TEXT OF INTERVIEW
Tess Vigeland: Today we start with something that happens year in and year out, isn't really related to the meltdown, but is still vitally important to a huge swath of the population.
Seniors have until December 31st to make decisions about Medicare Part D and which plans they want to use, so here with an explainer is Jack Hoadley of Georgetown's Health Policy Institute.
Jack, I assume if your prescriptions have changed, that would be one reason to review your plan?
Jack Hoadley: Absolutely. People's needs do change and while sometimes people's prescriptions people use may stay the same for a period of time, certainly if they're in the same plan they first enrolled in three years ago, they may have new prescriptions since then and what we know is the prescriptions you use tend to be very influential in determining which plan is the best plan for you. It's not just what the monthly premium is, but it's the cost of those individual prescriptions that you take.
Vigeland: So how do you go about figuring out what plan is best for you? I mean, in some states seniors are facing 30, 40, 50 different plans. Is this just a matter of doing the math?
Hoadley: It really is in the end a matter of doing the math and the question is how hard it is to do that math. Medicare.gov has a very good plan finder tool. Of course, not everybody is savvy with using the Internet and even using that program, as good as it is, and so for many people it may be getting the help of a family member, getting the help of a counselor of some sort, to help them think through those alternatives.
Vigeland: Are there any changes to Medicare Part D itself in 2009?
Hoadley: There really is not for the most part. The benefit does make certain changes each year. So in 2009, the standard benefit has a deductible of $295. In other words, the first $295 of your costs, you would pay out of pocket. And then you get coverage up until you've incurred a total of $2,700 in drug costs -- that's both your costs and the part that the plan pays -- and on average, you're paying about 25 percent of the cost of the drugs in that what we call initial coverage period. After that first $2,700 in total drug costs, that's when you enter the coverage gap or the doughnut hole, and that lasts for about $3,450. You're paying out of pocket for the next almost $3,500 of drugs that you incur.
Vigeland: You know, when Part D debuted, what, three years ago now, there was all kinds of confusion. Is it any better now?
Hoadley: Well, one thing that's better of course is that most people are in plans now. Three years ago, we were needing to get people just to be aware that the benefit existed. Now it's a matter of if you don't do anything, you're still in the plan that you were in last year so at least the default is that you continue to be covered. The downside of that is you may be covered in a plan that's not the best deal for you.
Vigeland: So the deadline is coming up December 31st. What happens if folks don't enroll on time?
Hoadley: If they are in a plan today and they don't do anything, they just stay in the plan they're in, and they will of course face some changes in their premiums, perhaps changes in their copays. If there is somebody who is not in a plan at all and they now think they need to be in one, obviously that's a situation that says they need to get enrolled in a plan. This is their opportunity and if they miss this opportunity, they may have to wait until next year.
Vigeland: And aren't there some financial penalties if you are late?
Hoadley: There are. If somebody who was first eligible three years ago and has still never enrolled, they're paying a penalty that's equivalent to 1 percent of the average premium for every month that they did not enroll and that's now three years, so that's a lot of money and if they don't sign up this year, that penalty will continue to accumulate for every month and every year they don't sign up.
Vigeland: Jack Hoadley is an analyst at the Health Policy Institute at Georgetown University. Thanks so much for your help today.
Hoadley: Thank you for having me.