Here’s how to find the Medicare Part D drug plan right for you

Editor’s Note: Journalist Philip Moeller, who writes widely on aging and retirement, is here to provide the answers you need in “Ask Phil.” Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.

The annual Medicare open enrollment period is underway, having begun on Oct. 15 and extending through Dec. 7. During this period, you can shop for new Medicare policies and even switch from Original Medicare (Parts A and B) to a Medicare Advantage plan or vice versa. Most people don’t change plans, despite studies that repeatedly find they could save money and improve their coverage by doing so. Doing nothing here means you actually are doing something — automatically re-enrolling in your current plan.

For 2017 plans, active shopping may yield the greatest benefits in Medicare Part D prescription drug plans. Every day seems to bring another horror story of some pharmaceutical company cynically jacking up prices, not because of underlying business conditions, but simply because they can. Medicare officials, who are legally barred from negotiating drug prices, can do little here but continue approving claims for what often are outrageously overpriced drugs.

Part D premiums will be 9 percent higher in 2017 than in 2016, the Kaiser Family Foundation reported, and will average more than $42 a month. This is on top of the 13 percent jump in average premiums this year. These figures are for stand-alone Part D plans, which are the choice of about 60 percent of roughly 41 million Part D enrollees. The other 40 percent have Part D plans as part of their Medicare Advantage plans. I’ll be covering those plans in a couple of weeks.

(Geek alert: Kaiser’s averages and those in other Part D analyses are weighted to reflect the numbers of enrollees in different plans. So a plan with 2 million people has double the weight as one with 1 million participants.)

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There also will be fewer plans than in past years, continuing a consolidation trend that I think is healthy. There simply have been too many plans for consumers to feel at all capable of making informed decisions. CMS is encouraging plans to consolidate or even leave the market and is trying to focus attention on quality plans that receive the agency’s highest star ratings.

Even with fewer plans, most consumers will continue to have plenty of plans to choose from.  While there are lots of plans, there are not lots of insurers. Kaiser says four insurers control 80 percent of this market: Humana and United Healthcare, 24 percent each; Aetna, 22 percent; and WellCare, 10 percent.

Many Part D beneficiaries qualify for low-income subsidy benchmark plans that charge zero monthly premiums. The numbers of such plans offered by insurers is also decreasing. This means that millions of Plan D enrollees will need to find new plans for 2017.

There are great variations within this $42 average premium, so it’s essential to look at actual premiums for plans available in the ZIP code where you live. Beyond premiums, of course, you will also need to understand other key costs in Part D plans.

Rising prices have caused Medicare to raise the maximum allowable deductible for Part D plans to $400 from $360 this year (and $320 last year). This is the amount of money you must pay before you get any insurance coverage at all. In past years, lots of plans charged annual deductibles that were lower than the allowed maximum. Fewer and fewer are doing so now.

Once you have paid your drug plan’s annual deductible, Part D rules will cover you until you and your plan have spent $3,700 on covered drugs in 2017. Then, a so-called coverage gap kicks in and strips you of all insurance until total out-of-pocket spending hits $4,950. While in the gap, also known as the donut hole, you will pay 40 percent of the cost of brand-name drugs and 51 percent of the cost of generic drugs. However, 95 percent of the costs of brand name drugs will apply to the total spending in determining when you reach the end of the gap. For generics, it’s only the 51 percent of the cost that you paid.

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Under terms of the Affordable Care Act, the donut hole will disappear by the year 2020, at which time your copay for all drugs — branded and generics — will never be more than 25 percent. However, don’t assume this means you will be paying 25 percent as your share for each and every drug you take. This figure is what’s called, in Medicare-speak, an actuarial average. Some plans may charge you 40 or even 50 percent of the cost of a drug. However, they must also provide a commensurate offering of drugs with little or no co-pays. They can do this so long as their actuarial average is about 25 percent.

When total costs have reached $4,950, you will enter the catastrophic phase of plan coverage and will pay only a few dollars for each prescription or 5 percent of the cost, whichever is greater.

How to shop for a Part D plan

As I said in an earlier column, you should already have received annual documents from your Medicare drug insurer explaining any important changes in your plan for 2017. Here’s what to look for:

How will your overall costs change next year?

Go online to Medicare’s Plan Finder, put in your ZIP code and see what drug plans are offered where you live. Many of these plans will be included in Medicare Advantage plans. For now, just look at the drug part of those Medicare Advantage plans.

READ MORE: Get ready for big changes in Medicare drug pricing

You can get a rough idea of comparative plan costs for next year by looking at Plan Finder summaries for each drug plan. However, these summaries do not reflect your specific prescription drug needs and costs. Enter your drugs in the Plan Finder formulary section. This will take a little time, and most likely you will need to round up your prescription bottles and refer to them. The good news is that once you have completed your personal formulary, you don’t need to do it again. It will be stored at Plan Finder and accessible via a password, allowing you to easily compare different plans.

Doing this detailed comparison should give you a good idea of your annual out-of-pocket costs for different plans. This is the number you need to know to really compare plans. Just looking at monthly premiums is not enough and could lead you to make the wrong decision.

Are all your prescription drugs still included in your plan formulary (the list of prescription medicines covered by the plan)?

It’s essential to find out if your drugs are still in your current plan’s formulary in 2017. Insurers and pharmacy benefit managers are permitted to negotiate with drug companies on prices, so a drug may not have the same cost to you in different plans. Another way to combat high prices is to simply drop an expensive drug. This is also more likely to happen in 2017 plans. Medicare rules require plans to offer therapeutically equivalent drugs in key categories, so plans may argue that they can drop your drug and move you to a cheaper equivalent. Your prescribing physician has a strong voice here, so make sure your doctors accept any such changes. If not, you may be able to continue to get your preferred medication.

If you take any expensive medications, how will they be treated?

This information should be included in plan formularies as well. Look to see whether the plan is charging you significantly more for these drugs in 2017 than 2016 — either through direct increases or by moving the drug from one plan pricing group, or tier, into a more expensive one. Most plans have five tiers — preferred and other generics, preferred and other brand drugs and specialty medications (aka the ones that break your bank if not your financial back).

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Even if you see an out-of-pocket total for a drug plan, this is probably not your worst-case financial hit. Under Part D rules, as explained above, you are still on the hook for up to 5 percent of the cost of a drug in the so-called catastrophic section of plan coverage rules. With some drugs costing $100,000 a year or even more, 5 percent can still be a lot of money.

Can you still get your prescriptions filled at your local pharmacy, and at what price?

Nearly all Part D plans now have preferred pharmacy networks. Filling your prescriptions with your plan’s preferred pharmacy provider will save you money, especially on mail-order prescriptions. Even if you can fill a prescription at a non-preferred pharmacy, you may end up paying a higher price. While the plans do publish enormous pharmacy directories, the easiest thing for you to do is call your preferred pharmacy and make sure it is still in the preferred network of your current plan for whichever plans you might be considering switching to during open enrollment.

Are your prescriptions written by a Medicare-enrolled provider?

A new Medicare rule took effect this year that denies Part D coverage for prescriptions that are not written by a provider who is enrolled in Medicare (most are) or has a formal exception from the agency. While this is not likely to trip you up with a physician’s prescription, dentists and other professionals can write prescriptions, and they also need to be enrolled. This is a preventable surprise you don’t want to get!

READ MORE: Lower drug prices: Does any candidate have an Rx?

Is your income low enough to qualify for Medicare’s Extra Help program?

Millions of Medicare beneficiaries receive financial assistance from Medicare to pay for their Part D drugs and even their insurance premiums. The Extra Help program can be complicated, so I recommend you get free help by calling a counselor in your state with the State Health Insurance Assistance Program.

Finally, here’s a look at 2017 premium changes in the nation’s most popular stand-alone prescription drug programs (PDP), courtesy of Kaiser. These 10 plans enroll more than 80 percent of all Medicare buyers of stand-alone plans:

 Name 2016 Enrollment 2016 Average Premium Monthly 2017 Average Premium Monthly Percent Change
SilverScript Choice [CVS Health] 4.16 million $22.78 $29.12 28%
AARP MedicareRx Preferred [UnitedHealthcare] 3.14 million $60.79 $71.66 18%
Humana Walmart Rx Plan 1.98 million $18.40 $16.81 -9%
Humana Preferred Rx Plan 1.81 million $28.36 $27.32 -4%
AARP MedicareRx Saver Plus [UnitedHealthcare] 1.23 million $33.93 $37.34 10%
Aetna Medicare Rx Saver 1.07 million $25.89 $31.35 21%
Humana Enhanced 0.98 million $66.28 $64.23 -3%
WellCare Classic 0.94 million $31.71 $28.96 -9%
First Health Part D Value Plus [Aetna] 0.75 million $33.85 $39.27 16%
*Cigna-HealthSpring Rx Secure 0.67 million $35.95 $27.86 -22%

*Cigna is banned from selling Part D and Medicare Advantage policies to new customers in 2017 because of Medicare rules violations. Existing customers can renew their Cigna policies.

Lastly, remember that these are averages and that the premiums offered by these plans where you live may differ a lot.

READ MORE: Is there any relief for astronomical drug costs?

Kaiser also has a very useful table in a recent report showing how much money major insurers charge enrollees for drugs in the five tiers of the their plans. You will find it on page 10.

I’ll be shifting to other aspects of open enrollment next week, as well as getting back to answering your questions. Send your questions to me here.