Now's the Time to Decide on a Medicare Plan

October 26, 2009

Q: What is going to happen to rates for Medicare Part D prescription-drug plans next year? Can I switch plans?

A: Prices for both Medicare Part D prescription-drug plans as well as Medicare Advantage plans are going to rise in 2010. And you have from Nov. 15 to Dec. 31 to decide whether you want to stay in the same plan or switch plans for 2010.

Average premiums for Part D plans are increasing 7 percent in 2010, to $30 a month, and average premiums for Medicare Advantage plans are jumping 22 percent, to $39 per month. These price hikes may be particularly tough to stomach next year, when Social Security will not have a cost-of-living increase.

And premium increases are only part of the picture. For 2010, more than 60 percent of Part D plans will charge an annual deductible ($310 is standard) before covering any drug costs, up from the 45 percent that charged a deductible in 2009, according to the Kaiser Family Foundation.

Fewer Part D plans will provide coverage in the so-called doughnut hole, which begins after you reach $2,830 in total drug spending and extends until your total drug costs for the year reach $6,440 in 2010; within that gap, you generally have to pay all the bills yourself. The plans that do provide some coverage in the doughnut hole cover only the cost of generic drugs; otherwise, you’re on your own.

And be sure to check how each Part D plan treats your specific medications. Co-payments are rising, and many insurers are changing formularies. For example, you could end up with higher out-of-pocket costs if your insurer switches your drug from preferred to co-pay nonpreferred.

Ask your doctor whether you can switch any of your drugs to a generic or lower-cost medication; the policy with the best deal for brand-name drugs may not be the best deal for generics.

The Medicare prescription-drug-plan finder is an excellent tool to analyze the costs of Part D plans for your situation. Type in your drugs and dosages, and you’ll see total out-of-pocket costs — premiums as well as co-payments — for your medications throughout the year. Or call (800) 633-4227 for personalized assistance.