It's Time for Medicare Open Enrollment

Falling leaves and pumpkins are a sign of autumn -- and, yes, of Medicare open enrollment, too. As the season's chore list grows, you may be tempted to stick with your current Medicare Advantage or Part D prescription-drug plan. But that plan may no longer be your best option.

Medicare open enrollment runs from October 15 to December 7 for 2015 plans. Even if you've been happy with your current plan, it's important to review alternatives. Insurers are boosting premiums and other out-of-pocket costs. They're also adding expensive drug-pricing tiers, charging extra if you don't go to approved pharmacies, imposing new restrictions on drugs and dropping doctors from plans.

As a result, your current plan's coverage may change significantly next year. And it definitely makes sense to check out other options if you've been prescribed new drugs, your health has changed and your favorite doctors have left your Advantage plan. "People tend to pick a plan and stick with it," says Tricia Neuman, senior vice-president of the Kaiser Family Foundation. "But if their needs have changed and they go through the process of comparing plans, they might find that they could achieve significant savings by switching plans."

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To find a new Part D or Advantage plan, go to the Medicare Plan Finder (www.medicare.gov/find-a-plan) or contact your local State Health Insurance Assistance Program (find your local SHIP at www.shiptalk.org or call 800-633-4227). A SHIP adviser will run through the best options either by phone or in person. Plans will begin offering information on the Plan Finder starting October 1.

Find the Best Prescription-Drug Plan

For seniors who take many expensive medications, here's the good news about Part D: The "doughnut hole" continues to shrink. Those who enter the coverage gap in 2015 will get a 55% discount on brand-name drugs and a 35% federal subsidy for generic drugs.

The doughnut hole works like this: For 2015, after you pay a $320 deductible, the plan provides coverage until your drug expenses reach $2,960 (including both your share and the insurer's share of the costs). Then the doughnut hole begins, and you pick up 45% of the cost of brand-name drugs and 65% of the cost of generic drugs. When your out-of-pocket costs reach $4,700, the government picks up most of the tab.

Average Part D premiums are rising by just $1 a month in 2015, to $32 a month. But those stable premiums could mask changes within plans that could boost your costs. Here's what to watch out for.

Beware changing formularies. Insurers have been changing their formularies -- the list of drugs that are covered -- and adding more pricing tiers. Such moves can increase your out-of-pocket costs. "You can't assume that just because the drug was covered last year that it's on the formulary again this year," says Paula Muschler, health care operations manager for Allsup Services, a company that helps people pick Medicare plans.

And Muschler says that a drug could cost "a lot more" because the Part D plan is placing it on a higher-cost pricing tier. Most plans have five pricing tiers, generally with preferred and nonpreferred generics, preferred and nonpreferred brand-name drugs, and specialty drugs. Some insurers that previously charged the same co-payments for all brand-name drugs, for instance, have started charging more for certain brand-name medications by adding a nonpreferred tier.

Cost sharing for brand-name drugs has increased by about 50% since 2006. For drugs at the highest tier, which includes specialty drugs, insurers are charging patients from 25% to 50% of the full cost, potentially adding thousands of dollars to a beneficiary's out-of-pocket tab for medications.

Buy at preferred pharmacies. The number of plans with preferred pharmacies jumped to 72% from 7% over the past three years. While an insurer will pay a portion of the costs of drugs bought from pharmacies in its network, it pays a greater share at preferred pharmacies. It's not enough to go to a network pharmacy. "You need to go to a preferred network pharmacy to get the lower cost sharing," says Elaine Wong Eakin, executive director of California Health Advocates. (An insurer generally won't cover drugs purchased from out-of-network pharmacies.)

For example, the Humana Walmart Rx plan currently charges a co-payment of just $1 for Tier 1 preferred generics and $4 for Tier 2 nonpreferred generics -- as long as the medications are bought at Walmart or Sam's Club, which are preferred pharmacies. There's a $0 co-pay through the RightSource mail-order pharmacy. But you are charged a $10 co-pay for Tier 1 and a $33 co-pay for Tier 2 drugs at nonpreferred pharmacies in the plan's network. You pay 39% of the cost for Tier 4 brand-name drugs at the preferred pharmacies, but 50% at nonpreferred network pharmacies.

Overcome obstacles. Even if your drug is on the formulary, you may need to clear some hurdles before an insurer will cover it. For example, some insurers use "step therapy" for some expensive drugs -- requiring you to try a lower-cost medication first before they will cover your drug.

Or they may require "prior authorization," asking for your doctor to fill out a detailed form explaining why you need that medication. And insurers are imposing limits on the number of dosages.

The first step in determining whether to stick with your current plan, or to switch, is to review your "annual notice of change," which explains any changes in coverage and costs for 2015. Notices are due at beneficiaries' homes by September 30.

Before you change coverage, ask your doctor if you can switch any of your brand-name medications to generics. The plan with the best deals for generics may be different from the one that offers the best rates for brand-name drugs. With the Plan Finder, you plug in your zip code and then your drugs and dosages. The tool then pulls up the plans in your area, including details on premiums, deductibles and co-payments, and whether all of your drugs are on the formulary.

You can find out how much you can expect to pay out of pocket under each plan. Focus on that number rather than on the premium cost. The Plan Finder also notes the plans that impose restrictions such as preauthorization and step therapy.

The Plan Finder lets you choose local pharmacies, which can help if you have an established relationship with the pharmacist. However, compare coverage for several pharmacies -- the tool shows your expected out-of-pocket costs for all pharmacies you choose. "If you're willing to switch from your pharmacy to another one that may be across the street, there may be huge savings," Muschler says. You could also save money by switching to a mail-order pharmacy for your regular prescriptions.

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It's important to enroll in a Part D plan, even if you use few drugs now. You never know if you will need expensive coverage several months into the year. You will have to pay a lifetime penalty if you decide to enroll later unless you have "creditable coverage" from an employer, retiree or other approved plan.

Barbara Evanhoe of Williamsburg, Va., turned 65 in March and signed up for traditional Medicare and a private Medigap supplemental insurance policy. Medigap doesn't cover prescription drugs, so she also searched for a Part D policy.

Because she doesn't take any medications now, Evanhoe looked for the lowest premiums. "I signed up for the cheapest plan I could because I heard that you are penalized if you wait until later to sign up," she says. She's paying less than $20 per month for coverage now and plans to look for a low-cost policy for 2015. But in 2015 she'll take a look at co-insurance rates and pharmacies, just in case she ends up taking medications.

Assess Medicare Advantage Plans

Medicare Advantage plans are private insurance plans that provide both medical and drug coverage. Some do not charge a monthly premium beyond the monthly cost of Medicare Part B, which covers outpatient care. (Medicare Part A, which pays for inpatient care, is generally free.) The standard premium for Part B is $104.90 a month in 2014. Monthly premiums for Advantage have averaged $35 for the past several years.

Unlike traditional Medicare, Advantage plans provide medical care through networks of doctors and hospitals. Recently these plans have been shrinking their networks. Some plans dropped doctors in the middle of the year, forcing many policyholders to switch physicians (read Health Plans Shrink Choice of Providers).

If this happened to you, this is the time to reassess your options. "Narrowing networks can be very tumultuous for people," says Casey Schwarz, policy and client service counsel for the Medicare Rights Center, a consumer group. The upside: You'll likely incur lower costs with a narrow network plan.

If you have a Medicare PPO, you'll pay a lot more to see out-of-network doctors -- perhaps 20% for in-network doctors versus 40% for out-of-network physicians. And you may face a higher out-of-pocket maximum if you seek out-of-network care -- perhaps $6,700 in-network compared with $10,000 for out-of-network. If you're enrolled in a Medicare HMO, you may not get reimbursed at all for care delivered by out-of-network providers except for in emergencies.

As with Part D, Advantage insurers must send current clients a notice by September 30 explaining any changes in coverage and costs. After typing in your zip code in the Plan Finder, look at "Medicare Health Plans." Type in your drugs and dosages and your general health condition (excellent, good or poor in the "refine your search" section), and you'll get an estimate of each plan's medical and drug out-of-pocket costs for your situation.

You can also compare estimated out-of-pocket costs based on health condition (defined as good, fair and poor) at MedicareNewsWatch.com. This site lists Senior Gold Choice awards for the value of benefits and plan design for plans in 80 cities (2015 ratings will be available after October 15).

Check that the plan covers hospitals, doctors and other providers you use. Contact the plans for up-to-date information. If you're now in a plan, ask your physician if he or she will be staying in 2015.

Weigh the importance of sticking with each doctor. If you have a chronic condition, keeping your current doctor may be a top priority. You may want to change doctors if you visit your primary care doctor just once or twice a year. If you've been diagnosed with a major medical condition but discover that the top specialists aren't included in any Advantage plan, consider switching to traditional Medicare and buying Medigap and Part D policies, Schwarz says.

Before you switch to traditional Medicare, find out whether you can qualify for a Medigap policy. In many states, you can be rejected or charged more for Medigap coverage based on your health if you don't enroll when you first sign up for Medicare Part B.

Contact your state insurance department to check your Medigap options. Go to the Web site of the National Association of Insurance Commissioners (www.naic.org) for a link to your state agency.

Look carefully at the Advantage plan's maximum out-of-pocket expenses, which is the most you have to pay for covered services during the year. Some plans provide extra coverage, such as vision and dental care.

Katherine and Don LePage of Springfield, Mass., currently pay $107 each per month for their Advantage plans with Health New England, in addition to the Part B premiums. When they looked for a plan for 2014, they had hoped to find a policy with no monthly premiums, but the lower-cost plans in their area don't cover the hospital they prefer to use, Baystate Medical Center. They also looked for a low co-payment for inpatient hospital stays, because Don, 72, had been hospitalized several times for hernias.

For 2015, they're hoping to find a policy with lower premiums that covers their hospital, and they are willing to switch surgeons and cardiologists if need be. They may search for different plans from each other. "I was going to go with the cheaper plan for myself because I am pretty healthy and never go to the hospital," says Katherine, 74. "That being said, I was afraid if I changed that would be the year I would need to go in."

Check the plan's government star ratings, which are based on customer service, complaints, member satisfaction, help managing chronic conditions, and coverage for screenings, tests and vaccines. A 5-star rating is the top, but such a plan isn't necessarily the best plan for you. Plans with 4 and 4.5 stars are good, too, and may be a better match based on your providers and typical expenses.

Also, delve a bit further into the ratings. You may care more about a plan's top rating for customer service than its lower rating for management of chronic disease, for example. Find information about the plans' ratings on the Plan Finder.