BITING INTO MEDICARE'S DONUT HOLE
willing volunteer for worthy causes. His weight is good; he does not smoke and rarely drinks alcohol.
Still, Walter has had his health problems — including heart ailments — but he takes good care of himself and generally follows his doctors’ orders. Walter’s health regime includes an array of prescription medications. He can afford these medications because he is enrolled in Medicare’s Part D prescription drug program, which also means that he has a supplemental insurance policy, purchased separately from a private insurer, which helps with the cost of prescriptions.
But a few months back, Walter (whose identity is cloaked for privacy reasons) was shocked when he went to get refills of an antidepressant and a cholesterol-reducing drug. Usually a 90-day supply of the cholesterollowering agent alone was about $100. But when Walter arrived at his pharmacy, he discovered the cost was more than 10 times that amount this time around. The reason? Walter had encountered the dreaded “donut hole” (or coverage gap) of the Medicare Part D prescription drug program. Put simply, the donut hole is the place you enter when you and your private insurance carrier have paid out a predetermined amount for prescribed drugs within a year. When that amount is reached, you then become personally responsible for the full amount of your medications.
Walter is far from destitute, but — like most of us — he has felt the sting of the worst economic downturn since the Great Depression, and he balked at the high price of his medications. Without consulting his doctor, Walter quit the antidepressant, which he was taking at an extremely high dosage, per his physician’s instructions.
There are many prescription drugs that should not be discontinued without the guidance of a physician, and Walter’s antidepressant — Prestiq — is one of them. Within days of discontinuing the medicine, he entered severe withdrawal, characterized by profuse sweating, disorientation and hallucinations. He could not work for nearly two weeks and was bed-ridden for a good portion of that time.
Walter recovered and is back to his vigorous self, but his case illustrates a powerful point about Medicare’s Part D prescription drug problem: It is at best confusing and at worst dangerously complicated. And, most of all, the donut hole is not a place you want to be.
Those who think they finally understand what the Part D program is all about should be aware that things are changing — mostly for the better, as it turns out — in 2011.
For many Americans above the age of 65, the fine line between well-being and debilitation or worse, is often walked with the aid of prescription medications. But a lack of understanding about the Part D prescription drug program or insufficient funds to deal with a journey into the donut hole can lead to withering consequences.
Inside the hole
“I’ve seen cases where people hit the donut hole and think: ‘Well, I’m not going to eat so I can afford my medications or I’m going to eat and be without my medications.’” Says Pam Fico of SHINE (Serving Health Insurance Needs of Elders), a division of the Florida Department of Elder Affairs that is affiliated with the Area Agency on Aging for Southwest Florida. “Literally, some make the choice between food and medication.”
We are nearing the end of Medicare’s annual enrollment period. This is when Medicare recipients make their choices for supplemental drug insurance coverage for 2011. The selection of a Medicare-approved plan must be made by Dec. 31.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 took effect in 2006. Part D was controversial from the get-go and was widely lampooned by detractors as an enormously expensive gift from the federal government to the drug and insurance industries, with a bit of good for Medicare enrollees thrown in on the side. Among other things, the legislation prevented the government from negotiating prices for medications with the pharmaceutical giants. As a result, critics complained that Medicare recipients pay 80 percent more for their drugs than they would if the government negotiated the prices, as it does for the Veterans Administration, for example. It is expected that Part D will lead to an additional $139 billion in profits to the drug industry by 2014. Part D likewise spawned an entirely new — and highly profitable — line of supplemental policies that could be offered by insurers. Still, there was no denying that prior to Part D’s enactment, there was no Medicare drug coverage at all.
The Part D plan this year, as in previous years, covered up to just over $2,800 in drug expenses. When that amount is reached, Medicare recipients are on the hook for 100 percent of their medications until they reach just over $4,500, when “catastrophic coverage” kicks in.
Things change next year as a result of the Affordable Care Act, which is President Obama’s controversial health care initiative that was signed into law last March. This law seeks to address the donut hole conundrum in a number of ways.
“Next year, the health care reform bill begins to phase out the donut hole,” says Stan Grigiski, a Medicare expert with the Medical Claims Service of Southwest Florida.
Out of the hole
As Mr. Grigiski points out, the donut hole remains, but, beginning next year, it starts to shrink, which is welcomed news to Medicare recipients.
In 2011, those with a Medicare prescription drug plan will pay a deductible of $310 for their drug costs. After that deductible is satisfied, recipients will make copayments for their medications (copayment amounts vary from insurer to insurer) which are coupled with payments from the insurer. Once that amount reaches $2,840 in 2011, the donut hole is engaged.
But the donut hole will not be so onerous next year. Instead of paying the full cost of their medications (as they have in the past), Medicare users will pay 50 percent of the price of name-brand drugs and 93 percent for generics. (Medicare intends to phase in additional discounts for brand names and generics down the road.) When an out-of-pocket total of $4,550 is reached, catastrophic coverage begins. At this point, the coverage gap ends, and the enrollee’s drug plan will pay most of the costs for covered medication for the rest of the year, with the person insured being responsible for a small copayment.
Additionally, the health care reform legislation affords some relief for those who incurred expenses this year while they were in the donut hole. Those who fell into the coverage gap are due $250 rebate checks from Medicare for monies spent during 2010. The rebates are tax free. Checks began going out in June and will be mailed monthly throughout the rest of the year, as enrollees enter the coverage gap.
A whole lot of confusion
Even with changes and improvements, the Part D program remains a dizzying welter of options and choices, according to Ms. Fico, who adds that many elders put off making a decision about their drug coverage until the last minute.
“Don’t do that,” she advises. “Take some time, do some research in advance.”
“It is complicated and confusing,” says Mr. Grigiski. “Before you do anything, talk to someone who is familiar (with the supplemental plans).”
Mr. Grigiski says it is generally a good idea to stick with established companies that have a track record in Part D coverage.
“Most of our Medicare clients are with bigger companies, and we don’t see major a lot of major problems,” he says.
Plans vary from state-to-state, and there are more than 30 available for Florida residents. The total number of plans offered nationwide has been reduced under new guidelines that were aimed at doing away with those that had very low enrollments or were duplicative. If your plan has been eliminated, you will automatically be assigned another unless you choose a new one yourself before December 31.
If all Part D beneficiaries remain with the plan they had in 2010, the average monthly premium nationwide would be just under $41, according to US News and World Report. Look for better options and don’t remain with your plan simply for the sake of convenience, experts say. You might find a bargain by shopping around.
Compare premiums and copayment requirements. Also, study carefully what drugs are covered by individual plans. This list of drugs is called the “formulary,” and no one should assume that their drugs are automatically covered by an insurer’s formulary — no matter how basic or commonplace that medication might be. Moreover, a plan’s formulary can change from year to year. What was covered this year may not be covered next year.
Waiting until the last minute to sign up for Part D can be costly. Enroll when you turn 65 or when you lose your job-based health coverage. If you go 63 days or more without prescription drug coverage of any kind and then decide to enroll in Part D, you will pay a penalty. The longer you wait to enroll, the stiffer the penalty.
“The reason for this (late-enrollment) fee is to keep people from waiting until they are sick to get the coverage,” says Ms. Fico. “I like to compare it to driving a car without insurance. You can go along and everything’s fine and then you have a bad accident and suddenly you need insurance. You need to get the insurance before you have that accident.”
As with most things, knowledge is key. Ms. Fico says SHINE, which charges no fee for a consultation, welcomes inquiries from anyone who wants information about Part D.
“If you are having trouble, it’s a good idea to call SHINE first and get things ironed out at the beginning,” she says. “We have counselors who can help.”
To contact SHINE, Ms. Fico suggests calling the Elder Help Line at 800-633-5337 for a referral.
“If you are computer-savvy, the Medicare website is a marvelous resource,” she says. (That website is www.medicare.gov.)
She also highly recommends calling Medicare directly at 800-633-4227. As the enrollment period draws to a close, she says Medicare’s phone lines are staffed 24/7.
“The best time to call is early in the morning or late at night or on the weekends,” she says.
Firms like Mr. Grigiski’s company — Medical Claims Service of Southwest Florida in Cape Coral — also offer counseling and advice on Medicare matters, but they charge a fee.
Ms. Fico and Mr. Grigiski both caution that scam artists abound in the area of Medicare.
“Be careful about anything you receive in the mail,” says Ms. Fico. “You might get something that looks like it comes directly from Medicare, but that doesn’t mean it really does come from Medicare.”
One con that is popular at the moment involves swindlers who are using the donut hole rebate as a way to pry personal information out of unwitting Medicare enrollees.
“There are no forms to fill out,” warns the Centers for Medicare & Medicaid Services. “Medicare will automatically send a check that’s made out to you. You don’t need to provide any personal information like your Medicare, Social Security or bank account numbers to get a rebate check. Don’t give your personal information to anyone who calls about the $250 rebate check.”
The government insists that Part D will continue to be streamlined, simplified and improved and that next year marks the beginning of the process.
We shall see, but at least the donut hole is now a tad smaller and slightly less scary. That’s a start.