Answers to your vital questions

Medicare Part D, also known as Medicare Prescription Drug Coverage, has been available for more than three years — yet it continues to cause confusion among seniors. Unlike with the other parts of Medicare, seniors cannot simply obtain Part D coverage through the Medicare system. Instead, they must sort through an array of complicated private plans, each with its own rules, costs and lists of covered drugs. Bottom Line/Retirement asked Medicare rights expert Paul Precht to answer the most important questions about Part D…

What’s the best way to pick a Medicare drug plan? It’s usually wise to pick the plan that best covers the prescription drugs that you currently take. While your drug needs could change, chances are the drugs you take today will be the drugs you take in the year ahead.

Differences in coverage and costs can add up to hundreds of dollars per month. To estimate the cost of each plan based on your current drug needs, use the Medicare Prescription Drug Plan Finder tool at Medicare.gov (800-633-4227) or contact your state’s Health Insurance Assistance Program — you can find contact information through the Eldercare Locator (800-677-1116, www.eldercare.gov).

Can I switch plans if my health situation changes? You generally cannot switch from plan to plan in the middle of a calendar year, but you can switch to a different plan for future years. The open-enrollment period to make changes for the coming year runs from November 15 through December 31. Visit Medicare.gov or call 800-633-4227 for details.

Every senior should review his/her coverage well before the end of every year. The costs and coverages of your current plan could be slated to change next year. Your drug needs might have changed or new plans might be available.

Loopholes: Seniors can change Part D plans outside of the open-enrollment period under certain specific conditions, including if any of the following are true…

They begin receiving government assistance with their Medicare Part D expenses (see below).

They enter, leave or live in a nursing home.

They relocate to outside their current plan’s service area (or they relocate within their plan’s service area and additional Part D options not available at the previous address are available in the new location).

Am I required to sign up for Medicare Part D? Participation is voluntary — but it is a good idea for most seniors who do not already have drug coverage. It’s also smart to sign up and pay the monthly premium even if you do not currently require any prescription drugs. Not only does this provide financial protection in case you do need prescription drugs later in the year — it also protects you from the potentially steep late-enrollment penalty. Seniors who fail to sign up for a Part D plan when they are first eligible — typically when they turn 65 — face a late-enrollment penalty that grows by 1% per month for as long as they delay. That 1% adds up quickly. If you wait four years to sign up, you’ll pay 48% more than other seniors for the same prescription drug coverage.

If you don’t think you need prescription coverage when you first become eligible for Medicare, sign up for the lowest-premium plan available. In most regions, there are plans that cost only $25 or so per month.

Loophole: You won’t necessarily face a late-enrollment penalty if you have “creditable” drug coverage — at least as good as Part D — from another source, such as an employer’s supplemental health plan or the Department of Veterans Affairs. If you later decide to sign up for Part D, however, you must do so within 63 days of the termination of the creditable prescription drug coverage to avoid a penalty.

How does the infamous “doughnut hole” work? Most Part D plans are designed with a gap in coverage each year during which you receive little or no help paying for prescriptions. This gap, often called the doughnut hole, begins after the plan member has spent a total of $2,700 in prescription drug costs during a year (including the amount the plan pays and the participant’s copays). Coverage resumes once the plan member has incurred $4,350 in out-of-pocket drug costs, a figure that does not include the amount the plan has paid.

Some plans provide coverage for generic drugs during this doughnut hole, but such plans tend to charge high monthly premiums. Unless your medical condition or current prescriptions make it very likely that your drug costs will climb to near the top of the doughnut hole or above during the coming year, these plans are probably not worth the expense.

Can I get help paying Part D costs? If your income is below $1,354 per month ($1,822 for couples), you might be eligible for state or federal assistance programs that would pay some or all of your Part D expenses, including premiums, copays and doughnut hole costs.

Asset limits for entry into these programs are uniform nationally — although some states do have programs for help with prescription drugs that do not consider assets. You might be disqualified if your total resources, including bank accounts and most types of investments, exceed $12,510 ($25,010 for married couples). Your primary residence, vehicles, personal possessions and certain other resources do not count toward this limit, and asset limits do not apply everywhere.

Will Part D cover drugs that I currently take? Not necessarily. Many plans cover mainly generic drugs, with restricted coverage for brand-name pharmaceuticals. It usually is safe to switch to generics, but these limitations can be problematic for those taking brand-name prescription drugs for which there is no generic equivalent.

Examples: The cholesterol drug Lipitor and stomach acid drug Nexium do not yet have generic equivalents and are not covered by many Part D plans.

What to do: If you currently take brand-name pharmaceuticals, ask your doctor to prescribe generic equivalents. If there are no generic equivalents, ask your doctor if there are other drugs in the same class that do have generic equivalents and might be effective for you. If not, in future years, pay higher premiums to enroll in a Part D plan that includes the brand-name drug you need or ask your doctor to contact your plan and file an appeal by explaining why this brand-name drug is necessary for you. Filing an appeal will not affect your premiums, and your odds of success are good if you have your doctor’s support.

More information: Visit the Medicare Rights Center’s consumer advice Web site, www.medicareinteractive.org.

Closing Medicare’s Doughnut Hole

President Obama has promised to work with Congress to close the doughnut hole…

The drug industry has promised a 50% discount on brand-name drugs for seniors who fall into the doughnut hole.

The America’s Affordable Health Choices Act of 2009 drafted by the House of Representatives would phase out the doughnut hole until it vanishes in 2023. The initial amount of drug costs the government pays for would be progressively increased over time, and the annual out-of-pocket amount seniors are responsible for would be progressively decreased until the coverage gap is eliminated.