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By Christine Benz and Mark Miller | 10-07-2013 12:00 PM

Enrollment Tips for Medicare, ACA Coverage

Retirement expert Mark Miller details why seniors should reshop their Medicare drug coverage, how the Affordable Care Act affects those seeking health insurance, and steps individuals can take for ACA enrollment.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. Medicare open enrollment runs from Oct. 15 through Dec. 7. Joining me to discuss what seniors need to know during this season is Mark Miller. He is a retirement expert, and he is also a contributor to Morningstar.com.

Mark, thank you so much for being here.

Mark Miller: Thanks, Christine. Always good to be with you.

Benz: Mark, let's talk about what seniors need to know during this season. I know that you always say people should reshop their prescription drug coverage. What's going on with that coverage as you look upon the 2013 season?

Miller: I always try to nag people to do that. Not that many do, but the experts will tell you that it's a good idea to reshop your coverage for the prescription drug program or if you're in Medicare Advantage, if not annually, then at least every couple of years because the premiums and the offerings within the plans can change from year to year. Even if you like what you have it's good to do a check up and see what is exactly being offered for the coming year and compare it with what else is going on in the place where you live.

Benz: And seniors' drugs often might change, as well, so what might have been covered in the past, if you're on something new and different, it may not be covered?

Miller: Yes, your prescriptions might've changed, or what's called the formulary, which is the list of drugs that are covered and under what conditions and rules, can change from year to year.

Benz: Another important component of prescription drug coverage is what's been called the doughnut hole. We're seeing a shrinking of the doughnut hole, but what numbers do people need to be aware of?

Miller: This is a good news story from the Affordable Care Act. Under that law, this gap in coverage is shrinking over time and eventually will be eliminated completely. And what that is, is it refers to a gap in drug coverage for people who have relatively high spending, a so-called catastrophic level of spending. For next year, the overall hole gets $80 smaller.

What it means is that it's tracking the combined spending that you make and that your drug insurance provider makes combined. So, you fall into the gap next year [if your costs exceed] $2,850 and it ends at $4,550.

The other thing that the law did is it provides discounts on both brand name and generic drugs. For next year, the brand name discount stays where it was, which is 52.5%. The generic discount gets a little larger next year. If you're on a generic medication, the discount that's mandated goes from 21% to 28%. The hole gets smaller and the discounts on drugs get a little better, so this is a good improvement.

Benz: When the hole set to go away altogether?

Miller: I believe it's 2020. It's a gradual shrink down.

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