Seniors have until the end of the year to switch Medicare drug plans to get a better deal. But many will pass up the chance to save hundreds of dollars a year in prescription costs.
The reason: With dozens of drug plans on the market, many seniors get overwhelmed at the prospect of changing plans, even if a different one would better suit their needs and lower their costs. But with the average premium for a Medicare drug plan increasing 11 percent in 2010, consumer advocates say seniors have even more reason to check out the options and consider their costs.
Only an average of 7 percent of the 17 million seniors on Medicare drug plans switch plans each year, according to the Centers for Medicare and Medicaid Services, the federal agency that runs Medicare. Experts on Medicare say this suggests that millions of beneficiaries could be paying more than they should for their drug coverage.
The Medicare drug benefit was created by Congress in 2003 to help those seniors - one in four at the time - who didn't have prescription-drug coverage. Rather than giving all seniors the same coverage, Congress decided to have private companies offer the benefit through competing plans. As a result, insurers offer different levels of coverage for different drugs. Some experts say the competition has held down costs, but some seniors - and their children - say the wide array of plans can be daunting, making it unnerving or too perplexing to change.
The open season for selecting or changing plans began Nov. 15 and ends Dec. 31. (For details, go to www.cms.hhs.gov/center/open
enrollment.asp.) The number of Medicare drug plans varies from state to state, from a low of 39 in Alaska to 53 in Pennsylvania and West Virginia. Medicare's easy-to-use "plan finder" allows seniors to plug in their medications and see which plan would have the lowest overall annual costs. But many seniors are uncomfortable going online or unable to use computers to sort through the different policies. Last year, only 688,000 seniors, or 2.5 percent, went online to enroll in Medicare drug or health plans. The rest did it the old-fashioned way: by telephone or letter.
The price for such inaction will get higher next year as the average monthly premium for a Medicare drug plan rises to $38.85 a month, according to figures from the the Kaiser Family Foundation based on data from the Centers for Medicare and Medicaid Services. That's 50 percent more than seniors paid in 2006.
The average premium for the most popular drug plan - UnitedHealthcare's AARP Medicare RX Preferred, which has nearly 3 million customers - has jumped 50 percent to $39.39 in 2010 from $26.31 in 2006, according to the Kaiser Family Foundation.
In figuring out their prospective drug costs, seniors need to look beyond premiums and also consider deductibles and co-payments, which can vary by drug. In addition, they also have to consider whether they want to pay more in premiums to have some coverage in the Medicare program's coverage gap, commonly called the "doughnut hole." In 2010, this lapse in coverage will begin after an enrollee incurs $2,830 in total drug spending and end when an enrollee has spent a total of $4,550 out of pocket. After that, beneficiaries are responsible for just 5 percent of their drug costs.
The Democrats' health-care overhaul bills in the House and the Senate could have a major impact on the Medicare prescription-drug program. The House bill would close the gap in coverage by 2019, although the Senate bill wouldn't. Under both bills, starting in 2010, beneficiaries would be able to buy brand-name drugs for half price once they're in the coverage gap.