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Medicare drug plans in 2012: Important tips

When you enroll in a Medicare health insurance plan, don’t forget about your future prescription needs.

You can join a Medicare drug plan when you first become eligible for Medicare, which is three months before you turn 65, the month you turn 65 and three months after. If you don't sign up for drug coverage then, you will have another opportunity during the annual election period, which  is Oct. 15 to Dec. 7 for 2012.

If you opted for Original Medicare and want drug coverage, you have to buy it separately from a private insurance company, says Cheryl Matheis, senior vice president of health strategy for AARP, a group that represents the interests of people age 50 and older.

Medicare Part DIf you have a Medicare Advantage plan (MA), it may include drug coverage. Check your plan to be sure, as some include drug coverage and some offer it as an add-on. Should your MA plan include drug coverage (MAPD) and you were to enroll in a stand-alone drug plan, you would be automatically disenrolled as the Centers for Medicare and Medicaid Services (CMS) verifies all enrollments.

Drug plan costs decline

Medicare prescription drug plans will cost most seniors about $30 a month in 2012, which is slightly less than they were in 2011, according to CMS. The more options the medical insurance drug plan offers, the more you will pay, Matheis says.

It's important that you research your options and choose a plan that meets your needs, Matheis says. "Plans vary in which specific drugs they cover. It doesn't help to choose a plan that doesn't cover the drugs you take although, of course, that could change."

Plans don't have to cover every drug for every condition, says Lucas Burton of Golden Age Providers in Largo, Fla. "There may be five different drugs that treat high cholesterol, for example, and they may only cover two or three of them."

Restrictions on pharmacies

Each drug plan decides which pharmacies its members may use. Some limit your choice of pharmacies by geographic area while others offer nationwide coverage. You want to be sure that the plan you choose fits not only the drugs that you take, but your lifestyle, too. For example, if you travel a lot, you likely need a plan that offers nationwide coverage, Burton says.

The best thing to do is to go to the Medicare Plan Finder on the Medicare website and see what drug and health insurance plans are available in your ZIP code and what drugs each covers, Matheis says.

Your co-pays, the costs for generics vs. brand-name drugs, and whether you buy the drug mail order or from your pharmacy can vary depending on the plan you choose, Burton says. You should investigate the costs for the drugs you take when deciding which Part D prescription drug plan is right for you.

Some plans have a deductible -- which could be several hundred dollars -- and some don't. Some charge a co-pay and some charge a percentage of the cost of the drug (co-insurance) whenever you fill a prescription.

Generally, the lower the co-pays and co-insurance, the higher the premiums, Matheis says. You have to decide whether you want to pay for your drug coverage upfront in higher premiums or as you go when you fill prescriptions.

Don't delay drug coverage

Many people decide not to enroll in a drug plan when they're first eligible for Medicare because they're not taking any drugs at the time. But that could turn out to be a costly mistake, Matheis and Burton agree.

"You could pay a penalty on your premium if you don't sign up for Medicare Part D coverage as soon as you are eligible," Matheis says. For every month that you don't enroll, you could pay an additional 1 percent of the average premium.

How to sign up for Medicare Part D

Once you decide on a drug plan, you can get Medicare Part D quotes online, enroll online at the Medicare website or use a licensed insurance agent.

Sometimes the best solution is turning to the younger generation for assistance, Burton adds. "If you're not Internet savvy enough to research and sign up for drug plans online on your own, ask your children or grandchildren to help you."

Part D renews automatically

Your Medicare Part D health insurance coverage will renew automatically from year to year, unless during the annual election period, you decide to change plans. As with your Medicare supplement health insurance plans, whatever changes you make to your drug coverage during the election period will not take effect until Jan. 1 of the following year.

Medicare drug plans have a coverage gap, which often is called “the donut hole.” Once you spend $2,840 on covered drugs, your coverage lapses until you reach $4,550 in out-of-pocket expenses on prescription medications. Before 2011, you had to pay 100 percent of the cost of your drugs when you reached the donut hole. This year, you pay 93 percent of the cost of generic drugs and about half the cost of most brand-name drugs.

The coverage gap will decline slowly until 2020, when it closes altogether.

More from Beth Orenstein here

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