2. Compare prescription drug plan formularies, coverage tiers and restrictions. Medicare’s annual enrollment period is under way, running October 15 through December 7, so the time is right for your client to compare prescription drug plans. For most Medicare prescription drug plans, the premium and deductible are relatively modest. In 2014, the average premium will be $31 a month and the deductible is capped at $310. What your client pays out of pocket is determined largely by how well a given plan covers the specific drugs she takes.
Medicare prescription drug plans are required to cover drugs in every therapeutic class, but they do not have to cover every drug in a class. This means that some plans may cover all drugs your client takes, and some may not. Thus, it’s important for your client to check her drug list against a plan’s formulary.
Next, she needs to look at the coverage tier to which the plan assigns each of her drugs and the corresponding copay or co-insurance amount. This can be one of the biggest drivers of cost difference between plans. For example, one of your client’s drugs could be in Tier 3 in one plan and in Tier 4 in another. This can add up to a significant cost difference of sometimes hundreds of dollars, as your client fills that prescription month after month.
Finally, your client should check to see if a plan places any restrictions on the drugs she takes. For example, a plan may require prior authorization before it will fill prescriptions for certain drugs. It may limit the quantity of a medication that it will cover each month, or it may require your client to try a less expensive drug before it will cover a more expensive one.
3. Evaluate the plan’s preferred pharmacies. Many Medicare prescription drug plans negotiate lower prices with selected pharmacies in their networks. Your clients may see significant cost savings by filling their prescription at one of these “preferred pharmacies.” In some cases, the copay is higher at a non-preferred network pharmacy than it is at one of the plan’s preferred pharmacies. Your clients also should check their plan for other cost-saving options, such as using a mail-order pharmacy or buying a 60-day or 90-day supply of a maintenance medication.
4. Do the math before buying a plan with gap coverage. For seniors who use many drugs, Medicare Part D prescription drug plans that provide coverage in the doughnut hole may seem to offer valuable added protection. But it’s important to do the math to determine whether the plan’s benefits offset a much higher monthly premium.
In 2013, about half of the plans offering gap coverage limited their benefit to generic drugs, and none of the plans provided gap coverage for all of the drugs on their formulary. It can be costly to go without adequate prescription drug coverage, but overprotection also can be costly. Before your client buys a prescription drug plan with gap coverage, she needs to make sure the added coverage will save her money.
Health-care costs are a central part of a retiree’s financial equation, and prescription drugs make up a large share of this cost for many seniors. You can offer a valuable service to your retired clients by making their prescription drug coverage a part of the ongoing part of their annual financial plan review.
Paula Muschler is operations manager of the Allsup Medicare Advisor®, a nationwide Medicare plan selection service that helps financial advisors guide their clients to the Medicare plans that best match their needs and preferences. Allsup Medicare Advisor® is an unbiased, flat-fee-based Medicare plan selection service that serves as a trusted resource for financial advisors and seniors. Allsup Medicare specialists can work with your clients one-on-one to assess their needs, research their Medicare options and help them choose cost-effective coverage that protects their health and retirement savings. Financial advisors may contact (888) 220-9678 or go to FinancialAdvisor.Allsup.com for more information.