Deciphering Part D

Senior citizen puzzles over Medicare changes

TEXT OF INTERVIEW

Tess Vigeland: We talked earlier in the show about the looming deadline if you want to take advantage of certain energy-related tax credits. Well, if you're a senior citizen or permanently disabled, there's a far more important deadline to worry about.

December 31 marks the end of open enrollment for Medicare Part D and if you miss this one, you'll have a lot more than lumps of coal to worry about, even if you've been good all year.

To help us figure it out, we turn to Kimberly Lankford, she's with Kiplinger's Magazine.


Tess Vigeland: Kimberly, welcome back to the show.

Kimberly Lankford: Thank you very much.

Vigeland: Let's start with the real basics. Review for us: what is Medicare Part D and what's happening with it?

Lankford: Medicare Part D is the part of Medicare that now covers prescription drugs. For many, many years, people did not have prescription drug coverage through Medicare. So now, people have many, many choices and they need to make their decision for 2008 right now. They have until December 31 to decide which plan they'll have for the whole year of 2008.

Vigeland: What are the biggest considerations this year as opposed to any previous years? What's changed?

Lankford: Well, the most interesting thing is the most popular policies have increased their prices substantially, especially Humana and United Healthcare, the ones that most of the people are in. Some of the policies' prices have even doubled. So even though the average prices have only increased by about 14 percent, if you're in one of the more popular plans, it's really important to look at what your costs will be next year because you may want to change to a different policy. You may be able to save a lot of money by shopping around again.

Vigeland: I remember when Part D first came out that there was a lot of confusion on the parts of seniors about how to even go about figuring out what plan is best for them. Have those details been kind of ironed out for them? Is it any easier these days?

Lankford: It is still very complicated. That's one of the pros and cons to choice. The medicare.gov Web site has a wonderful tool called the Prescription Drug Plan Finder, so if you are a person who uses the Internet, then you can go on there, type in your specific prescriptions and the dosages and you will see what you're out-of-pocket cost, the premiums plus copayments and deductibles, will be by the end of the year so you can really compare those plans. But, it's interesting, for some people, the higher premium policies may actually be a better deal for them by the end of the year just because of the way they cover drugs throughout the year.

Vigeland: How does that work?

Lankford: Well, it's interesting. Some of the higher-priced policies actually end up filling in the deduct able and end up filling in part of that dreaded doughnut hole, that part in the middle where you have to pay a few thousand dollars out of your own pocket before you get the big coverage and so you really need to look at your specific drugs and see what the copayments are for them, how much that plan is charging you for that, in order to figure out what the total prices are going to be for you.

Vigeland: So the dreaded doughnut hole is still there?

Lankford: It is still there and it is interesting because the people who don't have many prescription drugs don't need to worry about it as much as they do. There are some people who end up paying pretty high premiums in order to fill that doughnut hole, but you really need to look at what your drug costs are throughout the year. I mean, you have to have drug bills of more than $2,510 in order to reach that doughnut hole in 2008. For some people, they won't get there, but others with very expensive drugs, that could be a huge issue.

Vigeland: OK, and again, the deadline is December 31?

Lankford: Yes, it is. People need to act soon.

Vigeland: Kimberly Lankford is with Kiplinger's Personal Finance Magazine and she's got a great article on Medicare Part D in the December issue. Thanks for coming in.

Lankford: Thank you very much for having me.

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