What factors should I consider when choosing a Medicare health plan?

Anne Fabiny
Geriatric Medicine
Here are some factors to consider when choosing a Medicare health plan. Be aware that plan costs can change yearly:
  • Premium. Monthly premiums charged by each plan can be paid directly to the company responsible for the drug plan or deducted from a Social Security check. Some plans don't charge any premium at all.
  • Deductible. Each calendar year, coverage starts only after fulfillment of a deductible, which varied from none at all to $310.
  • Coverage. Once the deductible is met, the participant is responsible for a copayment or coinsurance amount, which varies by plan. In some plans, the copayment or coinsurance is always the same (for example, $10 per prescription or 25% of the drug's cost) and the plan pays the remainder. In other plans, common medications are placed in different tiers, each with different copayments. For example, the copayment might be $10 for drugs in Tier 1 and $60 for drugs in Tier 3.
  • Coverage gap. Many Medicare drug plans used to have a gap in their coverage for prescription drugs, sometimes referred to as a "donut hole." However, a health care reform legislation passed gradually fills that hole. Prior to reform, Medicare stopped paying after the beneficiary and the plan had spent $2,830 for prescription drugs and would only start paying again after the person's out-of-pocket spending hit $4,550. The health care reform bill provides a one-time $250 payment to people who hit the gap, and over the following 10 years, the gap will gradually disappear, so you will no longer have a period when you have to pay 100% of your drug costs.
  • Catastrophic coverage. This starts automatically when the individual has paid the out-of-pocket maximum ($4,550). Then, through the end of the calendar year, the plan pays up to 95% of the cost of the covered drugs.
  • Penalty. A premium penalty of 1% per month may apply to anyone who fails to enroll in Medicare D once eligible and chooses to enroll later. The penalty doesn't apply to anyone who currently has drug coverage through other benefits, but begins if a person loses those benefits and fails to apply for Medicare Part D promptly. The penalty may also be waived for low-income people.

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.