigating the application is fairly straightforward. On the other hand, after you’re in the program, you may have some hoops to jump through in choosing and joining a drug plan and, when you’re in a plan, getting all the meds you need. Also, no question, people who receive Extra Help one year but don’t qualify the next face big disruptions. I cover these specific topics later in this chapter.

But first, you need to know how you can qualify for Extra Help and, if you do, how it can help pay for your medications. Extra Help benefits are available at five levels, mainly according to income. Table 5-1 explains these levels at a glance.

Table 5-1 The Different Levels of Benefits in Extra Help

(Based on Income and Savings in 2008; Costs for 2009)

Medicaid benefits and live in an institution,

Such as a

Nursing home

2 Full $0 $0 $1.10 for $0 Automatic

Medicaid generics;

Benefits $3.20 for

And a brand -

Yearly name

Income drugs

No higher

Than

$10,400

(single) or

$14,000

(married couple)

3 Full $0 $0 $2.40 $0 Automatic

Medicaid generics;

Benefits $6.00

And brand -

Income name

Higher drugs

Than in level 2; Or Supplementary Security Income; Or Your state

Pays your Medicare premiums

(continued)

Table 5-1 (continued)

Level If You Monthly Annual Co-Pay Cata- Eligibility

Have Premium Deductible per Pre – strophic Medicare scripttion Coverage

And also: Co-Pay

4 Yearly $0 $0 $2.40 $0 Must

Income generics; apply

No higher $6.00 than brand -

$14,040 name

(single) or drugs

$18,900 (married couple) and value of assets no higher than $7,790 (single) or

$12,440

(married couple)

5 Yearly Percentage $60 Up to 15% No more Must

Income of plan’s of the cost than $2.40 apply

No higher premium of each for generics

Than according prescrip- or $6.00

$15,600 to income tion after for brand -

(single) or meet- name

$21,000 ing the drugs or

(married deductible 5% of the

Couple) cost

And value of assets no higher than

$11,990

(single) or

$23,970

(married couple)

Source: Centers for Medicare & Medicaid Services.

Checking out examples of Extra Help at work

Here are some examples of how Extra Help works in practice (at 2009 rates):

Louisa is very frail and lives in a nursing home. The little income she has from Social Security goes to Medicaid, which pays her costs in the home, leaving her a small allowance for personal needs. The full price of her medicines runs to $370 a month. But because she gets Medicaid and lives in an institution, she automatically qualifies for maximum Extra Help (Level 1) and pays nothing for her prescription drugs.

Edward and Sue’s combined income is $12,750 a year, and they get medical benefits from their state Medicaid program, so they qualify automatically for full Extra Help under Level 2. The total, joint cost of their drugs is $550 a month. Under Extra Help, Edward’s four brand-name drugs and two generics cost him $15 a month ($3.20 x 4 = $12.80; $1.10 x 2 = $2.20). Sue’s one brand-name med and six generics cost her $9.80 a month ($3.20 x 1 = $3.20; $1.10 x 6 = $6.60). Together, their monthly out-of-pocket expense is $24.80, saving them $525.20 each month, or $6,302.40 over the year.

Cora has many health problems, and the meds her doctor prescribes add up to $1,220 a month, or $14,640 over the year — unafford-able for her without Extra Help. Because her state pays her Medicare Part B premiums, she qualifies automatically for full Extra Help at Level 3. She uses four brand-name drugs (including an expensive one for cancer) and four generics regularly. Her out-of-pocket

Cost is $33.60 a month ($6.00 x 4 = $24.00; $2.40 x 4 = $9.60) for the first five months of the year. But then, because her drug costs are high, catastrophic coverage kicks in, and from June through December, she pays nothing. Over the whole year, her total expense is $168 ($33.60 x 5), and she saves $14,472.

Carlton is a widower with an income that entitles him to partial Extra Help (Level 5). He pays half ($14) of his Part D plan’s regular monthly premium, a $60 annual deductible, and 15 percent of the cost of his drugs. At full price, his drugs would cost $350 a month, or $4,200 over 12 months. Under Extra Help, they cost $52.50 a month (15 percent of $350). His total out-of-pocket expense over the year is $858 ($14 x 12 = $168 in premiums + $60 deductible + $630 share of drug costs). He saves $3,342 over the year.

These examples reflect the 2009 maximum co-pays set in law. People receiving Extra Help can’t pay more than these amounts. But in some Part D plans, they may pay less. For example, if a plan normally charges nothing for certain generic drugs, Extra Help enrollees in that plan don’t pay anything for them either. (So if Cora were in a plan like this, she’d get her four generics free and save $48 more over the year.) And if a plan has no deductible, people receiving partial Extra Help receive coverage right away and don’t have to pay their reduced deductible. (So Carlton would save a further $60 in a no-deductible plan.)

From Table 5-1, you see that

People who receive full Medicaid benefits And Live in nursing homes or other types of institutionalized long-term care (Level 1) automatically qualify for full Extra Help and pay nothing for their medications.

People who receive benefits from Medicaid or some other government programs that pay their Medicare premiums or provide supplemental income (Levels 2 and 3) automatically qualify for full Extra Help and pay a small amount for prescriptions.

Others who aren’t enrolled in any of these programs but whose monthly incomes are still below certain dollar amounts (Levels 4 and 5) must apply for Extra Help.

People in Levels 4 and 5 have their assets (mainly savings), as well as their incomes, taken into account to qualify for Extra Help.

People in Level 4 receive full Extra Help benefits and pay the same co-pays as those in Level 3, but don’t qualify automatically. They must apply for Extra Help.

People in the highest qualifying income group (Level 5) receive "partial" Extra Help. They pay a share of their plan’s premium on a sliding scale according to income, a reduced annual deductible (about one-fifth of the regular Part D deductible), and up to 15 percent of the cost of each prescription.

People in Levels 1, 2, 3, and 4 pay nothing for catastrophic coverage, which kicks in after their drug costs reach a certain level in the year ($4,050 in 2008; $4,350 in 2009). People in Level 5 have small co-pays after getting to that level. Everything the government contributes toward prescription costs through Extra Help counts toward the spending limit that triggers catastrophic coverage.

Everybody, at all five levels, gets full drug coverage throughout the year. Nobody receiving Extra Help has to face the dreaded doughnut hole.

Income and asset limits increase every year. The Social Security Administration announces the new amounts in February or March, and they become effective immediately. These limits are higher in some circumstances — if you live in Alaska or Hawaii, have dependent relatives living with you, or have some earnings from work that aren’t counted. Any of these situations may give you a better chance to qualify for Extra Help than the income and asset limits in Table 5-1 suggest.

Extra Help co-payments (and the amount of the deductible for people in Level 5 who receive the partial benefit) increase at the beginning of each calendar year and remain the same for that whole year.

Qualifying Automatically for Extra Help

—35x You qualify automatically for Extra Help — without having to go through the process Llll 1 Of applying for it or answering any questions about your income and savings — if " you’re in Medicare and also receiving any of the following government benefits:

Medicaid: This is the program in your state that provides healthcare benefits for people whose incomes are below a certain level. The program is generally known as Medicaid but may have other names in different states — for example, MediCal in California, MassHealth in Massachusetts, and TennCare in Tennessee. If you’re in Medicaid, you get Extra Help as soon as you become eligible for Medicare (Chapter 1 explains the eligibility rules). Or, if you’re already in Medicare, you’d get it if and when you qualify for Medicaid.

Supplementary Security Income: SSI is a federal program that provides monthly payments to people in certain categories (blind, disabled, or 65 and older) whose incomes are very low.

Medicare savings program: Three Medicare savings programs (officially designated QI, SLMB, or QMB) give varying help to people with low incomes and few resources to pay for the out-of-pocket costs of Medicare. If you’re in any of these programs, your state pays your Medicare Part B premiums (see Chapter 1 for Part B information).

Medicaid medical spend-down programs: Some states have a system that allows people whose incomes are above the state limit for Medicaid to become eligible for it when their out-of-pocket medical expenses reach a certain level in a calendar year. If you’re receiving Medicaid in one of these medical Spend-down Programs, you automatically start getting Extra Help for drug coverage as soon as you become eligible for Medicare. Or, if you’re already in Medicare, you qualify for Extra Help as soon as your medical spend-down reaches the point of putting you in Medicaid. After you’re in the Extra Help program, you’ll continue to receive its benefits until the end of the calendar year. (See the later section "Determining Whether You’ll Qualify for Extra Help All Year and Next Year" for more about these programs.)

Jargon alert: People in any of these programs are known as Dual eligibles In Medicare lingo, because they qualify for help from both Medicare and Medicaid.

If you automatically qualify for full Extra Help, Medicare should send you a letter telling you so. If you don’t receive this notice but are in one of the previously listed programs, call Medicare at 800-633-4227 to find out why.

Be aware that qualifying for Extra Help, even automatically, is only one step in the process. You still have to join a Part D private plan to get prescription drug coverage. You can sign up for a plan of your own choosing — but if you don’t do so, Medicare will pick one and enroll you in it, even though that plan

May not be ideal for you. You’ll find more details about this in the section on choosing a plan later in this chapter.

It could happen that you qualify for Extra Help only after you’ve been in the regular Part D drug program for some time — for example, if your situation changes and you suddenly become eligible for Medicaid, Supplementary Security Income (SSI), or your state’s Medicare savings program. But be aware that it can often take months before the various government agencies get their paperwork sorted out and confirm your eligibility.

You have the right to be reimbursed for the money you spent on drugs dating back to the day you applied for Medicaid, SSI, or the Medicare savings program. Your Medicare drug plan must return the difference between what you would’ve paid under Extra Help rules during this period and what you actually paid. But you can’t rely on your plan to automatically refund that money to you. Instead, you should contact the plan and ask for the appropriate refund, explaining the circumstances. If you still don’t get the money, call Medicare at 800-633-4227 and report it. Or, if necessary, file a grievance against the plan, as covered in Chapter 19.

Applying for Extra Help

Perhaps your income and resources are limited but you’re not enrolled in one of the programs that qualify you for Extra Help automatically, as I explain in the previous section. In this case, you need to Apply For Extra Help. You can apply at any time — when you first join Medicare; when you lose a job, become widowed or divorced, or experience any other change that lowers your income; or if you’re already in Part D and have only just realized that you may qualify for Extra Help.

Applying involves filling out a form and sending it to the Social Security Administration (not Medicare), which will then decide whether you qualify. I walk you through the process in the following sections.

Obtaining an application form

You must apply for Extra Help in writing on the official printed form or online on the Social Security Web site. Don’t use a photocopy or a form printed from the Web site — these can’t be scanned by computers, so they’ll just delay your application.

You can obtain a form in any of the following ways:

F By mail (without requesting it): You’re likely to receive an Extra Help application in the mail soon after you sign up for Medicare. Social Security seems

To send them out to virtually all new beneficiaries, even people who are still working and earning far more than the Extra Help income limits.

F By phone: Call Social Security toll-free at 800-772-1213. (If you’re hard of hearing, call the TDD number at 800-325-0778.) Tell the representative that you want to apply for Extra Help to pay for Medicare prescription drug costs. You can ask for the form (in English or Spanish) to be sent to your home, or you can arrange to pick one up at your nearest Social Security office.

F Online: Go to Www. ssa. gov and click "Medicare" on the top panel, then click "Apply for help with prescription drug costs." You can use this form to apply directly online, but only in English. Before downloading the application form, it’s helpful to click the link headed "How the Online Application Works." This page explains the process, including instructions on how you can save your work so you can leave the form partially completed and return again later.

You Can’t Print out the form and mail it in — but a printout may be useful for a practice run before you make the proper application. (For more information about applying online, see the later section "Signing and sending in the application.")

F In person: You can obtain a form (and help filling it out, if you need it) at your local Social Security office or State Health Insurance Assistance Program (SHIP) office. (To make an appointment at a Social Security office, call 800-772-1213. To call your SHIP, see the contact info in Appendix B at the end of this book.) Forms are also sometimes available in pharmacies, doctors’ offices, and senior centers.

Helpful tips for filling out the application

The Extra Help application contains four pages of questions, mainly about your income and savings. I provide tips for answering them in the following sections.

Don’t panic if you can’t answer all the questions! Answer as many as you can and send in the form. Someone from Social Security will be in touch to help you complete it. However, if you apply online, you must answer every question before you can submit the form.

Getting instructions

You can get detailed instructions in English and 15 other languages (Arabic, Armenian, Chinese, Farsi, French, Greek, Haitian-Creole, Italian, Korean, Polish, Portuguese, Russian, Spanish, Tagalog, and Vietnamese) by calling Social Security or by visiting its Web site. If you want these instructions mailed to you, ask for form SSA-1020B-INST plus the language you need. But you must fill out the actual application in English or Spanish only.

Gathering information you need

^lM3Eft Before you start, pulling together some information is useful. This info

Includes your Social Security number and recent financial records relating to any earnings, pensions, savings, life insurance, and investments you may have. You need to refer to these records to answer questions about your income and savings. You do Not Have to send in any documents to support what you say about your finances, but that doesn’t mean you can be untruthful! Social Security will likely compare what you say with information from tax records and other government sources.

Single or married status

Income levels are for either single people or married couples "who are living together." If you’re married and living with your spouse, you can both apply on the same form. If only one of you is applying, you still have to provide your spouse’s income and resources. You count as single if

F You’re married but living apart.

F Your spouse is living permanently in a nursing home or another type of long-term care.

F You have a domestic partner or are in a common-law or same-sex marriage.

If you’re not sure whether you count as single or married for this purpose — for example, if it isn’t clear that your spouse will be in a nursing home permanently — call Social Security for clarification.

Income

The income limits for qualifying for Extra Help go up slightly each year and are announced in February or March. The application form doesn’t actually say what these dollar limits are, mainly because they’re somewhat flexible. For example, the limits are higher if you

F Have relatives living with you who depend on you for at least half of their support

F Live in Alaska or Hawaii (where the cost of living is higher than in other states)

F Have some earnings that aren’t counted as income

F Have certain expenses related to disability that allow you to work

Otherwise, if none of these circumstances are applicable, the upper income limits in 2008 and the early part of 2009 are $15,600 a year for a single person and $21,000 a year for a married couple living together.

You should include the following as income:

F Pretax wages or earnings from self-employment

F Social Security or Railroad Retirement benefits, Before Deductions

F Veterans benefits

F Pensions and annuities

F Workers’ compensation

F Net income from rental property

F Alimony

F Payments from anyone (other than a government agency) to help pay for certain household expenses, as explained later in this chapter

You can leave out the following:

F Cash or credit acquired from a loan or through a reverse mortgage

F Federal income tax refunds and earned income tax credit payments

F Victim’s compensation

F Education grants and scholarships

F Help from food stamps or Meals on Wheels

F Help from a housing agency, energy assistance program, or public relocation program

F Help paying for medical treatment and drugs

F Disaster assistance

If you’re not sure whether you qualify for Extra Help because your income may be a bit over the top, it’s still worth applying. Social Security doesn’t count every dollar of income toward the limits, so you may find that you qualify after all. Also, remember that the income limits increase a little each year in February or March. You can find updated levels by calling Social Security or Medicare or by going to the chart in Section 3 of "Your Guide to Medicare Prescription Drug Coverage," available online at Www. medicare. gov/ Publications/Pubs/pdf/1110 9.pdf. You can apply for Extra Help at any time, so if a new level suddenly brings your income within the limits, you can apply at once.

Assets

Assets (also called "resources") are the value of certain things you may own, mainly savings. The upper limit of this value increases from time to time. In 2008 and early 2009, it’s $11,990 for a single person and $23,970 for a married couple living together.

You should include the following as assets:

F Bank accounts, including checking, savings, and certificates of deposit F Proceeds of a loan if saved beyond the month they are received F Cash kept at home or anywhere else F Individual retirement accounts (IRAs) and 401(k)s F Stocks and bonds F Mutual funds

F Real estate (other than your primary home)

You can leave out the following:

F Your primary home and the land it stands on F Your vehicle(s)

F Personal possessions, including jewelry and furnishings F Property you need for self-support, such as land used to grow your own food F Burial plots

F Up to $1,500 (or $3,000 for a married couple living together) of the cash value of life insurance policies

Social Security rules for Extra Help don’t prevent you from spending down or giving away some of your savings to reduce them below the asset limit. Only what you have during the month you apply is counted. However, bear in mind that spending down may affect your eligibility for other assistance programs — especially Medicaid, which has strict rules about this — if you should need them within a few years.

Life insurance

The Cash value Of a life insurance policy means the amount you’d receive if you cashed it in right now. This is less than the Face value Of the policy, which is what you’d receive if it went to term. Most people have no idea what their policies’ cash value is, you’ll probably need to call your insurer to find out. Some types of life insurance — such as policies that can’t be cashed in before they come to term, or burial insurance where the benefit can be used only for funeral expenses — don’t count as assets. Note: Starting in 2010, life insurance will no longer count as an asset under Extra Help.

Funeral expenses

The application asks whether you expect to use money from your savings or investments to pay for funeral or burial expenses. Answering "yes" simply means you expect to do so, not that you have some amount ready and waiting for that purpose. Answering "no" will reduce your asset limit for qualifying for Extra Help by $1,500 if you’re single or $3,000 if you’re married and living together.

Dependent relatives

If you have any relatives — related to you by blood, marriage, or adoption — who live with you and depend on you (or your spouse) for at least half of their financial support, be sure to answer the question on household size. Every extra person raises the income limits and increases your chances of qualifying for Extra Help.

Help toward household expenses

The application asks whether anyone else (other than a government agency) helps you pay for food, mortgage, rent, heating fuel or gas, electricity, water, and property taxes. If you answer "yes," a part of the amount you specify will count as income. For example, if you live with someone who pays all these expenses each month, you’d add the amounts together and divide by the number of people in the household — then subtract from the total any contribution you normally make. The result is the amount you report on the application. Social Security will decide what portion of that amount would count toward your income. You don’t have to show proof of such help. Note: Starting in 2010, this assistance will no longer count as an asset under Extra Help.

Getting a hand with applying

Many circumstances — like being sick or recently widowed, to name just two — may make you feel that dealing with this application on your own is beyond you at this time. In that case, don’t hesitate to get help. All sorts of people can lend you a hand in applying:

F Someone you know: Anybody can help you fill out the application, or even apply on your behalf — a family member, a friend, a legal representative, a social worker, or anyone you choose to act for you.

F Free, expert personal help: Counselors at State Health Insurance Assistance Programs (SHIPs) are specially trained to personally assist people in sorting through their Part D options, including helping them apply for Extra Help or applying on their behalf. For the number of your local SHIP, see Appendix B at the end of this book.

F Help from Social Security: If you’re filling out the application on your own and need help on how to answer specific questions, you can call Social Security at 800-772-1213 (or the TDD number at 800-325-0778 if you’re hard of hearing) or visit your local Social Security office.

F Community groups: You may be a member of a church, senior center, or other community group that can assist you in filling out the form. If English isn’t your first language, an organization or group for people of your own nationality may be especially helpful in this regard. (Also, see Appendix B for sources of help in other languages.)

Signing and sending in your application

Signing the form means you’re legally declaring that all the information you’ve given is true to the best of your knowledge. If you’re married and living together, your spouse must also sign the application, even if he or she isn’t applying for Extra Help at this time. If someone else signs on your behalf, that person should complete the section provided on the form for his or her name, address, and personal or professional relationship to you. Then you can submit the form by

F Using the printed application form: After you’ve completed and signed the form, just put it in the preaddressed envelope and mail it in. If the envelope is missing, send the form to the Social Security Administration, Wilkes-Barre Data Operations Center, P. O. Box 1020, Wilkes-Barre, PA 18767-9910.

F Applying to Social Security online: Go to Www. ssa. gov and click "Medicare" on the top panel. Then click "Apply for help with prescription drug costs." Remember to look at the instructions, as explained in the previous section "Getting an application form," before filling out the form. You must answer all the questions before signing the form electronically and submitting it.

F Applying on the BenefitsCheckUp Web site: You can apply for Extra Help at Www. benefitscheckup. org using the same Social Security online form. The advantage of going this route is that the site automatically screens your information and lets you know whether you qualify for other benefits to help pay for prescription drugs and other living expenses. (I give more information about this Web site in the later section "Looking for help to pay other expenses.")

Knowing what happens next

So you’ve sent in your application and crossed your fingers, waiting for a decision. What happens next?

F Social Security should send you a notice saying it has received your application and is processing it. If you don’t receive this notice within a couple weeks of applying, call Social Security to let it know you sent in an application for Extra Help, just in case your form has gone missing.

F You may hear from Social Security by phone or mail if it has additional questions. The agency will contact you if your application is incomplete or if some of your financial information doesn’t match other government records, for example.

How do you know that the person on the end of the line is actually from Social Security and not just some scam artist trying to steal your Social Security number and financial data? If the call is legitimate, the person

Won’t normally ask for your Social Security number — unless the one you’ve given on your application appears incorrect — or for your credit card or bank account numbers. If you have any suspicions, hang up and call Social Security right away to check that the call was really from someone in that agency. (For more tips on avoiding scams, see Chapter 11.)

F You may receive what’s called a "Pre-Decisional Notice" saying that your application is likely to be turned down. This document specifies what information on your application will cause you to be denied — for example, that your income is too high or that your assets are above the limit. If this information is wrong, receiving the notice allows you time to correct it. You must do so within ten days of the date of the notice, by calling or visiting your local Social Security office at the number or address given on the notice.

F Social Security will decide whether you’re eligible for Extra Help. You

Should hear within 60 days of Social Security receiving your application, maybe sooner. You’ll receive either a "Notice of Award" saying that you qualify for either full or partial Extra Help (see the earlier section "Understanding the Value of Extra Help" to find out how to tell the difference) or a "Notice of Denial" saying that you don’t qualify.

If you’re told you don’t qualify, you can appeal the decision, as explained in the later section "Taking Action if You’re Denied or Lose Your Eligibility for Extra Help." That section also looks at alternative ways of reducing costs outside of Extra Help.

Figuring Out Whether Extra Help Affects Other Assistance

You may hesitate about Extra Help if you think it may cause you to lose or reduce other benefits you’re receiving. Sometimes it can, but maybe not to your disadvantage. The money you save through Extra Help should far outweigh reductions in other benefits. In other words, you end up better off and with more cash in hand, even if you receive less in other assistance. Take a look at these situations:

F Food stamps and housing assistance: Medical expenses are taken into account in receiving food stamps and government housing subsidies. So if you pay less for your drugs under Extra Help, your food stamps will be reduced, and you’ll pay a larger share of your subsidized rent. But you’re still likely to be better off.

Here’s an example: Sarah was paying $400 a month out of pocket for her prescription drugs before joining Medicare. But when she began receiving Extra Help, her monthly drug expenses dropped to $40. This meant losing $40 in food stamps. And under the formula used by her housing

Assistance program to calculate her new benefit — Not A dollar-for-dollar reduction — she paid $108 more in rent. But what she saved on medicines ($360) was more than her extra expenses for food and rent ($148). Overall she saved $212 a month, making her $2,544 better off over the year.

F Home heating/cooling assistance: Eligibility for the Low-Income Home Energy Assistance Program is based on income, without regard to medical expenses. So Extra Help does Not Affect it.

F Supplementary Security Income (SSI): Medical expenses aren’t taken into account in calculating eligibility for SSI. So even though Extra Help reduces what you spend in drugs (effectively giving you more cash in hand), you’ll continue to qualify for SSI.

Choosing a Drug Plan, Signing Up, and Switching Plans

Qualifying for Extra Help is just one step in the process. You still have to be in a Medicare drug plan to get coverage for your drugs. If you qualify for Extra Help Automatically And don’t immediately sign up for a Medicare drug plan on your own, Medicare enrolls you in one. Medicare does this to make sure you continue to get your medications, especially if you’re being moved from Medicaid to Medicare for your drug coverage. Medicare may sign you up with a plan a month or two before you’re switched from Medicaid to Medicare — a move that’s intended to ensure your details are entered into the computer system and that everything will go smoothly at the pharmacy. (If it doesn’t go smoothly, you have a right to a 30-day supply of drugs to tide you over, as explained in Chapter 14.)

However, Medicare enrolls Extra Help people in plans at Random. This is the computerized version of taking your name out of a hat and matching it to the name of a plan taken out of another hat. In other words, there’s no effort to put you into a plan that suits your needs, or even to ensure that the plan you’re assigned to actually covers your drugs. So you may find yourself in a plan that’s not ideal for you — unless you take action and choose a plan for yourself. You can switch to another plan immediately or whenever you want to, as explained in the next section.

You have the right to enroll in a Medicare drug plan of your own choosing — and you should do so by comparing plans carefully according to the drugs you take — just like anyone else (see Chapter 10 for details). But you should know about some details specific to Extra Help. I give you the nitty-gritty in the following sections.

What were they thinking. . . when they created the asset test?

Well over 2.5 million people on Medicare have incomes limited enough to qualify for Extra Help — yet fail because of the asset test. Not surprisingly, many feel the test is deeply unfair because it penalizes those who, despite limited incomes, have managed to save a small nest egg toward their retirement.

Medicare never had any type of asset test before Part D began in 2006. But Congress created the test for Extra Help as a cost trade-off — without it, the program would’ve cost $35 billion more.

Lawmakers in favor of the test pointed out that other assistance programs, such as Medicaid, have long taken people’s assets into account when deciding eligibility. Nonetheless, consumer advocates have consistently lobbied against the Extra Help asset test from the beginning, and some members of Congress are working to eliminate it or raise its limits so that more people with low incomes can qualify.

Before you choose: Realizing that some plans may cost you more than others

In the earlier section "Understanding the Value of Extra Help," I point out that full Extra Help entitles you to a zero premium. But there’s a catch. You can get that benefit Only If you join a plan with premiums below a certain dollar amount.

JrtNG/ Under Medicare rules, you don’t pay a premium if you’re in a plan with a premium that’s generally below the average of all plan premiums in your region in any given year (see Chapter 3 for an explanation of premiums). But if you join a more expensive plan — one with a premium above that regional average — you have to pay the difference between the average premium and the full premium. For example, if the average premium in your region is $30, and the premium in the plan you join is $37, you’d pay $7 each month for your drug coverage. (This rule doesn’t affect your low-cost Extra Help co-pays for prescriptions — they remain the same.)

This regional average (which bureaucrats call the Benchmark) Changes every year. That’s why, each fall, Medicare sends letters to some Extra Help beneficiaries, warning them that if they stay in the plan they’re in for the following year, they’ll no longer be able to claim zero premiums, or in some cases, the letter tells them they’ve been automatically switched to a new plan that has zero premiums. So be sure to read any letters that come from Medicare or your plan during the fall (September to November) so you’re not caught off-guard in January having to pay a premium you didn’t expect.

Finding a plan with the premium you want and the drugs you need

In general, the process of comparing plans to find the least expensive one that covers all or most of your drugs is the same in Extra Help as it is for folks in the regular Part D program, as explained in detail in Chapter 10. But there are some differences, depending on whether you’re receiving full or partial Extra Help.

Using an online comparison tool if you’re getting full Extra Help

Under full Extra Help, your co-pays (being set in law) are the same under any Part D plan. But the premium you pay depends on whether you choose a plan with a premium above or below the regional average, as explained in the preceding section. How can you tell which plans have these higher or lower premiums?

Fortunately, you can see this information at a glance on Medicare’s online Prescription Drug Plan Finder. (If you don’t have access to the Internet, you can get the same info in other ways, which I explain later in this chapter.) Before using the plan finder, you may want to look at the step-by-step instructions given in Chapter 10 on how to navigate it. Here are the variations if you’re on full Extra Help:

1. Go to Www. medicare. gov and click "Medicare Prescription Drug Plans." Then click "Find and Compare Plans," and then "Begin General Search."

2. Type in your zip code and answer the questions — in particular, the ones at the bottom of the page that establish what kind of Extra Help you qualify for.

3. Enter the names of all of your drugs, plus their dosages and how often you take them.

You’ll then see a list of drug plans, starting with the least expensive.

4. Look under the Monthly Premium column to the right of each plan’s name.

A zero dollar amount means you won’t have to pay a premium under that plan. A dollar amount shows what part of the premium you’ll pay if that plan’s premium is above the regional average. Click the name of any plan to see its details — in particular, whether it covers all of your drugs.

Using an online comparison tool if you’re receiving partial Extra Help

If you receive partial Extra Help, you pay 15 percent of your drugs’ full price under any plan. And your premium is a percentage of the plan’s regular premium — such as 25, 50, or 75 percent — calculated on a sliding scale according to your income. How can you tell what you’ll pay for drugs and premiums under any given plan?

Again, you can use Medicare’s online plan finder to see instantly how much you’ll pay for your drugs. (You may want to look at the step-by-step instructions in Chapter 10 on how to navigate it though.) Go to Www. medicare. gov and follow the steps outlined in the preceding section. But when you’re asked in Step 2 whether you receive full or partial Extra Help, click "Partial." After you’ve entered the names of your drugs (plus their dosages and how often you take them — this is important in determining the price), you’ll see the list of plans in descending order of out-of-pocket expense. The premium you see given for any plan is what you pay, according to what percentage of the regular premium your partial Extra Help entitles you to. Click a plan’s name to bring up its details, and you’ll see what you’d pay for each of your drugs under that plan. This price is 15 percent of the plan’s full price. In other words, your premium and co-pays for drugs are automatically calculated for you.

Comparing plans if you don’t have Internet access

Comparing plans carefully is so important that this would be a good time to ask a relative or friend who’s savvy about computers to search the Medicare plan finder for you. Or you can get the same info in the following ways:

F By phone: Call the Medicare help line toll-free at 800-633-4227. Tell the customer representative that you’re qualified for full or partial Extra Help and give the names of your drugs, plus their dosages and how often you take them. (If you’re on full Extra Help, say whether you want only plans that will accept you for a zero premium or whether you’re willing to consider paying your share of a premium for more expensive plans. You can also ask for a full list of plans that won’t charge you a premium.) Ask for printouts of the most suitable three or four plans to be sent to you.

F In person: Counselors at your local State Health Insurance Assistance Program (SHIP) can help you find the plan that suits you best. To find your SHIP phone number, see Appendix B at the end of this book.

Moving forward if no affordable plan covers all of your drugs

Medicare doesn’t cover all medications. Some Part D plans cover most drugs that Medicare has approved and even some that Medicare doesn’t pay for, as explained in Chapter 4. But these are mostly "enhanced" plans that have higher premiums. In general, the lower-premium plans cover fewer drugs — and some of these plans cover brand-name drugs Only If they have no lower-cost, generic equivalents. So some people on Extra Help who are seeking less expensive plans — especially those needing a zero premium — may find themselves without access to some of the drugs they need.

This won’t necessarily happen to you — it all depends on the drugs you take. But if you do find yourself in this situation, what can you do? Consider these options:

If you’re receiving Medicaid, your state may pay for the drugs your Part D plan doesn’t cover, or even those that Medicare doesn’t cover. To find out, and to get help applying, call your State Heath Insurance Assistance Program (SHIP). (See Appendix B for contact numbers.)

If you’re in a State Pharmacy Assistance Program (SPAP), it may pay for drugs your Part D plan doesn’t cover. Contact the program to find out. (I cover these programs in more detail later in this chapter.)

Ask your doctor whether switching to a similar drug (or drugs) that your plan Does Cover would be just as effective for you. This may lower your co-pays as well as give you coverage, as explained in Chapter 16.

You have the right to ask the plan to cover a particular drug — by requesting an exception to the plan’s rules — if your doctor considers it necessary for your medical condition, as described in Chapter 4.

You can choose to pay an extra share of the premium of an "enhanced" Part D plan that does cover all of your drugs.

You can switch to another plan that does cover all of your drugs. In Extra Help, you have the right to switch plans at any time of the year, as explained in the next section.

Joining and switching plans

Joining a plan is easy. After you’ve picked the plan of your choice, you can

Sign up by calling the Medicare help line at 800-633-4227 (877-486-2048 for

TDD users) or by visiting Www. medicare. gov, as described in Chapter 12.

But there are some things to keep in mind about switching plans. Unlike most folks in the regular Part D program, you won’t be limited to enrollment periods or locked into a Medicare drug plan for a whole year. Extra Help gives you the flexibility to join or switch to another plan at any time of the year. Table 5-2 shows when you can switch from one Part D plan to another, and when your coverage begins in different circumstances.

You need to compare plans carefully to find one that suits you to begin with so that you won’t want to change, unless it becomes necessary. Why? Because it’s possible that switching (and especially switching often) could cause any of these problems:

F It may take time for your new plan to be entered in Medicare’s computerized record system, which could cause delays in getting your meds at the pharmacy. (But see Chapter 14 for ways to avoid delays.)

F If you’ve requested and received from your present plan an exception that allows you to use a drug not on its formulary — or a prior authorization before the plan agreed to cover a drug — you may have to go through the same process again in the new plan.

F If you’re paying any premiums at all, and these are being taken out of your Social Security check, you may find yourself paying two premiums for a while — for both the old plan and the new one. Why? Because communication between Medicare (which knows you’ve changed plans) and the Social Security Administration (which cuts your checks) doesn’t always work as rapidly as it should. If this situation happens to you, call Medicare at 800-633-4227 immediately to complain.

An option to consider: Participating in a State Pharmacy Assistance Program

About 30 states have State Pharmacy Assistance Programs (SPAPs) in 2008, though over time new ones are introduced and others disappear. All help people whose incomes are limited (but too high to qualify for Medicaid) pay for prescription drugs. Some SPAPs have income limits above Part D’s Extra Help maximums and/or no asset tests.

Benefits vary a great deal among these programs. Some — including the long-established and excellent programs in New York (EPIC) and Pennsylvania (PACE and PACENET) — provide comprehensive services that wrap around Extra Help and offer additional benefits, as well as assisting many Part D

Enrollees who don’t qualify for Extra Help. Other SPAPs focus on drug assistance for patients with a particular medical condition (such as HIV-AIDS or cancer) or offer discount cards to use at pharmacies.

For details on SPAPs, go to Www. medicarerights. org/searchframeset. htm or Www. medicare. gov/spap. asp. You also can call 800-633-4227 and ask for a brochure to be mailed to you, or you can call your State Health Insurance Assistance Program (SHIP) for this information. (See SHIP phone numbers in Appendix B.)

Determining Whether You’ll Qualify for Extra Help All Year and Next Year

I’m going to assume that you didn’t just win the lottery or suddenly inherit great riches from some distant relative you’ve never heard of. So you’re hoping you’ll continue to get Extra Help throughout this year and next year too. The following sections explain the circumstances that can cause you to lose Extra Help (or get a lesser benefit) and how you’ll know where you stand for next year.

How you could lose Extra Help

In most cases, you’ll still receive Extra Help until the end of the year — once qualified, you’re likely to receive the benefit until midnight December 31 of the same year, regardless of whether your financial circumstances changed during the previous 12 months. But there are some exceptions. If any of the following marital events happen during the year, you’re expected to report them immediately so your eligibility for Extra Help can be reviewed:

F Your spouse dies.

F You and the spouse you’ve been living with start living apart, divorce, or have your marriage annulled.

F You and your spouse start living together again after being apart.

F You get married.

These events wouldn’t necessarily result in losing Extra Help during the year. In fact, they could mean that you qualify for More Extra Help than you received before, if your income reduces. Any benefit changes — whether a decrease, increase, or loss of Extra Help — take place the month after you report your new circumstances.

Continuing to get Extra Help Next Year, starting January 1, depends on whether you’ve become financially better off this year. You can lose Extra Help (or receive less benefit) next year if

F Your income rises above the limits for Extra Help

F The value of your savings and other countable resources rises above the asset limits for Extra Help

F You cease to qualify for one of the programs that makes you Automatically Eligible for Extra Help — Medicaid, SSI, having your Medicare premium paid by your state, or being in a state Medicaid spend-down program

Finding out where you stand

What will happen next year, and how you’ll find out, depends on how you qualified for Extra Help in the first place, as follows:

F If you qualified for Extra Help automatically: If nothing has changed — that is, if you continue to receive Medicaid or SSI benefits, or are still having your Medicare Part B premiums paid by your state — you don’t need to do anything. You’ll continue to receive Extra Help. If you no longer get help from any of these programs, Medicare will send you a notice (headed "Loss of Extra Help") saying that you no longer Automatically Qualify for Extra Help next year but that you can still Apply For it. An Extra Help application should be enclosed with this notice.

F If you qualified for Extra Help through a Medicaid medical spend-down program: As long as you continue to qualify for Medicaid benefits, you’ll still receive Extra Help. So if your medical expenses this year — for example, being in the hospital, going to the doctor, having lab tests, and so on — have been high enough to keep you on Medicaid at the end of the year, you’ll still get Extra Help next year. But if those medical expenses are no longer high enough to qualify you for Medicaid, then you’ll probably get a letter from Medicare saying you’ll no longer receive Extra Help starting January 1. However, even if you lose your Medicaid spend-down, you may still receive Extra Help automatically next year, depending on the timing of when you met your spend-down this year. If your name is in the system in July, when Medicare compiles its list of people automatically eligible for Extra Help next year, you’ll continue to receive Extra Help for all of next year.

F If you qualified for Extra Help by applying: In August or September, you may receive a letter and a form from Social Security asking whether your financial circumstances have changed. Not everybody receives this letter (which is headed "Review of Your Eligibility for Extra Help"), but if you do, you must fill out the form and return it to Social Security within 30 days. If you don’t return it, your Extra Help will end on December 31. Social Security reviews your information and will notify you, saying whether you’ll still qualify for Extra Help next year and, if so, whether your benefits will change. For example, if your income has gone down, you may get lower co-pays next year — or, if it has risen above a certain level, you may get "partial" instead of "full" Extra Help. Any changes will begin on January 1.

Taking Action if You’re Denied or Lose Your Eligibility for Extra Help

Being told "No — you don’t qualify" is a bummer. And it’s even more of a blow to lose Extra Help at the end of the year after you’ve already been receiving it. But in either event, you may still want to persist in getting Extra Help or exploring other ways to ease your expenses. The following sections explain some options.

Appealing a "no" decision

You can always appeal Social Security’s decision if you don’t agree with it. Here’s what to do, depending on whether you’ve been denied Extra Help or been told you’ll no longer be eligible next year.

If you’re denied Extra Help

You must appeal within 60 days of receiving a decision. (This deadline may be extended if you have good reason to miss it, such as being too sick to deal with it on time.) You can appeal in one of two ways:

F Request a telephone hearing. Call your local Social Security office or the SSA national help line (800-772-1213); or print an appeal request form from its Web site (Www. ssa. gov), fill it out, and mail it in. You’ll receive a letter confirming the date of your hearing and the number to call. (You can ask for a conference call if you want someone who’s helping you to be on the phone at the same time.) The letter also explains how to send in documents showing evidence that supports your case.

F Request a "case review." This means having a Social Security agent review your application and any additional information or evidence you’ve sent in, but without being able to present your case in person.

After Social Security has reviewed your appeal, you’ll receive a letter notifying you of the decision. If you win, you’ll receive Extra Help backdated to the first day of the month in which you originally applied for the benefit. If you lose, but still disagree with the decision, you can file a further appeal in a federal district court within 60 days of receiving the decision.

If you’re told that you’ll lose eligibility

Mistakes are often made in vast bureaucracies. So if you think you’ve lost eligibility by error or an unfair judgment, don’t hesitate to speak out. For example, if you’ve been told that you’ve lost your automatic right to Extra Help next year when you know you’re still enrolled in one of the programs that give you that right (Medicaid, SSI, having your Medicare premiums paid

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By your state, or being in a Medicaid spend-down program), call Medicare at 800-633-4227 immediately. If you got Extra Help by applying and are now told — wrongly, in your view — that your income or assets are too high to continue receiving the benefit next year, you can appeal to Social Security by the procedures explained in the previous section. The notification letter you receive from Social Security should also explain the process.

In general, if you received Extra Help Automatically, You should contact Medicare to resolve problems. If you Applied For Extra Help, you should contact Social Security.

Getting Extra Help another Way

Even if you’re denied Extra Help or lose eligibility, you may still be able to get benefits in another way. Take a look at your options.

F If you lose your Automatic Right to Extra Help: You may still qualify by applying for it. The income and asset limits for Extra Help are higher than the qualification limits for Medicaid or SSI. You should apply as soon as possible after being notified that you won’t qualify automatically next year, following the procedures explained in the earlier section "Applying for Extra Help."

F If you applied for Extra Help but are denied or lose eligibility: One

Of the ways to qualify for Extra Help automatically is by having your Medicare Part B premiums paid by your state under one of the Medicare savings programs. The income and asset limits for eligibility vary state by state. But some may be a little higher than the limits for Extra Help, and some states don’t require an asset test at all. So if you’re denied Extra Help (or lose eligibility) because your income or assets are a bit over the top, you might consider applying for this assistance. There’s no guarantee that you’ll get it, because enrollment for these programs is often limited to the funds a state has available. But it may be worth trying — and if you get this state assistance, you’ll get full Extra Help automatically. Contact your State Health Insurance Assistance Program (SHIP) for information and help in applying.

F If you lose Extra Help but qualify again in the future: It may happen that you lose Extra Help on January 1, but become eligible again later in the year or in a future year. That’s possible if your income or assets once again dip below the limits, or if the new limits (which Social Security announces in February or March of each year) make you eligible again. As soon as this situation happens, you can again apply for Extra Help. Or, if you’re in a Medicaid medical spend-down program and lose both your Medicaid and Extra Help benefits on January 1, you may qualify for both programs again later in the year as soon as your expenses once again rise to the required level.

Seeking other help to pay for drugs

If none of the options in the preceding section work out, you may be able to get other kinds of help to pay for your medications.

F A State Pharmacy Assistance Program (SPAP): If your state has an SPAP, contacting it to find out whether you qualify is well worth it. These programs vary, but some of them give additional help to people of limited means who are enrolled in the Medicare Part D program — sometimes with income limits that are much higher than those required in Extra Help and with no asset tests. (For more details, see "An option to consider: Participating in a State Pharmacy Assistance Program" earlier in this chapter.)

F Private and local pharmacy assistance programs: Some companies that manufacture drugs, some national organizations for patients with certain medical conditions, some charities, and some local assistance groups offer help paying for drugs. For details on these, as well as other ways of reducing prescription costs, check out Chapter 16.

F Falling back on the regular Part D program: The costs are higher and the benefits aren’t nearly as generous as under Extra Help, but you’ll still have insurance and pay less for your drugs than being outside of Part D.

Looking for help to pay other expenses

If you can’t obtain help paying for drugs, consider other federal, state, and local or private programs that might lower your other daily living expenses. Many people with low incomes are entitled to help in paying for food, housing, utility bills, and taxes, and they often don’t even realize they’re eligible.

The best and quickest way to figure out whether you qualify for any of these programs is to go to Www. benefitscheckup. org. You don’t have to give your name. Just enter your zip code and answer questions about your income and circumstances. Details of all programs that you may be eligible for, and how to contact them, appear on the screen. These may include the Medicare savings programs and State Pharmacy Assistance Programs mentioned earlier in this chapter, among many more. If you don’t have computer access, you can get similar details from your State Health Insurance Assistance Program (SHIP; for contact info, see Appendix B).

Part II

•••••••••••••••••••••••••••••••••••••••••••«

In This Chapter

^ Getting a grip on formulary fundamentals

^ Understanding plan limitations on some drugs

^ Obtaining the drugs you need when they’re not covered

^ Figuring out when drugs are covered by Part D or other parts of Medicare

7he whole point of Part D is to help people with Medicare get the prescription drugs they need to fight disease and maintain their health. The cost of meds under Part D, explained in Chapter 3, is only part of it. The other big concern is Coverage — that is, which drugs a Part D plan helps pay for. In particular, you want to know if your drugs are covered and how easily you can get them.

Chances are high that your drugs are covered in several plans available to you, or even in most of them. But you can’t just assume that all of your drugs are covered in Every Plan. That’s because Part D plans are allowed to choose which drugs they cover in any given year, within certain Medicare rules. Just as plans vary in their charges, so do they vary in the drugs they help pay for.

Another aspect of Part D coverage to be aware of is that any plan can require you to ask permission before it will cover certain drugs your doctor has prescribed. You may not encounter this hurdle — again, it all depends on the drugs you take and the plan you choose — but you should know that this obstacle exists and what to do if it happens.

In this chapter, I share how plans vary in their coverage of different drugs and how to find out which plans cover your meds. I also explain the ways that plans can restrict immediate access to some drugs and how to deal with this situation if it arises. I delve into the important role your doctor plays in how to get coverage for drugs that your plan doesn’t normally cover or restricts access to. Finally, I explain how the same drug may be covered under Part D, Part A (hospital care), or Part B (outpatient care) in different circumstances.

Finding Out about Formularies

Formulary Is a jargon word that becomes very familiar when you’re in Part D, because it directly affects your prescription drug coverage. A Formulary Is simply the list of specific drugs that each Part D plan has decided it will cover.

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If the drugs you take are on your plan’s formulary, the plan will pay its share of the costs during the initial and catastrophic phases of coverage (see Chapter 2 for an introduction to these phases). If any drug Isn’t On the formulary, you pay full price for that drug in Every Phase of coverage — in the initial coverage period and at the catastrophic level, as well as during the deductible period and in the doughnut hole — unless you can persuade the plan to cover it in your case, as explained in the later section "Requesting an exception with your doctor’s help."

As you can see, coverage is intimately entwined with cost. The difference in cost between a drug that’s on a plan’s formulary and that same drug when it isn’t on a plan’s formulary can amount to several hundred dollars. Consider this example for a drug prescribed to help people sleep when they’re in pain. The full price of this drug is the same in both Plan X and Plan Y. But Plan X, which covers the drug in the initial and catastrophic phases of coverage, charges $521 for it over the whole year. In contrast, Plan Y — which doesn’t cover the drug at all — charges $1,200 for it over the year. If my math’s right, that’s a difference of $679 for the identical drug!

Making sure that the drugs you need are on your chosen plan’s formulary is essential for another reason, too. If you fall into the doughnut hole (also known as the coverage gap; see Chapter 15), a drug that isn’t on the formulary Doesn’t Count toward your out-of-pocket limit that gets you out of the gap — unless, again, you’ve persuaded the plan to cover it for you.

So when you’re picking a Part D plan, both for cost reasons and because, darn it, you need these drugs for your health, your goal is to find a plan that covers all of your medications — or, failing that, almost all of them — on its formulary. (I explain how to find out which plans cover your drugs in Chapter 10.)

How many medications do Part D plans cover at any one time? The number varies a great deal among the plans, and some have many more than others. As a general indication, in 2008, the top ten plans (those with the greatest number of enrollees) averaged 2,285 distinct drugs on their formularies, according to an analysis by the health research group Avalere Health.

Despite this variation in the number of covered drugs, each Part D formulary must comply with Medicare rules in the following four areas:

F The drugs that plans must cover

F The drugs that Medicare doesn’t pay for

F The tricky issue of off-label drugs that are prescribed for unapproved treatments

F The rules on what plans can and can’t do when changing their formularies

I provide more info on each of these areas of regulation in the following sections. Later in this chapter I explain what you can do to get needed drugs that are affected by these conditions.

The drugs that Part D plans must cover

Medicare doesn’t require Part D plans to cover any individual prescription drug. But it does require plans to cover at least two in each class of medications. A Class Means all the similar drugs that are used to treat the same medical condition. Many plans cover more than two in a class.

For example, about half a dozen brand-name statins — drugs commonly used to counteract high cholesterol — are currently sold, as well as generic versions of some of these drugs. Many plans cover all the brand-name statins, and some don’t cover any. But plans that don’t have the brand-names on their formularies do cover at least two of the generic statins, which have the same active ingredients and are just as effective at less cost to you. (I cover generic drugs, and why it’s worth talking with your doctor about using them, in Chapter 16.)

Every plan must also cover "all or substantially all" drugs in each of the following six classes of medications:

F Anticancer drugs (used to halt or slow the growth of cancers)

F Anticonvulsants (used mainly to prevent epileptic seizures)

F Antidepressants (used to counteract depression and anxiety disorders)

F Antipsychotics (used to treat mental illnesses such as schizophrenia, mania, bipolar disorder, and other delusional conditions)

F HIV/AIDS drugs (used to block or slow HIV infection and treat symptoms and side effects)

F Immunosuppressants (used to prevent rejection of transplanted organs and tissues, immune system disorders, and some inflammatory diseases)

Medicare requires every Part D plan to cover pretty much all drugs in these categories due to the clinical problems that can occur when patients abruptly stop such medications or switch to others.

The drugs that Medicare doesn’t pay for

By law, Medicare doesn’t pay for certain kinds of drugs. This directive doesn’t mean Part D plans are prohibited from covering them — just that, if they do, Medicare won’t reimburse its share of the cost. So, although a few plans (typically those with higher premiums) may cover some of these drugs, most plans don’t cover any. The types of drugs excluded by Medicare are

F Barbiturates (used for seizures and anxiety, such as Amytal, Nembutal, Seconal, and so on)

F Benzodiazepines (used for anxiety and sleeping problems, such as Serepax, Valium, Xanax, and the like)

F Drugs sold over the counter (nonprescription medicines)

F Drugs used for anorexia, weight loss, or weight gain

F Drugs used for cosmetic reasons and hair growth

F Drugs used to promote fertility

F Drugs used to treat sexual or erectile dysfunction

F Medicines to treat cough or cold symptoms

F Prescription vitamins and mineral products

Sometimes Medicare pays for medications in these categories if they’re used for a "medically accepted" purpose. Here are a few examples:

F Drugs to help people stop smoking are excluded when bought over the counter, but accepted if prescribed by a doctor.

F Prescriptions for drugs used to counteract severe weight loss in AIDS patients are accepted because they’re medically necessary and not regarded as the usual weight-gain drugs.

F Prescriptions for drugs used to treat skin conditions, such as acne and psoriasis, are accepted because they’re not considered cosmetic.

F Cough medicines are accepted when prescribed to alleviate medical conditions such as asthma.

F Drugs normally used to treat sexual or erectile dysfunction (impotence) are allowed if prescribed for a different but approved use, such as the treatment of certain conditions affecting veins and arteries.

If you need any of these drugs for medically accepted reasons, you need to ask your doctor to file for an exception with your plan, as explained in the later section "Getting the Drugs You Need When They’re Restricted or Not Covered."

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The off-label uses for some drugs

When a doctor prescribes a drug Off label, She’s using that drug to treat a medical condition for which it hasn’t received official approval. The U. S. Food and Drug Administration (FDA) approves drugs and allows them into the market to treat specific illnesses. But if scientists find that a drug is also effective for another illness, doctors are legally free to prescribe it off label for the other illness, even if it hasn’t received FDA approval for that purpose.

This practice allows doctors to use their clinical judgment and is officially endorsed by the American Medical Association. In fact, it’s so common that hundreds of thousands of off-label prescriptions are written every year, especially for patients with cancer, chronic pain, and rare disorders.

Medicare law says simply that Part D plans may only cover drugs approved by the FDA. That’s very clear, and it’s meant as a safeguard to patients’ health. But what if a doctor prescribes a drug that’s both on a plan’s formulary And Is FDA-approved — but not for the condition prescribed? Can the plan cover it? Medicare regulations say that it can, but only if the off-label use is included in any of three medical Compendia (directories of drugs that list their usages).

The snag is that some time may elapse between medical research finding a new use for an existing drug and that usage being listed in the compendia. As a result, Part D plans are prohibited from covering drugs in this twilight zone, and patients who’ve used them effectively before joining Part D must either pay the cost themselves or do without. However, there’s one important exception. Under a recent change in Medicare law, Part D plans are allowed to use authoritative medical literature (as well as compendia listings) to justify off-label use — for anticancer drugs alone — starting January 1, 2009. (The Medicare Rights Center, an advocacy group, is suing the federal government to have the ban removed for all off-label uses.)

The rules of formulary changes

Every plan is allowed to take drugs off its formulary or add new ones to it at any time, subject to Medicare approval. If you’re in a plan that discontinues coverage for a drug you take, the plan must inform you of this action in writing at least 60 days before removing it from the formulary. (Here’s an excellent reason for reading the mail your plan sends you!) This written notice gives you the opportunity to ask the plan to make an exception and continue coverage in your case, if your doctor confirms that the drug in question is necessary to your health.

This rule doesn’t apply when a drug is removed from the market for safety reasons — for example, if new research shows that its risks outweigh its benefits. In this case, you don’t receive a 60-day warning, and you can’t seek exceptions for coverage.

Making Sense of Special Restrictions on Some Covered Drugs

Perhaps you’ve found a plan that covers all of your medications. Great! What a relief, huh? But wait a minute. Does the plan require you to ask its permission before it will cover some of your meds? And if so, what’s that all about? Well, Medicare allows Part D plans to place restrictions on some of their formulary drugs in the interests of safety or holding down costs.

Here’s what these special Restrictions (which bureaucrats refer to as "utilization management tools") are called and what they mean:

F Prior authorization: You’re required to ask your plan for permission before it will consider covering a drug placed in this category. These medications are usually powerful ones that may pose safety concerns when used inappropriately or for too long. The plan authorizes coverage for such a drug only if it accepts your doctor’s statement that the drug is necessary to treat your medical condition.

F Quantity limits: This phrase Doesn’t Mean that your plan will cover your prescriptions for a certain time and then stop. It means that your doctor has prescribed a dosage or number of pills per month that’s higher than the plan considers normal to treat your condition. For example, if your doctor prescribes a pill to be taken twice a day (60 a month), and the normal quantity is once a day (30 a month), the plan won’t cover the prescription unless your doctor shows that the higher quantity is necessary to treat you effectively.

F Step therapy: Your plan requires you to try other similar but lower-cost drugs before it will consider covering the more expensive one your doctor has prescribed. This situation can happen if the prescribed drug has a generic or older version (or even one sold over the counter) that’s much cheaper. To avoid step therapy, your doctor must show that you’ve already tried lower-cost drugs that didn’t work as well for you as the prescribed drug.

As you can see, some of these restrictions address safety concerns. So you may suppose that all plans restrict the same drugs according to some general Medicare regulation. But no, the system doesn’t work that way. Instead, each plan gets to decide which of its formulary drugs requires prior authorization, quantity limits, or step therapy. This fact raises a question: Couldn’t a plan use these restrictions to discourage people with certain illnesses and who require expensive drugs from joining the plan? Medicare says no. Officials say the agency reviews each plan’s proposed restrictions every year before approving its application to provide Part D services so that plans can’t use restrictions to steer the sickest people away.

Getting the Drugs You Need When They’re Restricted or Not Covered

Earlier in this chapter, I explain the basic rules about formularies and special restrictions on covered drugs. These restrictions may never affect you. But if they do, what can you do to get the drugs you need? You can start by knowing how to avoid having to jump through these hoops to begin with. Already in a plan that restricts or doesn’t cover your drugs? Fortunately, other established rules give you the opportunity to get your plan to cover nonformulary drugs or to set aside its usual restrictions. I touch on all of these possibilities in the following sections.

Sidestepping the hoops

Although restrictions like prior authorization and step therapy may be of benefit in protecting people’s health or even saving them money, most Medicare beneficiaries regard them as a hassle — just more hoops to go through to get the drugs they need. But you may be able to sidestep these hoops by avoiding plans that restrict your drugs in the first place.

Each Part D plan chooses which restrictions it wants on which drugs, so these requirements vary a great deal. For example, the same drug may come with quantity limits under Plan W, step therapy under Plan X, both under Plan Y, and neither under Plan Z. This variation gives you a chance to find a plan that doesn’t restrict your particular drugs, or at least not all of them, in

Advance — when you’re choosing a plan.

You can find this critical information in any of the following ways:

F Compare Part D plans online at Www. medicare. gov, as I explain in Chapter 10. Each plan’s details show which of your drugs, if any, have restrictions.

F Go to the "Formulary Finder," also at Www. medicare. gov. Here you can find out which plans in your state cover all of your drugs on their formularies, and which cover only some of your drugs. Clicking any plan name shows whether it has restrictions on any of your prescription meds.

F Call the Medicare helpline at 800-633-4227. Ask the customer representative to find the plans that cover all of your drugs at the least cost and, among these, which have restrictions. TDD users should call 877-486-2048.

F Go directly to any plan’s Web site and look up your drugs on its formulary. Restricted drugs are designated PA (prior authorization),

QL (quantity limits), or ST (step therapy). You can also call the plan directly and ask a customer representative about drug restrictions, but be sure to keep a record of this conversation. If you enroll and then find you were given wrong information, you may be able to switch to another plan, as explained in Chapter 17.

Understanding the 30-day rule

If you’re Newly Enrolled in a Part D plan and are Already Taking any drug that isn’t on its formulary or has restrictions (such as prior authorization or step therapy), the plan must temporarily waive its rules and cover at least a 30-day supply of that drug. Medicare requires every plan to do so under a Transition Or First-fill policy To ensure that a patient’s treatment isn’t interrupted when first joining a plan. (People in nursing homes have the right to a 90-day transitional supply, as explained in Chapter 18.)

You can use this rule whether you’re joining a Part D plan for the first time or have just switched from one Part D plan to another. Just ask your pharmacist to fill your prescription on a transitional basis. Your pharmacist, or your plan, may contact your doctor to verify that you were already on this particular drug when you joined the plan. If your pharmacist denies you a 30-day fill, call your plan immediately. If the plan doesn’t help, complain to Medicare.

JttNG/ The 30-day rule is only a temporary respite, and you must take immediate

Steps to get the drugs you need when this period ends. Ask your doctor if the plan covers a similar drug that may suit you just as well (see the next section). Or contact your plan for an exception to its policy, as explained later in this chapter.

Trying another drug

^jfcDO©^ Perhaps you Can Use a similar drug — one that’s on the plan’s formulary and/ " or doesn’t come with restrictions — that may treat you just as effectively as

The medicine you’re taking now. The possibility is worth asking your doctor about. A similar drug, which may be an older or generic version of your prescribed drug, will likely cost you less, too. (I explain the meaning of generic and older meds, and how they can slash your expenses, in Chapter 16.)

Requesting an exception with your doctor’s help

By law, you have the right to ask your plan to cover a needed drug that isn’t on its formulary. You can also ask the plan to waive any restrictions it has

Placed on any of your drugs. This process is called Requesting an exception To the plan’s policy or, more formally, requesting a Coverage determination. In the following sections, I explain the process of filing paperwork for an exception request, what your doctor can do to help, how you can help your doctor help you, and what happens when your request is granted or denied.

The paperwork you need

In some circumstances you may not have to go through this process yourself. Sometimes pharmacists resolve the problem themselves — by calling your plan and maybe your doctor — without you ever knowing about it. And occasionally your doctor deals with the issue directly. (In fact, it’s essential that your doctor send your plan a statement saying why the drug in question is medically necessary for you, as I explain in the next section.) But in most cases, you need to apply personally, too.

To request an exception, pick up your favorite pen, fill out the appropriate form, and send it to your plan. You can obtain a form by downloading the right one from your plan’s Web site, or by calling the plan and asking that one be sent to you. Medicare also provides an acceptable template form that you can download from Www. cms. hhs. gov/MedPrescriptDrugApplGriev/ Downloads/ModelCoverageDeterminationRequestForm. pdf (so get those typing fingers ready!). This form, titled "Request for Medicare Prescription Drug Coverage Determination," asks you to fill out the following:

F Your name, address, Medicare ID number, and plan ID number

F The name of the prescription drug you’re requesting an exception for, the strength of the drug (for example, 100 mg), and the prescribed quantities (for example, 2 pills a day)

F Your physician’s name, address, and phone number, and his medical specialty (such as internist, family practitioner, cardiologist)

F What type of coverage determination you’re requesting — the form provides a list of possibilities, so check off which one applies to you

F Any other information you want the plan to consider

You can attach your doctor’s statement to the form, unless he prefers to send it to the plan independently. Then just sign the form and send it to your plan. If you need exceptions for more than one drug, you can make the request on separate forms and send them all in together.

What your doctor can do to help

To have any chance of succeeding in an exception request, you need your doctor’s help. In fact, without his supporting statement, the plan may not even consider your request — or at least, not in a timely manner.

Under Medicare rules, your plan must respond within 72 hours of receiving both your request And Your doctor’s supporting statement. (That’s 72 hours

By the clock, not business hours.) If your doctor thinks waiting this long would endanger your health or life, he can ask for an Expedited exception, A request that the plan must reply to within 24 hours (again, by the clock) or even less if your health depends on it. If the plan doesn’t respond within either time frame, you should immediately file an appeal, as explained in Chapter 19.

Table 4-1 shows you at a glance the different situations you may encounter, what you can do about them, and how your doctor can help.

Table 4-1 Teaming Up with Your Doc to Get Your Meds

A, or B

How you can help your doctor help you

A doctor’s help is critical to obtain a successful exception request. If you think this process is a hassle for you, consider what it’s like for your doctor, who may have many patients seeking help for the same reason and who doesn’t get paid for providing this assistance. Medicare prohibits doctors from charging patients fees for helping to file for exceptions.

^jjfcDOQfy Fortunately, most doctors — even if they grumble about the extra work Part D . /-ssstx Has imposed on them — put their patients’ needs first and are willing to do the paperwork involved in filing for an exception. However, you can score major Brownie points with any doc if you do your part to lessen the work he is doing on your behalf. Your health permitting, call your doctor’s receptionist and ask whether it would help for you to provide any of the following materials:

F A copy of your plan’s formulary: Your doctor needs to know which similar drugs are covered by your plan in order to explain why they won’t work for you. You can download the formulary from your plan’s Web site or call to have it faxed to you or your doctor. (Some doctors have these formularies in their offices, and some use computer programs that allow them to look up any Part D plan’s formulary instantly.)

F The phone and fax numbers of your plan’s Clinical Review Department: All

Exception requests must be sent to this department. You can call your plan’s customer service number to verify the appropriate contact information.

F A blank exception request form: Providing this form for your doctor may make the process a bit smoother. Ask your plan to fax a copy of its own form to your doctor, or visit Www. cms. hhs. gov/MLNProducts/ Downloads/Form_Exceptions_final. pdf to download the appropriate Medicare form. This form is useful because it asks doctors precise questions. However, under Medicare rules, no plan can insist that doctors use a form, but must accept any statement written on their letterhead.

F A set of instructions for doctors unfamiliar with the exception-request process: Obviously, a doctor who’s well versed in the process doesn’t need to see pointers. But if you’re the first patient your doc has helped file an exception for, you can find useful instructions from the Medicare Rights Center online at Www. medicarerights. org/PartD_for_ Physicians_national. pdf.

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It’s almost inconceivable that a doctor would refuse to help you request a Part D exception, especially if you’ve gone to the trouble of getting together the information in the preceding list. But it can happen. For this reason, Medicare proposed new regulations in 2008 (not yet finalized as this book goes to press) that allow not only physicians but also other health professionals who are qualified to write prescriptions — such as nurse practitioners and physician assistants — to file Part D exception requests. So if your doctor refuses to help you, ask whether anyone else in his office can. Otherwise, you can’t do much — except perhaps report the refusal to Medicare and take your healthcare elsewhere.

What happens when your exception request is granted or denied

In most cases, if you win an exception it’ll be valid until the end of the calendar year — especially if the plan grants you an exception to cover a drug not on its formulary or to waive quantity limits and step therapy restrictions. But when plans approve prior authorization for a certain drug, they can (and sometimes do) require another request after an interval of time (like one month, three months, or six months). In this case, you and your doctor must go through the exception-filing process again, and may even be required to do so repeatedly throughout the year.

What happens at the end of the year? If you stay in the same Part D plan, your exception may continue to be valid throughout the following year, so you wouldn’t need to request another. However, that depends on the plan’s policy. Some plans require new exception requests for the same drug every year. If you switch to a different plan next year, you’d certainly have to file a new exception request — unless you choose a plan that doesn’t impose a restriction on your particular drug(s).

If your plan denies your request for an exception, you can pursue the matter further by asking for a Reconsideration (asking the plan to reconsider its decision) and, if necessary, by taking the dispute to a higher level of appeal. You can also take these actions if your plan doesn’t respond to your request for an exception (or reconsideration) within the required time frames. I offer a detailed explanation of how to ask for a reconsideration or file an appeal in

Chapter 19.

Obtaining excluded drugs

If you need a type of drug that the law excludes from Part D coverage (as listed in the earlier section "The drugs that Medicare doesn’t pay for"), what can you do? The ban on barbiturates and benzodiazepines is especially controversial. These drugs can lead to oversedation (especially in nursing homes), serious side effects, and addiction. But they’re also commonly used to treat older and disabled people for conditions such as muscle spasms, seizures, sleeplessness, panic attacks, and other forms of anxiety.

If your doctor says you need an excluded drug, your options for getting it covered under Part D are limited. You can’t file an exception request for any of these drugs, unless your doctor has prescribed them for what Medicare considers a medically acceptable reason, as explained earlier in this chapter. Here are some alternative possibilities:

F Although hardly any Part D plans pay for brand-name benzodiazepines, a few plans cover generic versions of these drugs — for example diazepam (Valium) and alprazolam (Xanax). These are often enhanced-benefit plans that have higher-than-average premiums. So check plan costs carefully. Generic benzos aren’t expensive, and it may be cheaper to pay their full cost each month than to pay a higher premium.

F State Medicaid programs often cover prescription drugs that are

Excluded from Part D; so do many State Pharmacy Assistance Programs (SPAPs). If you’re enrolled in either of these programs, and your doctor says you need one of these drugs, contact the program to see whether it’s covered. (See Chapter 6 for more info about these plans.)

F If you have other drug coverage that wraps around Part D (like coverage from an employer), you may be able to use those benefits to cover these drugs, as explained in Chapter 6.

F You may be able to obtain these drugs from the manufacturers through their patient assistance programs, depending on whether you qualify according to the programs’ conditions and income limits. To find out, go to Www. pparx. org. (Check out Chapter 16 for the scoop on these programs.)

Getting drugs for off-label uses

Unless Medicare regulations change, Part D plans will continue to cover off-label prescriptions only if their usages are included in the specified medical compendia, as explained in this chapter’s "The off-label uses for some drugs" section. If the drug your doctor has prescribed as medically necessary doesn’t fall into this category, your chances of being able to appeal your plan’s coverage refusal are slim.

It may help to contact the Part D Appeals Project of the Medicare Rights Center, which helps Part D enrollees try to get the medications they need and has a special interest in off-label denials. Call the Center at 888-466-9050.

Also, your doctor may agree to argue the case with your Part D plan when requesting an exception by describing how an off-label use is the only means of alleviating your medical condition. She can do so by providing references to scientific research that demonstrates the drug’s effectiveness and has been published in authoritative medical journals. Success isn’t guaranteed, but the voice of a physician who can quote the relevant research carries weight.

Knowing When Drugs Are Covered by Part D, Part A, or Part B

As confusing as it sounds, some prescription drugs may be covered not only under Medicare Part D but also under Part A (hospital insurance) or Part B (outpatient care), both of which I touch on in Chapter 1. Sometimes an identical drug may be covered by all three but charged under one or the other, according to different circumstances. That’s because certain drugs were covered under Part A or Part B before Part D came into existence, and that. sjltBEA practice has continued.

Here’s the general rule of thumb on the differences:

F Part D covers outpatient drugs you administer to yourself at home, or that a caregiver administers to you at your home. (These drugs include self-injected insulin for diabetes, for example.)

F Part A covers drugs administered when you’re a patient in a hospital or skilled nursing facility.

F Part B covers drugs administered in a doctor’s office (such as injected chemotherapy drugs), hospital outpatient departments, and, in some circumstances, in a hospice or by a home healthcare professional.

These general rules are more complicated in some situations. For example, if your organ transplant is covered by Medicare, the immunosuppressant drugs you need afterward are covered by Part B. But if your transplant surgery Isn’t Covered by Medicare (perhaps because you received it before joining the program), the drugs are covered under Part D.

Part D doesn’t pay for drugs covered by Part A or B. So if any of your meds are in question, your Part D plan may require information from you and your doctor before covering them. Usually this info includes details of the related medical treatment (such as a transplant or cancer surgery). For this reason, plans often place a prior authorization restriction on such drugs, to determine whether they should be covered by Part A, B, or D. Your doctor may be able to settle this matter over the phone or may help you file a speedy exception request as explained earlier in this chapter. Either way, your doctor needs to explain why a prior authorization shouldn’t apply in this case.

Chapter 5

In This Chapter

^ Deciphering the jargon of Medicare drug costs ^ Getting a grip on how costs are connected

^ Recognizing how a drug plan’s benefits may fluctuate in a given year ^ Knowing how costs may be adjusted from year to year

M T’s all about money, right? You’re thinking about Part D because you’re

Looking for some relief from the outrageous cost of prescription medicine. Okay, a lot of drugs aren’t especially expensive, and some of them allow you to avoid the even steeper costs of surgery and hospital stays. But plenty of meds out there can still take a big bite out of the average retiree’s Social Security check, and some cost more than the typical mortgage payment for a house. (Think I’m kidding? The priciest cancer drugs range from $4,000 to more than $10,000 a month.) So you’re wondering how much money you’ll save in Part D — and, at the same time, how much it’ll cost you.

Medicare says that "on average" people with Part D coverage save about half the cost of their medications. But that calculation runs the gamut from people who don’t save anything to those who save thousands of dollars a year. Again, your individual savings depend on the drugs you use, how many you take, and — to a degree that may surprise you — the Medicare drug plan you choose. That said, you can’t judge a plan on cost alone. Whether a plan covers all of your drugs, or makes you go through hoops to get some of them, is equally important when you’re choosing the plan that’s best for you (see Chapter 4 for details).

In this chapter, I explain the out-of-pocket expenses you’re likely to have in Part D and how those costs add up if you’re in the Regular Part of the program. But if your income is low, see Chapter 5. It explains the much greater financial assistance available to people who qualify for the Extra Help part of the program, and therefore pay much less.

Decoding the Jargon of Medicare Drug Payments

As you’re well aware, health insurance has its own special language — a whole lexicon of jargon relating to coverage, payments, restrictions, and the like. In the following sections, I explain the meanings of words and phrases used in Part D to describe your out-of-pocket expenses.

Making a commitment: Monthly premium

Here’s an easy one: Your Monthly premium Is the amount a plan charges each month to provide drug coverage, in addition to the monthly Part B premium (see Chapter 1 for more info on Part B). Medicare prescription drug plans (PDPs) that cover Only Drugs always charge premiums, which vary a great deal among plans. Medicare Advantage prescription drug plans (MAPDs) that cover both healthcare and drugs usually charge a single monthly premium for the whole package, though some have no premiums at all. If you’re married, you and your spouse must each pay a premium to be in Part D, even if you both join the same plan. In other words, there’s no price break for married couples.

Forking over the first financial slice: Annual deductible

The amount you may have to spend out of pocket on drugs each year Before Your coverage starts is the Annual deductible. The maximum amount is set by law and increases each year ($275 in 2008, $295 in 2009). However, many plans charge lower deductibles or none at all. Most people in plans with deductibles spend this amount at the beginning of the calendar year. But if you join Part D later in the year, there’s no reduction — you still have to spend the required deductible amount before your coverage begins.

Sharing the pain: Co-payments and coinsurance

Co-payments and coinsurance are what you pay for your share of each covered prescription. Your share may be in the form of a Co-pay, Which is a flat dollar amount — say $20. Or it may be coinsurance, which is a percentage of the drug’s total cost — say 25 percent. Some plans use only co-pays and some only coinsurance; others use both, according to the type of drug.

Leveling on costs: Tiers of charges

You may find that your plan charges you different co-payments (or coinsurance) for different drugs. That’s because the plan arranges its covered drugs into three or four levels, or Tiers, According to price:

V Tier One: This tier has the lowest co-pay because it covers the least expensive drugs, usually the generic kind. (Generics Are low-cost copies of brand-name drugs that have been on the market long enough to have lost their exclusive marketing rights.) A few plans don’t charge any co-pays for Tier 1 generics.

V Tier Two: This tier has a medium-priced co-pay because it covers the plan’s Preferred Brand-name drugs. The plan prefers you to use these drugs because it pays less for them after having negotiated good discounts with the drug manufacturers.

V Tier Three: This tier has a higher-priced co-pay because it covers Non-preferred Brand-name drugs. The plan prefers you not to use these drugs because they’re expensive, or perhaps because the plan hasn’t managed to negotiate adequate discounts for them.

V Tier Four: This tier has the highest co-pay because it comprises very expensive or specialty drugs, such as anti-rejection drugs used after organ transplant surgery and drugs used to treat certain cancers. In most cases, plans charge coinsurance — a percentage of the total cost — for drugs in this tier. This percentage is usually 25 percent but can be 33 percent or higher.

These tiers are typical of many Part D plans. However, some plans arrange them differently — for example, putting preferred generics in one tier and nonpreferred generics in another. So a plan may have more than four tiers. Then again, some plans (those that charge the same cost percentage for all drugs) have only one tier.

Getting out your wallet: Full price

You pay full price for your drugs during the deductible (if your plan has one), in the coverage gap (if you fall into it; see Chapter 15), or if you’re taking a drug that your plan doesn’t cover. Full price Actually means the price your plan pays for each drug. If the plan has negotiated a decent discount, its price may be quite a bit less than you’d pay retail at the pharmacy. If the full price of your drug is lower than the co-pay for its associated tier, you pay full price, because that’s the lesser cost.

Counting the cost: True out-of-pocket costs

True out-of-pocket costs Is an odd bit of jargon — which bureaucrats shorten to the acronym TrOOP — that relates to the coverage gap (also known as the doughnut hole). If you fall into the gap, you can only get out of it when you’ve spent a certain amount out of your own pocket for drugs since the beginning of the year. This TrOOP amount ($4,050 in 2008, $4,350 in 2009; it increases every year) includes

V Your deductible (if any) before drug coverage starts

V Your co-pays in the initial coverage period

V Anything you’ve spent on prescriptions while in the gap, according to certain rules

Are there any "false" out-of-pocket costs? Yes, actually — premiums and some other payments that don’t count toward the TrOOP limit. (Wouldn’t you think bureaucrats would call these FrOOPs? But they don’t!) Details on what counts and what doesn’t are in Chapter 15.

Grasping How Costs Fit Together and Add Up

So when it comes to choosing the least expensive Medicare drug plan, you just pick the one with the lowest premium, right? Nope! This approach is a trap many people fall into, and it’s why most plans have tried to keep their premiums relatively low ever since the Part D program began. Low premiums are designed to lure you in the door. But if you’re smart, you want to know more about what’s inside before you cross the welcome mat. No, nothing bad is lurking behind that beckoning door. It’s just that — With one exception — The premium contributes much less to your overall out-of-pocket expenses than two other items that contribute far more: the medications you take and the way your plan is designed.

So what’s the exception to avoiding the plan with the lowest premium? If you take no drugs right now, or only the occasional one, then absolutely opt for the plan in your area that has the lowest premium. Overall, you’re still paying more in premiums than you get back in benefits. But what you’re buying at this point isn’t drugs but Insurance. You’re playing safe because you don’t know what the future holds — it may bring some unforeseen illness that requires expensive medications. Choosing a plan with the lowest premium gives you the comfort of having insurance at the least cost (see Chapter 7).

This section focuses on the calculations everyone else — those who already take a number of drugs or a few costly ones — needs to make.

The importance of the drugs you take

If you absorb just one bit of knowledge from this book, I want it to be the realization that The drugs you take are the most important part of choosing a Medicare drug plan. Your medications, their dosages, and how frequently you take them are the keys to how much you may spend out of pocket in any plan. Why? Two reasons:

V Huge differences exist among the co-pays for meds in different tiers, even among drugs used to treat the same medical condition. For example, the co-pay for a nonpreferred drug in Tier 3 can be twice as much as a similar preferred drug in Tier 2; a generic version in Tier 1 can cost a fraction of either. So if you’re paying a hefty co-pay (say $60) for a Tier 3 drug, and you realize an alternative Tier 2 drug costs $30 or that a Tier

1 generic is available for $5, what are you going to do? Ask your doctor whether a lower-priced drug may work just as well for you. Well, why not? It’s your money!

V The co-pays that Different Plans charge for the Same Drug also vary a lot. Plan X’s co-pay (or coinsurance) for a particular brand-name drug may be quite a bit higher or lower than Plan Y’s. Each plan negotiates the price of each drug with the company that makes it. If Plan X wins a relatively low price for a drug, it will charge you less for that drug (through a lower co-pay) than a plan that doesn’t get such a good deal. And if your costs are high enough to take you into the doughnut hole, where you pay full price (see Chapter 15), you’re still paying less under Plan

X due to the steeper discount it has negotiated. This cost advantage is another good reason for comparing plans carefully before choosing one.

But wait a minute, you may say: What if one of my drugs is least expensive under Plan X, but another drug I take has the lowest price in Plan Y, and maybe a third is cheapest under Plan Z? You need to find out which single plan will cost you the least out of pocket for your whole batch of drugs throughout the entire year — including co-pays, premiums, deductibles, and possible costs in the doughnut hole. Don’t worry! Figuring out your potential cost savings isn’t as difficult as you may think. Flip to Chapter 10 for step-by-step guidance on how to do so in a reasonably fast and efficient way.

Here’s another wrinkle regarding prescription drugs that baffles people. The law says Part D enrollees pay about 25 percent of the cost of their drugs during the initial coverage period. Yet I often hear from folks who say things like: "My plan charges me $28 for one of my drugs, but it only costs $35 full price at my local pharmacy — so I’m paying 80 percent, not 25." In response, Medicare officials say a Part D drug plan can vary its charges and benefits any way it wants, but its total package must be at least Actuarially equivalent To the standard benefit created by Congress.

Translated into English, Actuarially equivalent Means that the whole amount a plan shells out for all of its enrollees — collectively, not individually — must be about 75 percent of the enrollees’ total drug costs, with the remaining 25 percent paid by the enrollees themselves. If you’re in the type of plan that exactly mirrors the standard benefit, then you Will Pay a strict 25 percent of each prescription’s cost. But if you’re in a plan that has tiered co-pays or maybe offers extra benefits, such as a waived deductible or some coverage in the doughnut hole, you may pay more than 25 percent of the price for some drugs — or, in some cases, less. What you pay depends on the plan’s design.

The importance of the plan you choose

Each plan has its own mix of costs and benefits. And although this fact may make the plans seem harder to compare, their different designs allow you flexibility in finding one that best meets your needs. Here are some of the different designs Part D plans typically offer:

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V A plan that mirrors the basic design for minimum Part D coverage outlined by Congress features a full deductible, 25 percent coinsurance for each prescription during the initial coverage period, a doughnut hole, and standard catastrophic coverage.

V A plan that charges no deductible (or a reduced one) and has tiered co-pays for prescriptions during the initial coverage period (probably with coinsurance for drugs in the highest tier), a doughnut hole, and standard catastrophic coverage.

V A plan that looks like either of the preceding designs, but charges nothing for drugs in Tier 1.

V A plan that looks like either of the first two designs, but also covers generic drugs in the doughnut hole.

V A plan that looks like either of the first two designs, but also covers generic and some brand-name drugs in the doughnut hole.

About the only aspect that stays the same in every plan is catastrophic coverage. The federal government heavily subsidizes this level of coverage, and its low co-pays are fixed each year by law. Otherwise, you can find many variations from plan to plan. Plenty have tiered co-pays and charge a full deductible. Some have three or five tiers of charges rather than four, some don’t use tiers at all, and a few charge nothing for generic drugs. To make matters even more confusing, plans can be here one year and gone the next. In 2006, one plan charged a straight 30 percent of the cost of all of its covered drugs throughout the year with no doughnut hole — but this plan vanished in 2007. Expect to see other creative plan designs come and go in the future.

Putting together drug costs and plan designs: Three common examples

So in one hand you have all these different costs, and in the other you have all these different plan designs. And you know what? None of it really matters! In this book, I give you a strategy for navigating the prescription drug plan maze that focuses on only the medications You Take, as well as a few other personal preferences you may have. This strategy can help you whittle your choices down to just a few plans — the ones that will cost you the least out of pocket but cover all (or most) of your drugs. (Hooray!) You may then want to consider these options according to certain conveniences, like being able to buy your drugs at a favorite local pharmacy, receive them by mail order, or purchase them anywhere in the country. In other words, the process of choosing begins with You, Not the plans.

I explain this strategy in detail in Chapter 10. In the meantime, it may help to know how the different costs and plan designs can work for different people. I provide some examples in the following sections — the people may not be real, but the math sure is!

Hearty Harry: Feeling healthy and happy

Hearty Harry is still in good shape. But years of energetic activity — hoop jumps, rock climbing, and daredevil skiing (not to mention chasing after his grandkids) — have proved tough on his joints, so he’s had knee and hip replacements. The only med he needs is something to keep his blood pressure in check. Choosing a Part D plan felt a bit like searching for all the hiders in a 20-person game of hide-and-seek, but he finally settled on a plan with a low premium ($15 a month), a full deductible ($275), and 25 percent coinsurance. Hearty Harry has to pay the plan’s full price for his blood pressure pills ($32 a month) until he meets the deductible, and because his drugs don’t cost much, he doesn’t meet it until halfway through September. At that point, he starts getting coverage, and his drug payments drop to $8 a month (25 percent of $32) for the rest of the year. Here’s what he pays out of pocket:

V January through August: $15.00 a month for premiums + $32.00 a month full price for drugs = $47.00 per month.

V September: $15.00 for premium + $21.66 for drugs = $36.66 for this month. (Meeting the deductible on September 20, Hearty Harry’s coinsurance kicks in, reducing his drug payments to about $2.66 for the remaining ten days of the month.)

V October through December: $15.00 a month for premiums + $8.00 a month coinsurance for drugs = $23.00 per month.

V Grand total: Over the course of the entire year, he pays just under $482, which includes his monthly premiums ($15.00 x 12 = $180), annual deductible ($275), and coinsurance for the rest of the year ($8.00 x 3 =

$24.00 + $2.66 = $26.66).

Hearty Harry likes this deal almost as much as he likes seeing his favorite basketball team lose, because over the year he pays out about $97 more for his coverage than his single drug actually costs ($32 x 12 = $384). However, after a lifetime of close calls on cliff faces and ski slopes, he figures his risk-taking days are over, so he settles for paying the extra to have insurance, just in case.

Normal Norma: Taking some medications regularly

Normal Norma isn’t the dynamo she used to be, but she remains in reasonably good health as long as she takes regular meds to control diabetes and a thyroid condition. She takes five drugs (four brand-names and one generic), which would cost her well over $4,000 a year retail without insurance. As a diligent consumer, she compared Part D plans carefully and found the least expensive one that covered all of her drugs. This plan has a premium of $23.50 a month and no deductible, so her coverage starts at the beginning of the year. For eight months she’s in the initial coverage period, with medium co-pays. But at the beginning of September, she hits the doughnut hole (the time when she pays full price for medications in the gap before coverage kicks back in), and her drug expenses jump to almost three times as much each month for the rest of the year. Here’s what Normal Norma pays out of pocket:

V January through August: $23.50 a month for premiums + $92.96 a month for drugs = $116.46 per month.

V September: $23.50 for premium + $309.37 for drugs = $332.87 for the month. (The total cost of her drugs that both she and her plan pay reaches the $2,510 limit of initial coverage very early in September, pitching her into the doughnut hole.)

V October through December: $23.50 a month for premiums + $312.81 a month for drugs (full price in the doughnut hole) = $336.31 per month.

V Grand total: Throughout the whole year, she pays just over $2,273, which includes her monthly premiums ($23.50 x 12 = $282). At the discounted prices this plan pays for her drugs ($3,756 for all of them), she saves $1,483.

Remaining cost-conscious, Normal Norma did some extra research in an effort to bring her costs down further. Unfortunately, no lower-cost versions of her four brand-name drugs exist yet, so that idea didn’t work. But she found that if she buys her drugs in 90-day supplies from the plan’s mail-order service, she can stave off the doughnut hole for another couple of weeks and pay less — $1,823 over the whole year — saving herself a total of $1,933.

Sickly Sam: Shelling out for expensive specialty drugs

Sickly Sam is hanging in there. He’s doing okay after a recent heart transplant, but he needs a cocktail of medicines to prevent rejection and deal with side effects. He chose a Part D plan that covers all of his drugs, features a $26.40

Monthly premium, and has no deductible. At this plan’s full price, his meds cost a whopping $1,340.77 a month, a tough sum to pay when he goes into the doughnut hole. But he gets through the gap quickly and by mid-May he’s into the catastrophic phase of coverage, with low costs to the end of the year. Here’s what he pays out of pocket:

V January and February: $26.40 a month for premiums + $371.27 a month for drugs (in the initial coverage period) = $397.67 per month.

V March and April: $26.40 a month for premiums + $1,340.77 a month for drugs (in the doughnut hole) = $1,367.17 per month.

V May: $26.40 for premium + $676.90 for drugs = $703.30 in May. (Halfway through the month, his drug expenses from the beginning of the year reach $4,050, the limit of the doughnut hole, and he begins catastrophic coverage.)

V June through December: $26.40 a month for premiums + $72.64 a month for drugs (catastrophic coverage) = $99.04 per month.

V Grand total: Over the course of the year, Sickly Sam pays just over $4,926 out of pocket, including the monthly premiums ($26.40 x 12 = $316.80). The full price of his drugs under this plan amounts to $16,089 over the course of the year, so he saves $11,163.

Although he has a hard time paying the bills during his two and a half months in the doughnut hole, Sickly Sam feels his low payments for the last seven months of the year are like seven months of opening birthday presents, eating cake, and playing games Without Having to turn any older.

Knowing the Costs That Plans Can (And Can’t) Change during a Calendar Year

Since Part D went into effect in 2006, a common complaint among consumers is that they’re normally allowed to change plans only once a year, whereas those plans can change their charges any time during the year. This statement is only partly true; some regulations protect enrollees against the whims of any plan that wants to make changes. This section lists the rules on what plans can and can’t do during the year, from January 1 through December 31.

The costs your plan can’t change

Plans Can’t Change these costs during the year:

V The amount of the monthly premium.

V The amount of the annual deductible (if any).

V The overall design of the plan (for example, whether it covers any drugs in the coverage gap).

V The tier structure of co-pays. So if a plan has three tiers of co-pays rising from $5 to $28 to $60 through the different levels, and charges 25 percent coinsurance in the fourth tier, the charges in each tier must stay the same throughout the year.

V Any costs set by law. These costs include the maximum amount of the deductible, the minimum dollar limit of initial coverage, the maximum out-of-pocket limit that ends the coverage gap, co-pays at the catastrophic level of coverage, and all co-pays for people who receive Extra Help. (See Chapter 5 for more on this program.)

The costs your plan can change

Plans Can Change these costs during the year:

V The Full price Cost of drugs: A plan can change these prices on a weekly basis (see the earlier section "Decoding the Jargon of Medicare Drug Payments" to understand what this term means). These price fluctuations usually vary by only a few dollars or cents, but they can still add up. Such changes — up or down — may affect what you pay during the deductible period (if your plan has one) and in the doughnut hole (if you fall into it). These changes Don’t Affect you in the initial coverage period if your plan charges tiered co-pays for your drugs. But if you pay coinsurance in this coverage period, any changes Will Affect you because you’re paying a percentage of the full price.

V The co-pay for different drugs: A plan can move any drug into a higher or lower price tier, which consequently raises or reduces your co-pay. However, plans can’t make this change during the annual enrollment period (November 15 to December 31) or during the first 60 days of a new year.

Being aware of your rights

You have some rights and protections in relation to the costs of your drugs that are worth knowing about:

V If one of your drugs is moved up to a higher tier of charges, You can’t be asked to pay a higher co-pay for it during the year. Say one of your medicines is in Tier 2 and your co-pay is $24. You’ll continue to pay that amount for the rest of the year, even if your plan moves the drug into Tier 3 where the co-pay is normally $56. However, if your drug is moved to a lower tier — yes, it can occasionally happen! — your co-pay drops to the lower level.

V If your doctor thinks a particular drug is the only one that will work for you but your plan places the drug in its tier of nonpreferred drugs and doesn’t offer a generic or a similar drug in its preferred tiers, you can request your plan to charge you a lower co-pay. (You’ll need your doctor’s help in making this request; see Chapter 4.) You Can’t Ask your plan to do this if the drug you need is in the highest specialty tier of charges or if the requested change would put your co-pay in the lowest (usually generic) tier.

V If any of your plan’s changes will affect a drug you’re taking, your plan must notify you in writing at least 60 days in advance, unless the drug has been withdrawn from the market for safety reasons.

What should you do if your plan violates any of these rights? Contact the plan, point to the regulations in question, and ask for the mistake to be rectified by filing a Coverage determination, Which means asking the plan to look into the facts of your case. If that doesn’t work, you can appeal the plan’s decision. See Chapter 19 for details.

Understanding How Costs May Change from Year to Year

Drug plans have only so much wiggle room to hit you with higher costs DurinG the year. But they do have the right to change everything from one year to the next. No, this privilege doesn’t necessarily mean raising all charges. But with the price of prescription drugs on the rise in general, Part D costs tend to creep up, not down.

Cost increases for enrollees in Part D aren’t solely related to drug plans raising their premiums and co-pays. Medicare, the federal program, also controls several costs and dollar caps that affect all enrollees, regardless of the private plan they’re in. These costs change by law each year and generally go up, because they’re tied to the rising cost of drugs in the whole Part D program.

Medicare typically changes these costs and benefits from year to year:

V The maximum amount of the annual deductible

V The limit to the initial coverage period

V The limit on out-of-pocket expenses that gets you out of the doughnut hole (if they ever get that high) and into catastrophic coverage

V Co-pays at the catastrophic coverage level

V Co-pays for people receiving Extra Help (see Chapter 5)

Drug plans can change the following costs and benefits from one year to the next:

V Monthly premiums

V Annual deductible (no higher than the maximum amount set by law)

V Co-pays for each tier of charges in the initial coverage period

V Percentage of coinsurance in the initial coverage period

V Full-price charges in the deductible or doughnut hole

V Covered drugs

V Overall plan design

Following are some recent trends in annual cost changes:

V Medicare-controlled costs have gone up steadily. For example, the maximum deductible rose from $250 in 2006 to $295 in 2009. The out-of-pocket limit that triggers the end of the doughnut hole rose from $3,600 in 2006 to $4,350 in 2009, which means it costs more to get to the catastrophic coverage level. On the other hand, the annually raised limit on total drug costs in the initial coverage period — which went up from $2,000 in 2006 to $2,700 in 2009 — means you get a bit more coverage before hitting the doughnut hole than you did in previous years.

V Drug plan costs are more variable. Consumers certainly see the effects if their premiums or co-pays suddenly take a jump on January 1. But often changes are much more subtle — for example, more drugs moved to a higher cost tier. From 2007 to 2008, a few plans lowered their premiums and/or co-pays, but most plans raised both, especially through increased charges for brand-name drugs. And in the most dramatic change of 2008, coverage for brand-name drugs in the doughnut hole — which in the previous two years had saved a lot of money for enrollees with high costs — all but vanished.

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Your Part D plan must mail you a notice each fall (usually in October) to inform you of any changes it will make in costs and benefits for the following year. This mailing is called the Annual Notice of Change, And it’s important that you read it, as explained in Chapter 17. If you haven’t received this notice by early November, call the Medicare help line at 800-633-4227 (877-486-2048 for TDD users) and complain.

Chapter 4

In This Chapter

^ Qualifying for and enrolling in Part D

^ Choosing only one plan

^ Outlining how drug coverage varies in a year

^ Getting coverage for your drugs

^ Paying for drugs and filling prescriptions

^ Staying in one plan for a year

M N Chapter 1, I introduce you to the general Medicare program, but from

This chapter forward, I focus on the Medicare prescription drug program (also known as Part D). In later chapters, I outline the decisions you’ll likely face in getting drug coverage and how to find the best deal that suits your situation. And I delve into a lot of details on different aspects of Part D. But first, here’s the big picture — a broad view of how the program basically works. If you’re new to Part D, this framework helps you more easily grasp the specific information that you find out later in this book.

Qualifying for Medicare Prescription Drug Coverage

Everyone In Medicare is entitled to Part D drug coverage. As long as you’re enrolled in Medicare Part A Or Part B — it doesn’t matter which — or both, you qualify for Part D. That’s true whether you’re in Medicare because of your age (65 or over) or because you have disabilities.

It doesn’t matter whether you’re rich or poor or somewhere in between. You’re entitled to Part D regardless of your income or how much money you have in the bank or invested in the stock market or stashed under the mattress. However, if your income is low, you may also qualify for a special part of the program known as Extra Help. As its name implies, this part offers much more generous drug benefits and lower costs than the regular Part D program. To get Extra Help, your income and savings are taken into consideration and must be under a certain level, as explained in detail in Chapter 5.

The state of your health isn’t taken into account to enroll in Part D either. Unlike many other types of private health insurance, there’s no such thing as a pre-existing condition in Part D (just as there is none in Medicare as a whole). You can’t be denied coverage because of any illness or disability that you have now or had in the past, no matter how severe, or because you take a large number of drugs or very expensive ones right now.

Voluntary Enrollment and All the Strings Attached

You get to choose whether you want Medicare drug coverage. Well, that’s true for most people. The exception would be if you’re now getting your prescription drugs from Medicaid, The federal-state program that pays the medical costs of people with very low incomes. In that case, you’ll be automatically switched to Part D (and receive Extra Help) to help pay for your drugs as soon as you become eligible for Medicare, as explained in Chapter 5. For everyone else, enrolling in Part D is voluntary.

The folks who tend to be the most anxious about Part D are those who already have prescription drug insurance from elsewhere, such as an employer or union’s health plan, or retiree benefits that cover medications. Let me give some reassurance here. You won’t need to join Part D if you have such coverage And That coverage is what Medicare calls Creditable —meaning Medicare considers it at least as good as Part D. But you’d be wise to check that your current coverage is, in fact, creditable. Also, some employers require retirees to take Part D at age 65 and may or may not contribute toward their out-of-pocket expenses. (Chapter 6 goes into all the angles on how Part D fits in with employer – or union-sponsored drug coverage.)

The outlook is different if your other insurance is Not Creditable, or if you have no coverage for drugs at all. Here’s where the strings are attached. You still have the right to turn your back on Part D, but doing so means you have to pay more for your coverage if you decide to join Part D in the future. Medicare rules say that people without creditable coverage who sign up for Part D Later than when they first become eligible for the benefit Must pay a late penalty in the form of permanently higher premiums. (I explain the late penalty more fully in Chapter 8.)

The late penalty is a powerful incentive (as Medicare intends it to be) for enrolling in Medicare drug coverage at the right time. What the "right time" is for you depends on when you first become eligible for Part D, which in turn depends on your circumstances. The best time to enroll may be when

U You first sign up for Medicare

U You lose your current creditable drug coverage, or decide to drop it I You return to live permanently in the United States after living abroad

Each of these situations comes with a time limit for signing up for Part D without incurring the late penalty, as explained in more detail in Chapter 8.

Picking a Plan, Any Plan — but Only One

In earlier sections, I talk about signing up for Part D as though it were a simple one-step operation. It isn’t. There’s no single Medicare drug plan. Instead, the program is run through many private insurance plans that Medicare has approved to offer drug coverage. To get coverage, you must join one of them.

There are scores of these private drug plans servicing any given area of the country. Some are called Stand-alone plans Because they provide only drug coverage and are mainly used by people in traditional Medicare. Others are Medicare Advantage health plans That provide medical services and prescription drugs. Each plan differs from the next in the fees it charges, the range of drugs it covers, and its overall benefit design. So you have plenty of choices. But when it comes to picking a plan, this isn’t a straightforward, apples-to-apples comparison. It’s more like comparing apples to oranges to pineapples, with maybe a few lemons thrown in. Nonetheless, you have to choose just one.

Not surprisingly, people find this aspect of Part D the most daunting. Even if you’ve had employer health coverage in the past and are used to comparing plans, it’s safe to say that you’ve never faced such a huge number of choices before — there could be well over 50 plans available to you, wherever you live. But please don’t let this put you off. It’s possible to drill down and find the plan that most meets your needs in a relatively short time, if you know how to go about it. You can find all sorts of helpful information on how to do this — including a step-by-step guide for comparing plans properly and to your best advantage — in Chapters 9 and 10. Chapter 11 shows you how to be on your guard against scams and hard-sell marketing tactics. And in Chapter 12, I walk you through the process of actually signing up for a plan.

Making Sense of Drug Coverage That Can Vary throughout the Year

Bizarre as it sounds, you may find yourself paying different amounts for the same medicines at different times of the year. That’s because Medicare drug coverage is generally divided into four phases over the course of a calendar year. Whether you encounter only one phase, two, three, or all four Depends mainly on the overall cost of the drugs you take during the year. Here’s how it works:

U Phase 1, the deductible: This is a period in which you may pay full

Price for your drugs until the cost reaches a limit set by law ($275 in 2008, $295 in 2009) and drug coverage actually begins. Many plans don’t charge deductibles. But if your plan has one, this period begins on January 1, or whenever you start using your Medicare drug coverage.

U Phase 2, the initial coverage period: This begins when you’ve met the deductible, if there is one. Otherwise, it begins on January 1, or whenever you start using Medicare drug coverage. You then pay the co-payments required by your plan for each prescription, your share being roughly 25 percent of the drug’s cost. This period ends when the total cost of your drugs — what you have paid Plus What your plan has paid — reaches a certain dollar limit set by law ($2,510 in 2008, $2,700 in

2009).

U Phase 3, the coverage gap: This gap — often called the Doughnut hole — begins if and when you reach the dollar limit of Phase 2. You then pay 100 percent of the price of your drugs until your total out-of-pocket expenses reach another dollar limit set by law ($4,050 in 2008, $4,350 in 2009). This amount includes your deductible (if any), your co-pays during the initial coverage period, and what you paid for your drugs during the gap.

U Phase 4, catastrophic coverage: If your drug costs are high enough to take you through the gap, coverage begins again. And here, at last, is the good news — your payments then drop sharply. In this period, co-pays are small and set by law: $2.25 per prescription for generic drugs and $5.60 per prescription for brand-name drugs in 2008, or $2.40 and $6.00 in 2009, or 5 percent of each drug’s price (whichever is the greater amount). Catastrophic coverage ends on December 31. The following day, January 1, you return to Phase 1 (or Phase 2 if your plan has no deductible), and the whole cycle starts over again.

Table 2-1 is a quick way of looking at the same progression.

Table 2-1 Phases of Part D Minimum Drug Coverage

And Dollar Limits, 2008 and 2009

What you see in Table 2-1 is the basic design for Minimum Medicare drug coverage that Congress dreamed up and set in law. No drug plan can offer less than this coverage. However, drug plans often vary this design, as explained in Chapter 3. Many charge no, or lower, deductibles. Some plans charge less than 25 percent of the cost for some drugs and more than 25 percent for others. And some plans provide partial or full coverage during the gap, usually for a higher monthly premium. You can find a lot of detailed information about the coverage gap — including how to tell whether you’ll fall into it and some ideas for avoiding it or softening its impact — in Chapters 15 and 16.

No plans limit the amount for catastrophic coverage. If you reach that level, you continue paying the same low costs until the end of the year, no matter how many drugs you use or how high the cost becomes.

^ff^lf If your income is limited and you qualify for Extra Help (as explained in

Chapter 5), you’ll pay far less than the costs shown in Table 2-1, and you’ll receive continuous coverage throughout the year. People enrolled in Extra Help don’t face the doughnut hole.

Getting Coverage for the Drugs You Take

You may assume that all Medicare drug plans cover any prescription medicine that you need. Well, maybe they do and maybe they don’t. No drug plan covers every drug — though every plan has to cover at least two drugs out of several that are used to treat a particular medical condition — and some plans cover a much wider range than others. Each plan has its own Formulary — that is, the list of drugs the plan will pay for.

What if the plan you choose doesn’t cover all of your drugs? You’ll need your doctor’s help here. She may decide that a different drug that Is On the plan’s formulary will work just as well for your medical condition. Or, if your doctor wants to keep you on your present medication, she can help you ask the plan to cover that particular drug for you as an exception to its policy. If the plan turns down your request, you have the right to appeal against its decision.

I explain all these coverage issues (and more) in detail in Chapter 4.

Paying for Your Drugs and Filling Your Prescriptions

To get drug coverage under Part D you’ll likely pay a monthly premium to the Medicare drug plan that you choose. (However, some Medicare Advantage health plans that offer drug coverage don’t charge a premium; see Chapter 9 for details.) You may have to meet a deductible, if your plan has one, before coverage starts. You’ll also pay a share of the cost of each prescription you fill. Your share may be in the form of a Co-payment (a flat dollar amount) or Coinsurance (a percentage of the cost of the drug).

If you compare plans properly — that is, according to the medications you take — you’ll notice a lot of variation in the co-pays that different plans charge for the same drug. What’s more, even within one plan you can pay different co-pays for different drugs. Why and how this happens — plus tips for using the system to your advantage — is explained in Chapter 3.

You can fill your prescriptions at local pharmacies that are in your plan’s Network — meaning that they have a business relationship with the plan. Going to pharmacies outside the network means you pay more for your drugs. Most plans also give you the choice of getting 90-day supplies from a mail-order service, often for a lower price.

How does the pharmacy know what to charge you? After all, your payments can vary according to

U The Part D plan you’re enrolled in

U What phase of coverage you’re in (deductible, initial coverage period, coverage gap, or catastrophic coverage; see the "Making Sense of Drug Coverage That Can Vary throughout the Year" section, earlier in this chapter, for details)

U Whether you receive the Extra Help benefit (see Chapter 5)

U Whether you have other coverage (for example, from an employer or a State Pharmacy Assistance Program) that coordinates with Part D (see Chapter 6)

The answer is that your plan’s ID card is the key that should unlock these mysteries. Scanned through the pharmacy’s computer, it accesses a database that tells the pharmacist the amount you’re required to pay each time you fill a prescription. These pharmacy issues (including what to do if the system fails to work properly) are explained in Chapter 14.

Being Locked into One Plan for a Year

After you’re enrolled in a Medicare drug plan, you have to stay in that plan for the whole year (or the rest of the year if you first join Medicare sometime during the year) except in special circumstances, which are described in

Chapter 17.

During the calendar year, the plan can’t change its overall design or the amount of its premium and deductible. Those must stay exactly as they were at the beginning of the year. The plan can change the prices it charges for drugs, but it must also conform to certain Medicare rules that give some protection to consumers. Chapter 3 goes into this in more detail.

At the end of the calendar year, plans can change anything they please for the following year — their benefit design, their premiums, the drugs they cover, and their co-pays. Most plans do, in fact, make changes, so it’s important to read the notice that your plan must send you each fall (usually in October) informing you of any changes, as explained in Chapter 17.

Being locked into a plan for a whole year makes it all the more critical that you choose the plan that’s best for you to begin with, as explained in Chapters 9 and 10. And, if you want to continue being in a plan that gives you the best deal, you should be prepared to compare plans Every Year.

What were they thinking. . . when they made the Part D drug benefit so complicated?

Part D was the result of a bitter political battle in Congress between lawmakers with opposing philosophies. One group (mainly Democrats) wanted prescription drug coverage to be run by the federal government as a simple add-on to Medicare, for which beneficiaries would pay an extra premium and uniform co-pays for each prescription — a proposal that would’ve cost billions of dollars more than Congress was willing to allow. Another group (mainly Republicans) argued that a drug benefit offered by competing private insurance plans would hold down costs and give beneficiaries more choice. A third group wanted a benefit that would give drug coverage only to low-income people. And a fourth group didn’t want a drug benefit at all, arguing that it would add an expensive new entitlement to Medicare that the country couldn’t afford.

Underlying all these conflicting views was a more fundamental political struggle that had been going on for decades. Should Medicare continue to be a federal social insurance program that gave all eligible Americans the same deal, as originally enacted by a Democratic-controlled Congress and a Democratic president, Lyndon B. Johnson, in 1965? Or should it become a more "privatized" system with a menu of options offered through private insurance companies? Prescription drug

Coverage eventually became a bargaining chip in that struggle. Most Republican lawmakers and some conservative Democrats were willing to add drug coverage to Medicare only if the program was overhauled to include many more private options.

In late 2003, after years of stormy debate, a Republican-controlled Congress narrowly voted to pass the Medicare Modernization Act — by only five votes in the House and ten in the Senate — and a Republican president, George W. Bush, signed it into law. The final package contained compromises that provoked howls of rage from both liberals and conservatives. The act established a drug benefit available to everyone in Medicare and gave extra help to people with low incomes or high drug costs. It also gave private insurers a much greater role in Medicare than they’d had before, as well as large financial incentives to participate in Part D, which resulted in far more drug plans entering the market than had ever been expected. These trade-offs created a program so complicated that the original legislation ran to 681 pages, and subsequent regulations that interpreted the law and put it into effect ran to thousands more. Years later, Part D remains controversial, with many lawmakers on both sides vowing to "reform" it, in one way or another, if they get the chance.

Chapter 3

In This Chapter

^ Getting a grip on Medicare and how to qualify

^ Checking out Medicare’s benefits and costs

^ Figuring out when and how to enroll in Medicare

^ Discovering how to decrease your costs and increase your benefits

Edicare helps pay for your prescription drugs Only If you’re in the wider Medicare health program. You don’t necessarily have to be using its medical services at this time to be eligible for drug coverage; you just need to have your very own numbered file in the vast Medicare system.

So with this info in mind, why not begin at the beginning with a quick tour through the essentials of Medicare as a whole? If you’re already well acquainted with Medicare, you can skip to other chapters for the scoop on Medicare prescription drug coverage. But stick around if you’re facing the mysteries of Medicare for the first time and need to know whether you qualify, how to sign up, and how the different parts of the program — each with its own benefits and costs — fit together.

This chapter outlines only the basics of Medicare, just enough to get you on your way. To find out where to go for more detailed information, turn to Appendix B.

Knowing Your Place in the Wide World of Medicare

Medicare is a federal government insurance system, begun in 1966, that helps tens of millions of seniors and people with disabilities nationwide pay for healthcare. It’s the only national healthcare program — available regardless of income or where you live — in the United States, and it’s enduringly popular among people who use it.

Medicare doesn’t pay all of your medical bills by any means. Nonetheless, it still gives a lot of protection against today’s high healthcare costs if you don’t have other health insurance. And unlike other forms of health insurance you may have met in the past, you can’t be excluded from Medicare, or pay more for it, because of advancing age or the state of your health. How’s that for your tax dollars at work?

To qualify for Medicare, you must meet certain rules, depending on the following circumstances:

If you’re age 65 or older: You qualify for Medicare as soon as you reach age 65 if you Or Your spouse has worked long enough to entitle you to Social Security or Railroad Retirement benefits, even if you’re not yet receiving them. You usually need at least 40 credits (amounting to about ten years of work) to become eligible for these retirement benefits, which are paid through monthly checks. Anyone with enough work credits can claim these benefits from the age of 62 onward, though doing so means accepting lower payments than when starting at or after full retirement age. (For people born between 1943 and 1954, full retirement age is now 66.) But remember — even if you claim these benefits early, you still have to wait until age 65 to qualify for Medicare.

The annual statement you receive from Social Security says whether you qualify for Medicare or, if you’re not eligible yet, when you will be. If you lose your statement, call Social Security at 800-772-1213 to ask for a replacement.

If you’re younger than 65 and have disabilities: You’re entitled to Medicare at any age if you have a severe illness, injury, or disability that prevents you from earning more than a certain amount of money each month And You’ve received Social Security disability benefits for at least 24 months. These months need not be consecutive. Anyone diagnosed with Lou Gehrig’s disease (Amyotrophic Lateral Sclerosis, or ALS) doesn’t have to wait 24 months to join Medicare. If you think you may qualify and want to find out the earnings limits that apply to your circumstances, call Social Security at 800-772-1213 or go to Www. ssa. gov.

If you have permanent kidney failure: You’re entitled to Medicare at any age if you have end-stage renal disease (ESRD) — usually defined as needing a kidney transplant or regular dialysis — And If you or your spouse has paid into Social Security through work for a certain length of time. This period depends on how old you are. For specific eligibility information, visit Www. ssa. gov or call Social Security at 800-772-1213.

If you don’t qualify for Medicare: If you’re 65 or older but don’t have enough work credits, you may be able to buy into the system by paying premiums. You can buy in Only If you’re an American citizen or a legal resident (green card holder) who has lived in this country continuously for at least five years. The premiums for Medicare Part A (hospital insurance) are pretty hefty for people who don’t qualify for Medicare — the amount varies depending on how many work credits you have — but they’re probably less expensive than insurance you can buy yourself.

Purchasing Medicare Part A makes you eligible for other Medicare benefits, like prescription drug coverage. If you work long enough to earn enough credits to qualify for Medicare in the future, you no longer have to pay Part A premiums.

Now you know the general guidelines. Of course, the fine print of Medicare rules and regulations deals with many specific situations, but I avoid this nitty-gritty here because you’ll find out where you stand when you go to sign up for Medicare. (I explain how to enroll later in this chapter.) If you want more detailed information, contact the sources listed at the end of this chapter.

Examining Costs and Coverage in Medicare’s Four Parts

Medicare has never been a single unified program in which you pay just one premium to belong and a certain amount for each medical service you use. Instead, Medicare evolved over time and now has four parts, each covering different types of medical care and requiring different payments. The following sections are a brief overview that outlines what you pay and what you get in return. Here’s where you dive into the Medicare alphabet soup and learn your ABCs all over again!

Part A

Part A is insurance that pays most of your costs when you’re a patient in a hospital and also, in some circumstances, if you’re in a skilled nursing facility or hospice, or are receiving treatment from a home healthcare agency. When you turn 65 and have enough work credits, as described in the previous section, you instantly qualify for Part A.

But wait! There’s more good news: If you’re eligible for Medicare, you pay no monthly premium charges for Part A. (That’s because you, or your spouse, already paid payroll taxes for Medicare in a job.) Services received through Part A, however, aren’t free; you pay a share of the costs when using them. For example, when you go into the hospital, you pay the first chunk of expenses until you meet the deductible, an amount set by law that usually goes up every year ($1,024 in 2008).

This amount isn’t an annual deductible. Instead, it applies to every Benefit period — the time you’re treated in the hospital for a particular spell of illness or injury. After you’ve met the deductible, Medicare pays 100 percent of covered costs for a stay of up to 60 days (which need not be consecutive). After that, you pay a share of the costs ($256 a day in 2008) from Day 61 to Day 90. (If you need extra days, you can use up to 60 Lifetime reserve Days that Medicare allows for additional coverage over the rest of your life.

The co-pay for these days, in 2008, is $512.) If you go into the hospital for a Different Illness or injury, you start a new benefit period and again pay the deductible before coverage kicks in and the payment cycle starts over. There’s no limit to the number of benefit periods you can use.

Part A covers the following inpatient services:

A semiprivate room. Regular nursing care.

All meals provided directly by the hospital or nursing facility.

I Other services provided directly by the hospital or nursing facility, including lab tests, prescription drugs, medical appliances, and rehabilitation therapies.

I A temporary stay (up to 100 days) in a nursing home or hospital under the skilled nursing facility benefit. This benefit is available Only When nursing or rehabilitation care is necessary following at least three days in the hospital with a related illness or injury.

Part A doesn’t cover the cost of a private room (unless one is medically necessary), private nurses, or nice-to-have conveniences such as a telephone or television. Except for the skilled nursing facility benefit, Part A doesn’t cover the costs of living in a nursing home. (I explain this benefit, and nursing home care, in more detail in Chapter 18.)

Part B

Part B is insurance that helps you pay to see a doctor and use services outside of a hospital or nursing facility. Part B is voluntary, meaning you can choose whether you want it and, depending on your circumstances, when to sign up.

If you’re 65 or older, you can purchase Part B coverage even if you don’t qualify for Part A. To do so, you must be an American citizen or a legal resident who has lived in the U. S. continuously for five years.

Part B requires you to pay a monthly premium, even if you or your spouse paid taxes for Medicare while working. The Part B premium amount is set annually ($96.40 a month in 2008) and generally goes up from year to year. Most people pay the same premium. However, those with high incomes (more than $82,000 a year in 2008) pay more, and those with very low incomes may receive state help for paying these premiums, if they qualify. Part B also requires you to pay an annual deductible, determined by law ($135 in 2008), which is the out-of-pocket amount you pay for medical care at the beginning of the year before coverage kicks in. You also have to pay a share of the cost of services that Medicare covers — usually 20 percent of the bill, though some services (such as outpatient mental health care) cost more, and some (such as approved home healthcare) cost less.

Wondering what you get for this voluntary coverage? Part B covers

I Approved medical and surgical services from any doctor who accepts Medicare patients, whether provided in a doctor’s office, hospital, long-term care facility, or at home, anywhere in the nation

I Diagnostic and lab tests done outside hospitals and nursing facilities

I A certain number of preventive services and screenings, such as flu shots and mammograms

I Some medical equipment (for example, wheelchairs and walkers)

Some outpatient hospital treatment received in an emergency room, clinic, or ambulatory surgical unit

I Inpatient prescription drugs given in a hospital or doctor’s office, usually by injection (such as chemotherapy drugs for cancer)

I Some coverage for physical, occupational, and speech therapies

I Outpatient mental health care (copay of 50 percent in 2008 reducing to 20 pecent by 2014)

I Approved home health services not covered by Part A

A wide range of medical services, such as dental, vision, and hearing care (including hearing aids); routine checkups; and outpatient prescription drugs, falls outside Part B’s coverage zone. Fortunately, outpatient prescription drug coverage is exactly what Part D is for!

Part C

In the previous two sections, I outline costs and coverage under Traditional Or Original Medicare, Which earned the name because it follows the basic design of the program originally laid out in 1965. It’s also called Fee-for-service Medicare Because each provider — whether a doctor, hospital, laboratory, medical equipment supplier, or whatever — is paid a fee for each service.

But Medicare also offers an alternative to the traditional program in the form of a range of health plans that mainly provide managed care. These plans are run by private companies, which decide each year whether to stay in the program. Medicare pays plans a fixed fee for everyone who joins the plans, regardless of how much or little healthcare a person actually uses. This health plan program is called Medicare Advantage, Or Medicare Part C.

In most cases, you pay a monthly premium for a Medicare Advantage (MA) plan — with the amount varying from plan to plan — on top of the regular Medicare Part B premium. Some plans, however, don’t charge an extra

Premium, and a few also pay all or some of the Part B premium for their members. You pay a share of the costs of hospital and outpatient services. These co-pays vary from plan to plan and are usually different than those required in traditional Medicare.

MA plans must cover all services covered by Part A and Part B in the traditional Medicare program. They may also offer extra services that Medicare doesn’t cover — for example, dental and eye care. Most plans include prescription drug coverage as part of their package.

Unlike traditional Medicare, your choice of doctors and hospitals under most MA plans is likely to be limited to those in the plan’s provider network and to the plan’s local service area. You also pay more if you go out of network. In a medical emergency, however, the plan must cover the treatment you receive from Any Doctor or hospital.

Part D

Part D is insurance for outpatient prescription drugs — meaning medications you take yourself, instead of having them administered in a hospital or doctor’s office — that Medicare began offering in 2006. Like Part C, this program is run entirely through many private plans approved by Medicare, each of which has different costs and benefits. You can get Part D through Stand-alone plans (which cover only prescription drugs and are used mainly by people in traditional Medicare) or through Medicare Advantage health plans that include drug coverage. But I don’t dwell on Part D here, because the rest of this book explores the program in detail.

Comparing different types of Medicare insurance

All the different kinds of insurance under Medicare are enough to blow anybody’s mind. (Would you believe there’s another? Medicare supplementary insurance isn’t a government program, but it can be bought to fill in some of the gaps in Medicare, as I explain in the later section "Lowering Costs and Adding Benefits.") Consequently, it isn’t surprising people get confused about what each means and what the difference is between them.

Table 1-1 helps cut through the confusion by briefly describing coverage, provider details, and pros and cons for each kind of Medicare insurance, including the types of Medicare Advantage plans you’re most likely to encounter. Note: Two types of Medicare Advantage plans aren’t included here: Special Needs Plans (SNP) and Medicare Medical Savings Account Plans (MSAs), both of which restrict enrollment to certain groups of people.

Table 1-1 Types of Medicare Insurance

(continued)

Table 1-1 (continued)

By-visit basis; doesn’t coordinate care

Getting with the Program: When and How to Sign Up for Parts A and B

Don’t panic if your 65th birthday is looming and you haven’t a clue about how to sign up for Medicare — or even whether you should. You’re not alone. Remember how you dived into a state of denial when you turned 50? Now you’re 15 years further on, but you still haven’t given much thought to Medicare, an even bigger psychological milestone — until now. In the following sections, I explain when to sign up at the time that’s right for you and walk you through the process of enrolling.

It’s all in the timing: When to sign up

You can (and should) sign up for at least Medicare Part A — hospital insurance — around the time you turn 65, whatever your circumstances (even if you’re still working, have health insurance from your employer, or haven’t yet begun to draw Social Security retirement payments). It costs nothing to enroll, and you have no premiums to pay. But even if you don’t need any Medicare coverage right now, simply getting your name in the system as soon as possible may ensure a smoother ride later on if and when you decide you want (or need) to sample more of Medicare’s offerings.

When to enroll in Medicare and what services you decide to sign up for depend on your circumstances. This section covers the possibilities.

You already receive Social Security benefits

When I say "Social Security benefits" here, I’m referring to Social Security benefits for retirement, dependents, and survivors — or similar benefits for Railroad Retirement. If you’re already receiving any of these benefits and Haven’t Yet turned 65, you don’t need to sign up for Medicare. In this case, Social Security automatically enrolls you in Medicare Part A and Part B, and you receive your Medicare card in the mail. Coverage starts on your 65th birthday. The same automatic enrollment takes place if you’ve been getting Social Security disability benefits for two years, regardless of your age.

In both situations, you have the right to cancel Part B coverage if you don’t want it (for example, if you already receive medical coverage from an employer or union health plan). But if you’re considering canceling because the Part B premium is more than you can afford, you may want to apply for your state’s Medicare Savings Program. If you qualify, the state pays your Part B premium, and you automatically become eligible for low-cost prescription drug coverage under Part D’s Extra Help program, as explained in depth in Chapter 5.

4£

You don’t receive Social Security benefits yet

If you don’t receive Social Security benefits by the time you’re 65, you need to apply to enroll in Medicare. Timing is very important here because you have a seven-month window, or Initial enrollment period, To sign up. It begins three months before the month in which you turn 65 and ends three months after your birthday month. So if you’re going to celebrate 65 years on June 22, you can sign up any time between March 1 and September 30.

Sooner is better than later. If you enroll early, your coverage starts the month you turn 65. If you wait until after your birthday, it begins on the first day of the month after you enroll.

If you don’t sign up for Medicare Part B when you first become eligible, you have to pay a late penalty when you do eventually sign up. (The exception is if you’re still working and have group health insurance from an employer or union that’s Primary To Medicare, meaning that your group plan pays your medical bills first.) A late penalty means paying more for Part B in the form of permanently higher premiums — 10 percent higher for every year you could’ve had Part B but didn’t. After your personal deadline for joining Part B has passed, you can sign up Only During a general enrollment period from January 1 to March 31 each year. Your coverage then begins July 1.

You have no other health insurance

If you don’t currently have health insurance, you’ll need Medicare for all of your medical coverage. So you’ll probably want to sign up for both Part A (hospital insurance) and Part B (insurance for doctor visits and outpatient services). You should sign up for these programs during your seven-month initial enrollment period around the time of your 65th birthday (see the preceding section). If you don’t sign up for Part B during this time but decide to do so later, you’ll pay a late penalty.

You Work and have group health insurance

If you’re still working after the age of 65 and have group health insurance from your employer or union, check with your benefits administrator to find out whether this coverage is primary or secondary to Medicare. Primary Means your own insurance pays your medical bills first; Secondary Means Medicare pays first and your insurance pays for certain services that Medicare doesn’t cover. So how does this explanation relate to your specific situation? Here are your options:

U If your insurance is secondary: You should sign up for Medicare Part B within your seven-month initial enrollment period (see the earlier section "You don’t receive Social Security benefits yet"). In fact, your employer or union health plan will probably insist on it as a condition for continuing your current coverage. (If your employer has fewer than 20 employees and you are 65 or older, your health plan is automatically secondary to Medicare.)

U If your insurance is primary: You don’t need to sign up for Part B at this time. However, when you sign up for Part A, make sure that Medicare documents that you have primary coverage from elsewhere. In the future, if you lose your employer or union coverage, you’ll need Medicare to know that you once had it so you can enroll in Part B at that time without incurring a late penalty. If you do lose your current coverage, you’ll have eight months to sign up for Part B, starting from the end of the month in which you lose coverage. As long as you sign up within this period (or earlier), you won’t pay a late penalty, and you’ll still have guaranteed access to Medigap insurance. (I explain guaranteed access to Medigap later in this chapter.)

You no longer work but have retiree health insurance

After you retire, consider signing up for Part B, even if you still have health insurance from your former employer or union under a retiree plan. Yes, this precaution probably means paying two premiums — and of course you have the right not to join Part B if you don’t want to (unless your employer or union insists on it as a condition of your retiree coverage). But if at some future date you lose or drop your retiree benefits and need to sign up for Part B at that time, you’ll have to pay a late penalty. You won’t incur a late penalty if you join Part B within eight months of retiring from your job.

You don’t qualify for Part A

If you don’t qualify for Part A’s hospital insurance, you may be able to buy into the system by paying a premium for this coverage (see the earlier section "Knowing Your Place in the Wide World of Medicare"). Regardless of what you choose to do with Part A, you can still get outpatient medical coverage under Part B as long as you’re 65 or older and an American citizen or have lived in the U. S. as a legal resident for at least five years. To receive this benefit, you simply pay the same premium, deductibles, and co-pays as anyone else. To join the Part B party, and avoid a late penalty, enroll at one of the following times:

I During the seven-month initial enrollment period around the time of your 65th birthday if you have no other health coverage, or if your current coverage is secondary to Medicare

Within eight months of losing your current health coverage, if it’s primary to Medicare

I Within eight months of retiring from a current job that provides retiree health benefits

You live outside the United States

If you have enough Social Security credits to qualify for Medicare, you should file for Medicare Part A (hospital insurance) around your 65th birthday if you live outside the U. S. You can’t use this insurance abroad, but, after all, it doesn’t cost you anything to sign up. To do so, contact the U. S. embassy or consulate in the country you’re living in — or the Department of Veterans Affairs’s regional office if you live in the Philippines.

Deciding whether to buy Part B (doctor and outpatient services) may be trickier. If you’re still working and have primary group health insurance from your employer, you don’t need to join Part B yet. But if you don’t have such insurance (or are perhaps relying on the public health service of the nation where you live) or are retired, you have two options:

I Sign up for Part B when you turn 65 and pay the required premiums — even though you won’t be able to get Part B medical services while living abroad.

I Delay signing up after you turn 65 and incur a late penalty if you join Part B after moving back to the U. S.

Taking the plunge: How to sign up

When you don’t automatically qualify for Medicare — that is, if you’re not Already Receiving Social Security or Railroad Retirement payments — you must apply for the program. All you have to do is make one toll-free phone call to the Social Security Administration (not Medicare) at 800-772-1213. A customer representative will ask for your Social Security number and will give you the choice of signing up for Medicare directly on the phone or making an appointment for you to visit your local Social Security office. Signing up on the phone is simpler, but you need to send important documents (such as your birth certificate or passport and, if you’re not an American citizen, proof of legal residence) to Social Security through the mail. If this process unnerves you, you can take the documents with you to an office appointment. The representative you initially speak with schedules the appointment and gives you the address of the nearest Social Security office.

During this interview, whether on the phone or in person, you can discuss your Medicare needs — such as whether you want to sign up for Part B right now — and whether you want to start receiving Social Security payments as soon as you’re eligible. The customer representative then answers your questions and enters your information into the computer system. A week or two later, you’ll receive your Medicare card in the mail. The card indicates which benefits (Part A alone, or Part A and Part B) you’ve signed up for. With your card, you’ll also receive a copy of your information that’s been entered into the Medicare system. If any details are wrong, call the phone number listed in your mailing to have them changed.

Lowering Costs and Adding Benefits

Medicare has a whole slew of out-of-pocket expenses and doesn’t cover all medical services. What, if anything, can you do to lower costs and get more benefits? These sections break down your possible options, depending on various circumstances.

Medicare supplementary insurance (also known as Medigap)

Medicare supplementary insurance is Not A government program offered by Medicare. It’s a separate private insurance you can purchase for an additional monthly premium to fill in some of the gaps in traditional Medicare, which is why it’s often called Medigap. Depending on the kind of policy you buy, Medigap covers out-of-pocket expenses in Medicare, such as deductibles and co-pays, and may cover extra services (for example, at-home recovery after hospitalization and emergency treatment abroad). Medigap features 12 standard policies, designated A through L, each offering a different range of coverage options — the more options, the more expensive the policy. These policies are sold by many insurance companies at varying premiums. You can compare benefits and costs online at Www. medicare. gov or by calling Medicare at 800-633-4227.

The best time to buy Medigap insurance is within six months of signing up for Medicare Part B, because this timing gives you significant consumer protections. During the six-month window, you have a Guaranteed Right to buy any Medigap policy sold in the state where you live. In other words, you can’t be turned down because of poor health or any pre-existing medical conditions. Nor can you be charged higher premiums based on your age. You get this window, with all of its guarantees, regardless of when you enroll in Part B, even if you sign up late for Part B.

Other factors may affect your decision to purchase Medigap insurance:

I You can’t use Medigap if you’re in a Medicare Advantage health plan. So if you enroll in one of these plans immediately after joining Part B, you lose your right to buy Medigap with guaranteed protections. (However, you may be able to get this right back if you leave the MA plan within your first year in Medicare or if you gave up a Medigap policy to join an MA plan for the first time. I explain the details of these exceptions in Chapter 17.)

I No Medigap policies sold after 2005 include drug coverage, and you can’t use them to cover out-of-pocket expenses in Part D.

Medicare Advantage plans (Part C)

Medicare Advantage (MA) plans may have lower costs and offer more benefits than traditional Medicare. Depending on the plan, lower costs may include zero premiums, a reduced hospital deductible, a flat co-pay (for example, $10 or $20) rather than 20 percent coinsurance for each doctor visit, and a cap on out-of-pocket expenses in a calendar year. Extra benefits may include coverage for vision or hearing services, emergency treatment

Abroad, or exercise programs. However, some plans charge higher costs than traditional Medicare for some services and offer only minimal extra benefits. Also, you need to recognize that most MA plans limit the choice of doctors and hospitals and may not cover treatment outside of their service area, except in emergencies. (I compare MA plans with traditional Medicare in Chapter 9.)

Veterans benefits

If you qualify for federal health benefits from the Department of Veterans Affairs (VA), you can use them in addition to, or instead of, Medicare. You can also decide which benefits to use for each medical service you need. If you choose the VA for treatment, you must obtain your treatment at a VA facility. Medicare doesn’t pay for care at VA facilities but does pay for Medicare-covered medical services that you obtain elsewhere. If you’re a veteran with a low income or a high enough service-related disability rating, you may qualify for free VA care. Whether you’re eligible for free care or not, you should consider signing up for Medicare in case you need future services that the VA can’t provide or you have to travel too far to get to a VA facility. For more info, call 877-222-8387 or visit Www. va. gov/healtheligibility.

Medicaid

Medicaid is a healthcare program for low-income people and is administered by each state, which shares the costs with the federal government. (In some states it has a different name — for example, MediCal in California, MassHealth in Massachusetts, and TennCare in Tennessee.) Eligibility depends on the level of your income and savings and varies among the states. If you qualify for both Medicaid and Medicare, you should pay little or nothing for medical treatment — because Medicaid covers Medicare’s out-of-pocket expenses — and you have coverage for broader benefits, such as nursing home care. In addition, you automatically qualify for low-cost prescription drug coverage under Medicare Part D’s Extra Help program. (Extra Help is covered in detail in Chapter 5.) To find out whether you qualify for Medicaid and how to apply, call your State Health Insurance Assistance Program (SHIP). See Appendix B for the local number to call.

State Medicare savings programs

If you don’t qualify for Medicaid, but the Medicare Part B premiums and other costs are still more than you can afford, you may be eligible for help from your state to pay for them. Getting this assistance depends on your income level and any savings you may have. If you qualify, you also automatically receive the full Extra Help benefit under Part D, which provides prescription drug coverage at low cost. Call your State Health Insurance Assistance Program (SHIP) to find out whether you qualify for a Medicare savings program and how to apply. (SHIP contact information is in Appendix B.)

Chapter 2

I

MI You’re reading this book, chances are you’re baffled. That’s okay — you’re not alone. Since Medicare prescription drug coverage began in 2006, I’ve heard from multitudes of people trying to get their minds around Medicare Part D — the program’s official name — and most often they call it "confusing." In fact, the crispest verdict came from an exceptionally on-the-ball 93-year-old who’d spent the afternoon swing dancing at a Wisconsin senior center. He asked, simply: "Why did they come up with a program I couldn’t figure out myself?"

That’s why I’ve written this book. There’s no doubt about it — the Medicare drug program is complicated, largely because it comes with a lot of choices. Sure, choice is a good thing, but having many options also forces you to make more decisions. And to make good decisions — instead of just guessing and hoping for the best — you have to know the angles. That’s where Medicare Prescription Drug Coverage For Dummies Comes in. It takes you step by step through the choices you face and gives you the practical knowledge you need to make informed decisions. Consider it a road map for navigating the twists and turns in the system so you Can Figure it out for yourself — and with confidence.

Part D is a real benefit. Yes, it could be simpler and better, but it has still saved money for millions of people and allowed many to get the meds they need for the first time. For 40 years, Medicare didn’t pay for outpatient prescription drugs at all, and during that time, these meds became increasingly expensive and more necessary as a medical treatment. But now there’s Part D, and the problems are different. Typical questions I hear include:

"There are 52 Medicare drug plans in my area, so how the heck am I supposed to choose one?"

"I’ll be getting my meds through my retiree health plan. How will Part D affect it?"

"I was tricked into a plan I didn’t want. How do I get out of it?"

I "This benefit has saved me a lot of money, but now my plan has stopped paying for my drugs entirely. Why?"

This book answers those questions and many more. Yes, taking a whole book to explain Part D says a lot about the program’s complexities. But in these pages, I try to consider everybody’s circumstances by covering the widest possible spectrum of issues. In doing so, I draw on the frontline experiences of people like you who’ve grappled with Medicare drug coverage, my own

Experience in helping them, and the knowledge of many experts I’ve badgered for answers to the trickiest questions.

So whatever your situation, Medicare Prescription Drug Coverage For Dummies Offers strategies to cut through the confusions of Part D, either for yourself or for someone you’re helping. It explains the program’s ins and outs in plain words. It shows you how to avoid or cope with pitfalls and suggests how you can lower your costs or find a better deal. Best of all, it convinces you that you can — yes, you can — handle Medicare Part D!

About This Book

Medicare Prescription Drug Coverage For Dummies Gives you a lot to chew on, but don’t worry — you can take small bites. What you personally want to read depends on your situation — and on whether you’re using this book to help yourself or someone else. But one matter’s certain: If you recognize yourself in any of the following scenarios, you can find help in these pages:

You have no insurance for prescription drugs right now (or it’s coming to an end), but you’ll soon be going into Medicare and know zip about Part D coverage or how to get it.

I You do have drug insurance now (from an employer or elsewhere) but will soon be eligible for Medicare and need to know whether Part D will affect you and whether you should sign up for it.

I You’re already in Medicare but haven’t signed up for Part D and are wondering whether you should.

I You’re already enrolled in a Medicare Part D plan but can use some help troubleshooting problems, finding a better deal, or cutting your expenses.

I You need to know about Part D because you’re helping parents, relatives, or friends find the best Medicare drug plan for them.

I In your job (or as a volunteer) working with seniors or people with disabilities, you can use a plain-language reference to Part D.

Conventions Used in This Book

As you may expect from a program run by a federal bureaucracy, you’re going to meet certain unavoidable jargon in this book. This Part D-speak is worth getting to know, because notices you receive from Medicare or your drug plan — or any to-and-fros you have with either — will be easier to understand. So I use the following conventions:

New terms in Part D-speak are explained the first time they appear.

I When you see the word "Medicare" used on its own, it usually means the whole Medicare program. (As in: "When you join Medicare. . .") Sometimes it means the federal agency that runs Medicare. (As in: "Medicare may send you a notice. . .") The agency’s official name, the Centers for Medicare & Medicaid Services (CMS), is used as the source of information in some tables.

I The Medicare prescription drug program is referred to interchangeably as Part D or Medicare drug coverage. The private plans that provide this coverage are referred to as Part D plans or Medicare drug plans.

I also include a few standard conventions to help you navigate this book:

Italics Indicate definitions and emphasize certain words.

Boldface Text highlights key words in bulleted lists and actions to take in numbered steps.

Monofont points out Web and e-mail addresses.

"Quotation marks" generally indicate specific buttons or links you are to click on a given Web site.

What You’re Not to Read

Guess what? You can skip the sidebars — chunks of text that appear in nifty gray-shaded boxes. They’re not necessary to understanding how to find your way through Part D. Still, you may find them interesting. Ever wonder how on earth Congress dreamed up some of the more oddball bits of this program? You’ll find answers in the sidebars scattered throughout this book.

Foolish Assumptions

This book assumes that you don’t have any working knowledge of the Medicare prescription drug program — none, zip, nada. But even if you do, you can still find practical insights and useful tips to help you navigate the system more quickly, easily, and confidently.

Another point: This book assumes no political standpoints. Part D has always been controversial, coming under fire from conservatives and liberals alike. If you hold strong opinions, fine — that’s your privilege. But in these pages, the only "us versus them" undertone is a bias toward consumers (us) rather than government bureaucracies and insurance companies (them). The aim of this book is to help you understand and deal with the system as it is now. If you want it changed, please tell your members of Congress, not me!

How This Book Is Organized

Medicare Prescription Drug Coverage For Dummies Has six main parts with 21 chapters and three appendixes. Just dive into whatever you need to know — whether you’re thinking about Medicare drug coverage for the first time, you’re already in a Part D plan, or you’re in a special situation, such as having a limited income or living in long-term care. You don’t need to read stuff you already know, and you don’t have to wade through stuff you don’t need to know right now. The following summaries of each part include guidance on what you may want to read, according to your own situation.

Part I: The Nuts and Bolts of Medicare Prescription Drug Coverage

This first part begins with a quick run through the essentials of Medicare as a whole. This spot’s your first port of call if you’ll soon be going into Medicare and need to know if you qualify and how to sign up. Next, I get into the nitty-gritty of Part D itself by first looking broadly at the main rules of the prescription drug program and how it works. Then I take a closer look at the big questions that matter most to your pocketbook and health — costs and coverage. These chapters are essential reading if you’re considering Part D for the first time.

In this part, too, I provide detailed information about the program-within-a-program known as Extra Help, which offers much more generous drug benefits to people with limited incomes. Head to this chapter if you think you can’t afford the premiums and co-payments required in the regular Part D program, or if you currently get your meds from Medicaid.

Part II: Deciding Whether to Sign Up for Part D

For many people, this crucial question — "Do I really need Part D?" — can cause everything from head-scratching to panic attacks. Read this part if you already have prescription drug insurance, rely on free or low-cost drugs from some other source, or take no or very few meds right now. Here you discover how to find out if your current drug coverage is considered better or worse than Part D coverage and why this distinction matters. You also find help in weighing the consequences of continuing to have no drug coverage when you’re eligible for Part D — including hard facts about the late penalty if you don’t sign up for Part D at the right time.

Part III: Choosing and Enrolling in

The Right Part D Plan for You

Having to pick just one Medicare drug plan — out of more than 50 that are available to you, wherever you live — can bring on an acute form of paralysis, especially because each plan has different charges and covers a different range of drugs than the next one. So this part shows you the best ways to pick the plum — meaning the best plan for you — out of a whole lot of apples, oranges, and pears. It explains how to compare plans properly in the quickest way and why doing so is worth the effort. It also suggests ways to avoid scams and hard-sell marketing tactics. Finally, I show you how to enroll in the plan of your choice. Check out this part if you’re joining Part D for the first time And If you’re already in a Part D plan in November or December and want to know if it’ll still be the best one for you next year.

Part IV: You’re In! Navigating Part D from the Inside

This part covers a ton of ground — from first receiving your plan’s card right through to the end of the year when you’re deciding whether to stay with this plan or switch to another. Want to know how to navigate the dreaded doughnut hole (formally known as the coverage gap)? Need a drug that your plan won’t pay for? Want to cut down your out-of-pocket expenses? Wondering how going into a nursing home affects your Part D coverage? Need help in challenging a decision your plan has made that you don’t agree with? You can find the answers to these questions and many more right here. Consider reading much of this part if you’re joining a Medicare drug plan for the first time. But if you’ve been in a plan for a while, you may just want to jump into the chapter that directly speaks to your particular concern.

Part V: The Part of Tens

From the Ten Commandments to David Letterman’s Top Ten Lists, ten has long been the magic number for snappy lists. This part has two ten-point lists. Check them out for information you can take in at a glance on two key areas — ten ways for boomers to ride to the rescue of loved ones grappling with Part D and ten proposed changes to Part D that you should know about.

Part VI: Appendixes

Appendix A offers sample worksheets you can use when comparing Part D plans — whether stand-alone drug plans or Medicare Advantage plans. Appendix B is your go-to resource for when you need personal help with Part D. Look here for the names and contact info of organizations and agencies mentioned in this book. Appendix C is your guide to safely buying prescription drugs by mail order from abroad. It explains steps you can take to ensure you receive genuine products from reputable pharmacies instead of falling prey to counterfeit medicines and dubious sellers.

Icons Used in This Book

Icons are those cute drawings you see in the page margins now and again. Here’s what they mean:

^jjfcDuQfy This icon indicates a situation in which you need your doctor’s help — for

Example, when asking your Part D plan to pay for a medicine it doesn’t usually «f _ Lw I Cover, or when finding out whether a lower-cost drug would work just as well as the expensive one you’re taking now.

BED

This icon signals important info. If you take anything away from this book, it should be information highlighted with this icon.

This icon draws your attention to on-target advice and practical insights that will save you time, effort, and maybe even money.

This icon raises a red flag to alert you to a Part D rule or potential pitfall that may trip you up if you remain blithely unaware of it.

Where to Go from Here

Nobody expects you to read this book cover to cover. Harry Potter It’s not! But you can jump in anywhere to the bit you need, at whatever point you happen to be in when grappling with Medicare prescription drug coverage. I’m going to whip off the cloak of invisibility to reveal. . . not the Sorcerer’s Stone, not the Chamber of Secrets. . . but the practicalities of a system that isn’t very mysterious at all — after you know how to navigate it.

Part I

The Nuts and Bolts of Medicare Prescription Drug Coverage

The 5th Wave By Rich Tennant

""Exactly – vihat kind O£ Prescription medication Are you – taking?"

In this part. . .

Efore you can choose a prescription drug plan, you should understand the basics of Medicare Part D prescription drug coverage — how it fits into the wider Medicare program and, broadly, how it works.

First, for those of you who are just about to join Medicare, I give a quick primer on the different parts of the Medicare program — Part A (hospital coverage), Part B (doctors and outpatient services), Part C (private health plans), and Part D (drug coverage) — as well as how to be sure you’re eligible for Medicare and how to enroll. Then I give an overview of the main rules of Part D so you can get a general idea of how Medicare drug coverage works if you’re not yet enrolled in the program.

In the remaining chapters of this part, I explain in more detail the two topics that probably most concern you at this stage — how much you’re likely to spend and save in Part D (whether you’re in the regular program or you qualify for extra financial help in paying for meds) and how your prescription drugs will be covered.

Chapter 1