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Why It Pays to Shop Around During Medicare Enrollment

Christine Benz
Mark Miller

Christine Benz: Hi I'm, Christine Benz for Open enrollment season for Medicare runs from Oct. 15 through Dec. 7. Joining me to share some tips for the process is Morningstar contributor Mark Miller. Mark, thank you so much for being here.

Mark Miller: Thank you, Christine.

Benz: Mark, you mentioned in a recent article that the Part D premiums for some recipients are going up quite a bit this year. What kind of increases are we talking about?

Miller: Well, we're seeing double-digit increases in seven of the 10 top plans by enrollment, and these 10 plans have maybe 80% of all people who are enrolled in Part D. So, within those top 10, seven of them are going up by more than 10%. The highest one is 23%. There are a number that are in the sort of 18%-15% increase range. So, there are some big changes in the premium levels with these top plans.

Benz: But the premiums aren’t the only thing you need to stay attuned to when you're shopping.

Miller: No certainly not.

Benz: So, what else?

Miller: You need to look at what the deductibles are in the plan, for example. Co-pays. What are the specific costs for the drugs you're taking?

Another thing to check carefully is what is called the formulary rules for a drug, meaning under what conditions will this plan provide the drug? For example, you might be on a drug where it's listed as covered, but in the fine print it says the plan has the right to go to the doctor and asked that doctor to try some cheaper medication first. The back and forth between the plan and the doctor could take weeks if not months during which time you're hung up. So, that's another thing to pay careful attention to is the formulary.

The third is many of these plans are going to preferred provider networks for pharmacy delivery. They've set up their own networks for delivery as a way to save money. That's a perfectly reasonable thing to do, but [you should] check and see what is the delivery method that's going to be in a plan that you're looking at and if that is acceptable to you. Some are going to be in-pharmacy in a store. Others are going to be by mail, for example.

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Benz: Part D participants will be receiving something in the mail saying whether they're going to be seeing an increase in their premiums. Assuming I do see a big increase, what step should I take, and what are resources that I can look to you to help me make good decisions as I attempt to choose maybe another provider?

Miller: Right. Everybody should have received what called the annual notice of change by the end of September, which describes changes in the plan, pretty much at a higher level including premium changes, perhaps other things that are changing. So, one problem is not enough people actually do bother to go out and recheck and reshop their coverage every year. Only about a third of seniors said in one poll this year that they actually plan to shop the plans. And another piece of research that's just come out quantifies that very few seniors are actually in the optimal plan, meaning the least expense for the most solid coverage.

So, there really is a gap here between the smart shopping and what’s going on with consumers in this market. So, it's worth checking particularly if you notice a change comes and you're looking at a big premium increase. A good starting point, if you're comfortable with using the Internet and feel like you get your way around a website well, is the Plan Finder, which is the authoritative source of all plan information. And you can go onto that site and enter your Medicare number and your specific drugs and dosages, up will come a list of plans, and you can evaluate them as imagined. But it takes a lot of digging. You got to get in and look at things like that formulary question for example.

There also is a network of free assistance programs around the country called the State Health Insurance Assistance Program, or SHIP for short, and those are programs that will provide free assistance to enrollees in helping them shop plans. In our article on about Medicare shopping this month we have a link to the SHIP program website which you can use to find the program in your part of the country.

Then, last but not least there are several services that will, for a small fee, do personalized shopping with you, and that can be a good way to go, too. One example is Allsup which for a few hundred dollars will shop your plan for you, and if they do a good job and find you something that's a best match, then you will more than make up that fee in terms of savings on the plan.

Benz: How about pharmacies that offer to help you choose the best plan? Should you be on alert that they may have a vested interest in pushing into one plan or another?

Miller: There's certainly nothing wrong with going into your Walgreens or CVS for the free evaluation. I would just urge people to check that against some other nonbiased source. Obviously, these folks have a motivation to sign you up.

Benz: Right, So, Mark, I would also like to discuss what's going on with the doughnut hole in 2013. What are the changes, and I know it's gradually getting better, but what are the changes we'll be seeing next year?

Miller: So, the doughnut hole just refers to when you get to a point in your program where your coverage stops if you have really high expenditures, meaning, in 2013, if your out-of-pocket spending and your insurance company's spending combined exceeds $2,970 you're in the gap, or the doughnut hole, and then it ends again $6,700 and change. So, we're talking about people who have serious, serious medical issues and lots and lots of drug needs. And the Affordable Care Act over time is shrinking that down. This year, there'll be a total discount on brand-name drugs in the gap of 52.5%. There's also an increase on generic discounts in the gap from 14% to 21% this year.

Benz: Mark obviously a lot of moving parts here with Medicare Part D. Thank you for sharing your insights. It sounds like your bottom line is do your homework.

Miller: Do the homework; it will pay off.

Benz: Okay, thank you Mark for joining us.

Miller: Always good to be here.

Benz: Thanks for watching. I'm Christine Benz, for