I actually read the House bill on healthcare reform that was announced on Thursday by Nancy Pelosi – well, I read the parts dealing with Medicare Advantage and Part D. You pretty much need a translator to understand the odd language that refers to previous bills and paragraphs and all sorts of mumbo jumbo, but I did understand a few points that will be well-received by seniors.

The bill directs certain actions to be taken as early as 2010 which will affect many seniors and Medicare beneficiaries with high drug costs:

The Part D initial coverage limit would be raised by $500 for 2010. The current level at which people with high drug costs will fall into the donut hole in 2010 is $2,830. This would be raised to $3,330, allowing some seniors to stay out of the donut hole a bit longer. The initial coverage limit would be raised each year until there is no donut hole in 2019.

The bill also requires pharmaceutical companies to agree, by December 31st of this year, to discount the cost of their drugs by 50% for Medicare beneficiaries who find themselves in the donut hole. It looks like this change will also take effect for 2010. If pharmaceutical companies do not agree to provide this discount, they would not be allowed to sell their drugs through Part D prescription plans.

The bill also mandates the elimination of the Open Enrollment Period from January 1st to March 31st, when people can switch Medicare Advantage plans. This would limit the period for switching Medicare Advantage plans to the period of November through mid-December each year. Currently people can switch Medicare Advantage plans between November 15th and March 31st. The change will not take place until 2011, so seniors will be able to change Medicare Advantage plans between January and March of 2010. 

This change will make the Annual Election Period in the fall very chaotic – especially if cutbacks to Medicare Advantage plans result in major changes to plans next fall.  Ten million seniors will have 45 days to figure out how to change their Medicare Advantage coverage and what the best plan might be – or if they should (and could) go back to Medicare.  Next fall is going to be VERY interesting and VERY chaotic.

All of this depends, of course, on the healthcare legislation being voted on…and being passed by both the House and Senate.

If you watch much television, you’ve probably seen the advertisements for AARP Medicare insurance products.   Ads for the AARP Medicare Supplement must be on CNN 50 times per day. And I’ve recently noticed an ad for the AARP Medicare Complete Advantage plan is being aired just in time for the Medicare annual enrollment period (November 15 to December 31). 

Here is an example of how effective and how confusing advertising can be for seniors.

Elaine is a friend of mine in Rhode Island who is 80 years old. I was visiting Elaine last summer and the topic of Medicare came up, so I asked what coverage she had.  Elaine went through her wallet and pulled out not one, but two AARP cards.  One card was for a Medicare Supplement and one was for a Medicare Advantage plan – both from AARP.

I was puzzled and so was Elaine.  Which coverage did she have? Elaine wasn’t sure herself, but she knew she had called AARP three months earlier to sign up for the Medicare Supplement policy (at a cost of $175/month). So, even though it was Saturday, I called 1-800-MEDICARE and asked the question, “What do you see in Elaine’s Medicare record that shows if she is covered by original Medicare or a Medicare Advantage plan?”

The Medicare representative said Elaine was enrolled in the AARP Medicare Complete plan, which is a Medicare Advantage plan (also known as a Medicare replacement plan). I asked if Elaine’s Medicare Supplement policy would work with Elaine’s Medicare Advantage plan. I knew the answer but wanted the Medicare Rep to tell Elaine.

The answer was that a Medicare Supplement only works when a person is on original Medicare. The Med Supp covers the gaps in Medicare. But when a person enrolls in a Medicare Advantage plan, the plan pays the medical bills, not Medicare.  Therefore, Elaine’s AARP Medicare Supplement was useless.

“Let’s call AARP.”

So, with Elaine’s Medicare coverage clarified, I called AARP to find out how Elaine got signed up for a Medicare Supplement and was paying $175/month for a useless policy. The AARP representative said all callers are asked “if they have coverage already”. When I asked if customers are required to answer more specific questions about their coverage, the AARP rep said that was not part of the phone interview script she had.

Many seniors have made the same mistake.

As Elaine recalled why she signed up for the AARP Medicare Supplement, she said she needed to cover the gaps in her Medicare Advantage plan.  These are the co-pays for doctor visits, hospital stays, tests, etc.  But Medicare Supplements only fill the gaps in Medicare coverage.  They don’t fill the gaps in Medicare Advantage plans.

 Elaine was embarrassed by her mistake, but I was able to tell her that she was not the only person to be confused by the AARP advertisements. You see, I have met other seniors in Tucson who did the same thing as Elaine.

I told Elaine to cancel the Medicare Supplement policy and to ask AARP to refund the premiums she had paid. Medicare Supplement policies can be cancelled at any time – but Medicare Advantage plans and Part D Drug plans can only be cancelled at the end of the year.

 I wonder how many seniors are in the same AARP boat?

Medicare Part D drug coverage was introduced in 2006 and  seniors were told they should sign up for this new program.  With monthly premiums around $15 per month and lots of advertising about this new Medicare benefit, most seniors and Medicare beneficiaries enrolled in a drug plan.

Three years later, monthly premiums average $35 per month and some plans have skyrocketed to $59.  If you are unhappy with your Part D plan premium you can only make a change once per year: November 15 – December 31.

If your 2010 premium will be higher than $45, you might want to consider changing plans, but this is not a simple task.

****I should point out that 40% of seniors in Tucson are enrolled in Medicare Advantage plans which  include get Part D.  People who have a Medicare Supplement, or just Medicare would buy a “stand-alone” Part D plan, and those are the people I’m addressing here.

 You can sign up for new Part D coverage or change your current Part D drug coverage between November 15 and December 31st, and your coverage would begin on January 1st, 2010. While Part D is a Medicare program, the drug plans are provided by insurance companies.

To find the right plan for yourself, you can go to www. Medicare.gov and click on “compare drug plans”. You put in your zip code and the system will give you a list of companies offering drug plans in your county. There are 46 drug plans offered in Pima County (!!??).

If you take brand name drugs you will want to use the function on the Medicare site that allows you to put in your prescriptions info. The system then tells you the best plans based on the drugs you take. You see, each company has a different “formulary” and some drugs might not be on every company formulary. As well, some brand drugs are a tier 2 on one company’s plan and a tier 3 on another company’s plan. Tier 2 drugs might have a $30 co-pay while tier 3 could be $70 – a very big difference.

The next thing you will look at is cost, and the lowest cost plans come up at the top of the list of plans offered in your county. These plans cost between $17 and $20 dollars per month, but most people don’t choose these plans because they have a deductible of $310. This means you must pay the first $310 of your prescription costs – while paying $18 per month.

Most peope who take several brand drugs will choose the higher priced plans, which run between $34 and $60. I see that Unicare has a plan with no deductible for $25/month, but you’d need to be sure all your medications are covered in their formulary.  Unicare is owned by Wellpoint, which is the largest health insurance company in the U.S.

The most popular drug plan is the AARP Preferred plan for $35.20 per month. United is the actual insurance company for the AARP plan and they have a large formulary.

So, if you think your Part D premium is too high, you do have some options – if you are willing to do some research through http://medicare.gov  .