That sound you hear in the background is a ticking clock – because the open enrollment deadline is just days away. Medicare open enrollment is winding down to its final date on December 7th, and there’s still time to decide whether a change of medical coverage is in order, to take effect January 1. But you need to act fast.
Today we’re addressing this article to those whose parents are on Medicare, especially parents who are dealing with financial strain caused by rising costs of prescription drugs. If you’re an adult son or daughter under age 65, you may have thought open enrollment doesn’t affect you. But the fact is, your mom and dad’s money problems might start impacting your own finances before you know it. Helping them save money benefits you as well as the folks.
We came across this article in a back issue of the Seattle Times. In the article, originally published in 2021, financial writer Carla Fried gives readers a sort of primer on Medicare Part D, and explains how adult kids can be the ones to step in right now during the waning days of open enrollment to help ensure that the parents have the drug plan that’s right for them. The key is not to let your folks get complacent. If they fail to act, the wrong plan could continue costing your parents a lot of money they could be saving.
At Open Enrollment Deadline, The Right Part D Plan Can Save Hundreds
“Between now and December 7th,” Fried writes, “every adult child with a parent enrolled in Medicare has a chance to help them save hundreds, if not thousands, of dollars on what they spend out of pocket for prescription drugs.” The key is to better understand the intricacies of what’s called Medicare Part D.
Fried cites this recently-updated article from the Kaiser Family Foundation that explains the Part D basics. It’s a huge program: of the 62 million enrolled in Medicare, says Kaiser, 48 million have Part D prescription drug coverage. But choosing the right plan requires care.
“While Medicare Part D provides valuable insurance coverage for prescription drugs,” says Fried, “enrollees can still face stiff copays and coinsurance costs, depending on their prescription meds.”
Open Enrollment Deadline: Retirees Hit Hard by High Drug Costs
In her Times article, Carla Fried warns that drug costs are often uncapped. “There’s no annual out-of-pocket max for prescription drug costs under Part D,” she says. “Even after reaching the ‘catastrophic’ level of spending ($7,400 in 2023) an enrollee will continue to be responsible for 5 percent of their medication costs.” Those percentages can mount up rapidly and ruin a retiree’s budget. (Note that the 5 percent coinsurance burden is being eliminated for 2024.)
Fried quotes a recent analysis by the Kaiser Family Foundation which estimates that, during 2019, as many as 1.5 million Medicare enrollees faced out-of-pocket drug costs so high that they reached the catastrophic level. By contrast, just a decade earlier back in 2009, fewer than 400,000 enrollees reached the catastrophic spending stage during that year. Clearly, higher drug costs are putting more beneficiaries at risk.
Open Enrollment Deadline Means Now is the Time to Switch to a Better Plan
As Fried explains, and as Rajiv often points out, people enrolled in original Medicare must purchase a separate Part D insurance plan from a private insurer. Those on Medicare Advantage plans offered by private insurers have Part D typically rolled into their coverage. Open enrollment is the annual window when beneficiaries can switch plans.
Yet as we’ve pointed out several times here at the Blog, seven out of ten beneficiaries do nothing during open enrollment, risking spiraling costs. “A plan that worked great when they enrolled five or 10 years ago and took one generic drug might not be the best option now if they have more meds,” Fried writes. “Moreover, the private insurance companies are allowed to change what they charge for a given drug. A drug an enrollee has been taking for years and paying little or nothing in a copay can suddenly cost more, because the plan changed how it reimburses for it.”
Fried says that insurance agents who deal with Part D plans have story after story of clients “who had stuck with a plan out of convenience (or inertia), when there was a better plan they could have enrolled in that saved them $2,000 or more a year because it provided better coverage of their specific drugs.” All it takes is some initiative and due diligence.
Help Parents Shop Online for 2024 Medicare Part D Plans
It’s actually not hard to find the best drug plan for a Medicare enrollee, says Fried in the Seattle Times article. The process starts by vising the official Medicare website at medicare.gov. You’ll find a free online tool where you plug in a ZIP code and all your prescription drugs. The search tool provides a rundown of plans available and the projected cost. If your parents aren’t tech savvy, your help with the online help might prove invaluable.
“You can also get help from an independent insurance agent who specializes in Medicare,” Fried advises. “Or contact your State Health Insurance Assistance Program to find counselors who can help you sort through options.” Visit the SHIP website to find the office nearest you or your parents.
Don’t be Swayed by the Lowest Medicare Part D Premiums
If your folks are enrolled in traditional Medicare, they’ll need a Part D plan. But the plan with the lowest upfront cost is not necessarily the best deal. “It’s human nature to be focused on plans with low premium costs,” Fried writes. “But for someone with just a few meds, that can end up costing them more than a higher premium plan. The key is to understand the copay or coinsurance that will be charged each time the prescription is filled.”
Consider two Top of Form
Bottom of Form
Top of Form
Bottom of Form
Medicare Part D plans, one with a $50 monthly premium and one with a $10 premium. If the higher-priced plan charges no copay for your parent’s two prescriptions, they’ll end up paying less than they would with the “cheaper” plan that might require a $25 copay. Careful shopping is in order. And as Fried reminds readers, “if you have two parents enrolled in Medicare, make sure you shop each one separately. Their individual medication needs could mean that different Part D plans are best.”
Medicare Part D is Included with Medicare Advantage Plans
Parents on increasingly-popular Medicare Advantage plans may have a trickier time comparing drug coverage costs. “For a parent enrolled in a Medicare Advantage plan, there is no separate Part D plan,” Fried explains. “The Part D coverage is embedded in the overall Medicare Advantage plan. That makes shopping and switching more complicated, as you must switch to an entirely new plan.”
Start by asking your parents how much they’re spending for out-of-pocket prescription drug costs. “If it’s a significant amount,” says Fried, “you can use the same tool at Medicare.gov to shop for a Medicare Advantage plan that is a better fit (less costly) for their specific medications.” But the evaluation doesn’t stop there.
“The challenge with Medicare Advantage plans is if you find one that will be a better deal for prescription drugs, you must then take a deep dive into whether that plan also gives your parent access to the doctors and facilities they use,” Fried writes, “and whether the copay/coinsurance for medical care and hospitalization is not more than their current plan.”
Remember, if you ignore open enrollment for your parents, they may face a higher financial burden in 2024, one that will eventually become a problem for you. Because you love your folks and want them to be financially stable, why not step in during these final weeks of open enrollment and help them make the right Part D choice?
Breaking News: Rajiv’s New Book is Here!
We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public. As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.
You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.
Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.
Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.
Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!
(originally reported at www.seattletimes.com)