Your guide to choosing a Medicare drug plan that’s right for you

Editor’s Note: Journalist Philip Moeller, who writes widely on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” 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 2016, active plan shopping will yield big benefits in Medicare Part D prescription drug plans. Rising drug prices are the second-biggest headline for Medicare plans next year. The biggest involves projected 50 percent increases in Medicare Part B premiums for many Medicare enrollees next year, plus a similar jump for everyone on Medicare in the annual Part B deductible. There has been lots of talk in Washington about possible fixes but no action to date.

Premiums will be 13 percent higher in 2016 than in 2015, the Kaiser Family Foundation reported, and will average more than $41 a month. However, there will be an enormous range of plan costs, with bare-bones plans costing little and others charging $100 monthly premiums. Many insurers also will be raising less visible expenses, such as annual deductibles (which can go as high as $360 in 2016) and drug coinsurance payments.

Many Part D beneficiaries qualify for low-income subsidy (LIS) or benchmark plans that charge zero monthly premiums. The numbers of such plans offered by insurers will decrease in 2016, and some LIS beneficiaries will need to choose different plans.

More than 40 million people have Part D drug coverage, either through a stand-alone plan (usually abbreviated as a PDP) or wrapped in with a Medicare Advantage plan (MA-PD). With drug prices forecast to continue rising next year, this year’s open enrollment season presents a terrific opportunity to review your drug coverage and see if there is a better plan for you.

As I said last week, you should already have received annual documents from your Medicare drug insurer explaining any important changes in your plan for 2016. This is going to take some time, but your “hourly” rate for this work could be really high — think $100 an hour in possible savings, plus greater peace of mind. I think that’s an attractive return, but it is of course your call.

Here’s what to look for:

1. How will your overall costs change next year?

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

Plans are making a big deal about holding costs in line for 2016, and you will see lots of plans with $0 premiums. If you do not take many drugs, these plans could be a good deal. But here’s a news flash: insurance companies are in business to make money. Those $0 premium plans have to make money somewhere, right? It’s often in the fine print of drug pricing — higher annual deductibles, more expensive copays and more expensive drug prices.

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’ll need to round up your prescription bottles and refer to them. The good news is that once you’ve 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.

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

The Maven got in touch with big Part D insurers and asked them to provide consumers with access to their 2016 plan formularies. After all, it’s one thing for a plan to provide this information to Medicare users who already are customers. But open enrollment is supposed to be about letting people look at the details of all plans, not just the one they already use.

Here are links to their 2016 formularies. You may need to find a specific plan in your area to access its formulary:

• Aetna
• Anthem
• Cigna
• Coventry (part of Aetna)
• Humana
• Kaiser Permanente (this link is requires you to download the formulary file)
• United HealthCare: PDP (stand-alone) plans and MA-PD plans.

3. 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 2016 than 2015 — either through direct increases or by moving the drug from one plan pricing group, or tier, into a more expensive one. Most plans have at least five tiers — preferred and other generics, preferred and other brand drugs and specialty medications (a.k.a. the ones that break your bank if not your financial back).

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 (see the “donut hole” section below), 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.

4. 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.

5. Are your prescriptions written by a Medicare-enrolled provider?

A new Medicare rule will take effect next year that will deny 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, there are many other professionals authorized to write prescriptions, and they also need to be enrolled. In particular, make sure you check with dentists who write prescriptions to make sure they’re enrolled. This is a preventable surprise you don’t want to get!

6. What does the coverage gap (also known as the donut hole) look like in 2016?

Once you’ve paid your drug plan’s annual deductible, Part D rules will cover you until you and your plan have spent $3,310 on covered drugs in 2016. Then, a so-called coverage gap kicks in and strips you of all insurance until total costs hit $4,850. While in the gap, or donut hole, you will pay 45 percent of the cost of brand-name drugs and 58 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 58 percent of the cost that you paid.

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.

When total costs have reached $4,850, 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.

7. 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 (SHIP).

Finally, here’s a look at the 2016 changes in the nation’s most popular stand-alone (PDP) prescription drug programs, courtesy of Avalere Health, a consulting firm. People with Original Medicare (Parts A and B) buy stand-alone plans. These 10 plans enroll more than 80 percent of all Medicare buyers of stand-alone plans:

These averages can be misleading. According to a Part D study by the Kaiser Family Foundation, there will be big swings in premium shifts among these popular plans depending on where you live. Looking at the three most popular plans, Kaiser found that the AARP Medicare RX premium increases in individual states would range from 9 to 37 percent. The swing for SilverScript will be even wider, from a 36 percent drop to a 24 percent hike. Premiums for the Humana Preferred plan will fall 18 percent in some markets while rising 29 percent in others.

Kaiser found that plans in the southern half of the nation would see the biggest premium increases, led by Arizona (24 percent), Florida (21 percent), Virginia (19 percent) and Texas (17 percent). Residents of 11 Plains and Northwest states, meanwhile, will see premium increases of only 3 to 9 percent.