Why It Pays to Reshop Your Medicare Coverage

Christine Benz: Hi, I'm Christine Benz from Morningstar.com. Medicare open enrollment for 2018 runs from Oct. 15 through Dec. 7 of 2017. Joining me to share some shopping tips for the season is Mark Miller, he's a Morningstar contributor.

Mark, thank you so much for being here.

Mark Miller: Hi, Christine.

Benz: Mark, we always sit down and talk about open enrollment season ...

Miller: Like an annual event.

Benz: It does. And we have been doing …

Miller: So is open enrollment, so I guess that makes sense.

Benz: That's right. Let's start, though, for people who haven't been tuning in every year to see us talk about this, what are people shopping for when this open enrollment season kicks off?

Miller: People who are already in Medicare, or already enrolled in Medicare, during this enrollment period can reshop and make changes to their Part D prescription drug coverage or to their Medicare Advantage plan, which is Part C. People who have stand-alone Part D are people who are in traditional fee for service Medicare who are adding on these other layers. In Medicare Advantage, very often, the drug coverage is wrapped right into the overall plan advantages like the all-in-one managed care alternative to traditional Medicare. So you are down that path or you are down the traditional path. In either event the fall enrollment season is a time when you can re-evaluate your coverage and consider whether you want to make changes.

Benz: You often exhort people to take a look at this, reshop your coverage even if you had settled into a certain program, that you might revisit that. Why is this so important that people do that?

Miller: Because they are often--let's talk about it just from the standpoint of the stand-alone drug plans. There often are changes in premiums or in the cost-sharing arrangements, and very importantly, there can be changes to what are called the formularies, which are the rules under which a drug is provided and covered. Especially for people with more complex, perhaps expensive drug needs, you really have to keep an eye on that.

Benz: Another moving part presumably would be the retirees' own set of drugs that he or she is taking.

Miller: Right. Even these may have changed in the past year, very good point. The starting point for this is something called the annual notice of a change, which is a letter that arrives in your mailbox during September from your plan provider. It's not a personalized letter--it doesn't say, Christine, you take this drug and this is changing--but they have to list in this notice all the changes they are making, any changes to medications, cost-sharing, premiums. That can be the wake-up call, if you will, to take a look and just think, am I affected by any of this, do I need to take a look.

Benz: I want to talk about resources that I would need to bring to this job if my goal is to kind of reshop my coverage. Presumably that thing that I get in the mail is maybe the first piece of data, but what other resources do I want to rely on?

Miller: A great starting point on the Medicare website is called the Medicare plan finder, and you can go there and plug in your Social Security number, your drugs--and you really want to have the list of everything you take and very specifically ...

Benz: Dosages and all that.

Miller: Exactly. The site will then display for you a list of plans that could be a match for you, and you can start from there comparing that with your own needs. You want to take a look at the premium, but not stop there. It will show you the projected total cost of that plan for you in the year ahead considering your drugs and what rules for cost-sharing are for that plan and so on. You want to look at those things and you want to dig in to the detail on that plan and read the rules, those formulary rules for the plan you are considering.

Benz: This is run by Medicare, so presumably it's an objective resource. Do I want to be careful, are there sort of competing resources out there that might attempt to kind of swing me to purchase a certain type of coverage?

Miller: If you are just doing a Google search, Medicare plan finder, and all kinds of cats, dogs, and chickens will come up. People pitching, selling plans, brokers and the like. But if you just go to Medicare.gov and look for the link for the plan finder you should be in good shape. The article that we'll be having on Morningstar.com about fall enrollment will have a link to the plan finder in it as well.

Benz: I am bringing those tools, and I am using the Medicare site to do some searching. Any other things?

Miller: Yeah, I was going to mention that a lot of people find that it is helpful to get some expert advice. Now this comes up all the time, I get notes from readers about, hey, I or my spouse takes this expensive specialty medication, I am worried about it. I often advise them to consider one of several sources of expert advice. One is the free State Health (Insurance) Assistance Programs. Every state has one. Again the column that I am running will have a link to a page that let's you find--they are called SHIPs for short--the SHIP in your state. These are expert volunteer advisors who can sit down and help you shop for plans. That's one way to get help.

There are also these fee-based services which provide a good service, for, I would say, a reasonable fee of a few hundred dollars. Goodcare is one, Allsup is another one, again there will be links in the story. For a small fee you get some hand-holding and help in doing plan selection. If you wind up perhaps saving hundreds of dollars on a plan, that could be considered money well spent. There are a number of ways you can do it yourself for sure, but there are some complexity involved. It just depends if you are a do-it-yourselfer or would like some expert help.

Benz: How about a doctor? If I have done the due diligence and it looks like something that I am taking is really shooting up in terms of its cost and how much is covered, should I contact my doctor and see if there is workaround, maybe something else that I could take?

Miller: It can be a good idea to talk to your physician about Medicare Advantage plans, to find if that doctor is in that plan, accepting it, if they have a view of it. I would surprised, if doctors would have specific views as to a stand-alone Medicare drug plan. But one of the issues that comes up with formularies are these prior authorization rules where your doctor specifies--again let's talk about somebody who has a very specific intensive drug need and let's say a doctor has specified a particular brand drug for that--a plan formulary might come back and kick that back and say you need to try this generic first. That may not be what your doctor wants. That's one of the reasons to look at the formulary closely.

Benz: Let's discuss some trends. I know as I said we've been doing this for several years. What trends, when you look upon recent Medicare open enrollment periods, have you been observing, and what do you think people should have on their radars?

Miller: Well one thing to know is that the structure of stand-alone drug plans has been tending toward more complexity the last few years. Meaning, not just a simple straight-up, hey your co-pay is this and your co-insurance is this. There might be different tiers--for these drugs, the cost-sharing is this, and as you move up the tier structure there is a different structure. You want to pay careful attention to that. I would say that's the big thing worthy of note this year.

Another thing worth mentioning, and this has been an ongoing trend, is that the so-called donut hole, which is this gap in coverage that occurs in drug plans for people who have high spending needs, there is a gap that starts. For 2018 when the combined spending by you and your insurer reaches $3,750, the amount of reimbursement just plunges to a very small amount. It kicks back in again if you reach $5,000. Not that many Medicare enrollees have that kind of intensive drug spending. For those who do, its worth noting that's what the numbers are next year.

Under the Affordable Care Act there has been an acceleration of discounts that are available to enrollees who enter the gap. This coming year the discount on brand name drugs is going to be 65%, which is up from 60% in 2017, and on generic drugs is going to 56%, up from 49%. There has been an effort to bring down the cost that people experience inside this hole.

Benz: Mark, complicated stuff, but thank you so much for being here to discuss it with us.

Miller: My pleasure.

Benz: Thanks for watching. I'm Christine Benz from Morningstar.com.