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DOES PART "D" MAKE
SENSE FOR ME IN 2009?
Bob Fassbach, Editor
www.SeniorARK.com
Updated:
October 07, 2011
We think the answer is Yes ----and No!
If you are asking this question, you
are not alone. Millions of retired, and retiring Americans have had
to grapple with the same question during the past year. W e have read
online, and in the news, that 19 million, or 26 million, or 29
million, or over 31 million have already signed up to participate in
the Medicare Prescription Drug Program, also known as Part
D. No matter which number you believe, it is clear that a
massive group of Seniors have decided to cast their lot with the
program.
If asked, we suspect that the majority
of those millions of Seniors would not really know if it is a good
deal for them or not. Believe me---We understand! We have been told by the government that it
is. We have been told by AARP that it is. But remember, those in
the government who formed the program (with a lot of help from drug
and insurance lobbies) want to look good. They want to go back to
their constituents to receive accolades for a successful program
well-conceived and executed. If nobody signs up, the elected
officials look bad. If they can convince us that the program is the
latest greatest thing, then they will look good. So what about AARP's
aggressive support of the program? Do you know that a major portion
of the AARP revenue now comes from the sale of Part D insurance to
you? Their enthusiasm for the program must be looked at with some
suspicion, faced with a huge profit motive. The government pays
them, and other insurers, large subsidies to provide either
"stand-alone" Part D drug coverage, or total coverage through
Medicare Advantage Programs. My premium for a Medicare Advantage
policy through a private insurer might have a zero cost premium for
me, but the government pays the insurer up to $650 per month for
each and every one of us.
In mid 2006 SeniorARK published an
opinion on the program,
"Part D Fiasco".
We still hold the opinions expressed in that article. Part D needs
work. Insurance companies participating in the program are crowing
about record company profits since Part D began, and drug companies
and drugstore chains are reaping enormous benefit. Today we hear
their ads all day long. They are trying to convince us to beg our
congressman to vote against Medicare negotiating with drug companies
for better prices. They want us to believe that Medicare, the
largest channel for prescription drugs in the world, should not flex
its powerful muscle to save money for Seniors and taxpayers. They
have found the mother lode, are on a drunken binge, and don't want
anyone to question their prices or practices. For years folks have
complained that the government should be run like a nimble business.
Well my fellow Seniors, there isn't a responsible business in the
world that would not negotiate for lower prices.
As Part D exists today, what are some reasons
you might not want to sign up
for Part D?.
1. I don't use prescription drugs, or
I don't use enough to make Part D necessary.
2. I get a better deal from Canada.
3. I have enough money to pay for
prescriptions, and couldn't care less.
4. My prescriptions are already
covered in another plan.
5. Those plans limit which medicines I
can get, and may force me to use generics.
6. I have done the math, and I lose.
What are some reasons you might
want to sign up for Part D?
1. I use a lot of drugs, and it should
save me money in the "catastrophic area".
2. I don't want to buy from Canada or
some other cheaper source--it might not be safe.
3. I look at Part D as insurance, and
one never knows when a condition might develop where I may need many
more drugs than I can afford.
4. If I don't sign up now, I am
penalized by Medicare regulations, a greater percentage every year.
It is like a rolling snowball.
All of those 10 reasons, pro and con, have some
validity, and should be considered carefully when deciding whether
to participate in Medicare Part D. Perhaps the specific examples
below will help as well.
To understand the examples, one
must first understand how the basic Part D Plan works in 2009. This
is Part D for 2009 in chart form. Refer back to this chart as you
assess the examples below.
2009 Part D
|
AMOUNT & ITEM
|
WHAT YOU PAY |
WHAT MEDICARE PAYS |
|
$480 PREMIUMS (varies) |
$480 |
$0 |
|
$295 DEDUCTIBLE |
$295 |
$0 |
|
(25% / 75%) NEXT $2,405 |
$601.25 |
$1803.75 |
|
$3216.25 "DOUGHNUT HOLE"
|
$3,453.75 |
$0 |
|
TOTAL |
$4,830 |
$1,803.75 |
|
SO UNTIL $6,633.75 IS
SPENT, YOUR COST IS $4,830 ($4,535 if not counting
premiums) |
|
AFTER
THAT YOU PAY $2.40 FOR EACH GENERIC, OR $6.00 FOR EACH
BRAND NAME, OR 5% OF THE
TOTAL OF EACH PRESCRIPTION, WHICHEVER IS THE
HIGHER NUMBER. EXAMPLE: A $200 BRANDED DRUG COSTS YOU
$12.00. THIS SO-CALLED "CATASTROPHIC COVERAGE" CONTINUES
ONLY UNTIL DECEMBER 31, 2008 |
|
ON 1/1/10 IT ALL BEGINS
OVER AGAIN, WITH HIGHER PREMIUMS AND DEDUCTIBLE, AND A
LARGER DOUGHNUT HOLE.
Remember, if you have been in Part D for less than a
full year in 2008, being in for a full 12 months in 2009
may mean that the doughnut hole takes on a
greater significance for you. |
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Here are some examples of how the
program would affect your savings, or non-savings, at various
prescription drug expenditure levels.
These are the assumptions
we are using for the purpose of our examples:
-----The prescriptions you
use are brand name medications, not generic.
-----You could have saved 30% on
each prescription (a conservative number) by buying Canadian.
-----The Part D policy you purchase
follows the basic Part D guidelines.
-----Your monthly Part D premium is
$40 (actually $8 to $120 per month, based on coverage and
state)
-----We are talking about the year
2009.
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Example 1: My prescriptions
cost $1,000 per year. (
In Canada they would cost ($700 )
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $705: 176.25
My total cost: $951.25
Canadian Cost:
700.00
Pat D result is
I lose:
$251.25 |
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Example 2: My
prescriptions cost $2,000 per
year. ( In Canada they would cost $1,400 )
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $1,705.00: 426.25
My total cost: $1201.25
Canadian Cost:
1,400.00
I
gain:
$140.75 |
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Example 3: My
prescriptions cost $3,000 per
year. ( In Canada they would cost $2,100 )
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the doughnut hole---100%
of next $300: 300.00
My total cost: $1,676.25
Canadian Cost:
$2,100.00
Part D result
is I gain: $423.75 |
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Example 4: My
prescriptions cost $4,000 per
year. ( In Canada they would cost $2,800 )
My cost
under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the doughnut hole---100%
of next $1,300: 1,300.00
My total cost: $2,676.25
Canadian Cost:
2,800.00
Part D result
is I gain:
$123.75 |
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Example 5: My
prescriptions cost $5,000 per
year. ( In Canada they would cost $3,500 )
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the doughnut
hole----100% of next $2,300: 2,300.00
My total cost: $3,676.25
Canadian Cost:
3,500.00
Part D result
is I lose: $176.25 |
|
Example 6: My
prescriptions cost $6,000 per
year. ( In Canada they would cost $4,200 )
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the
doughnut hole---100% of next $3,300.00: 3,300.00
My total cost: 4,676.25
Canadian Cost:
4,200.00
Part D result
is I lose:
$476.25 |
|
Example 7: My
prescriptions cost $7,500 per
year. ( In Canada they would cost $5,250 )
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the doughnut hole---100%
of next $3,453.75: 3,453.75
I have just passed the doughnut
hole, so I pay 5% of the next 1,346.25: 67.32
My total cost: 4,897.32
Canadian Cost:
5,250.00
Part D result
is I gain:
$352.68 |
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Example 8: My
prescriptions cost $10,000 per
year. ( In Canada they would cost $7,000 )
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the doughnut hole---100%
of next $3,453.75: 3,453.75
I have just passed the doughnut
hole, so I pay 5% of the next 3,846.25: 192.32
My total cost: 5,022.32
Canadian Cost:
7,000.00
Part D result
is I gain:
$1,977.68 |
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Example 9: My
prescriptions cost $15,000 per
year. ( In Canada they would cost $10,500)
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the doughnut hole---100%
of next $3,453.75: 3,453.75
I have passed the doughnut
hole, so I pay 5% of the next 9,273.65: 443.32
My total cost: 5273.32
Canadian Cost:
10,500.00
Part D result
is I gain:
$5,226.68 |
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Example 10: My
prescriptions cost $20,000 per
year. ( In Canada they would cost $14,000)
My cost under Part D:
Annual premium: $480.00
Annual deductible: 295.00
25% of next $2,405: 601.25
This is the doughnut hole---100%
of next $3,453.75: 3,453.75
I have passed the doughnut
hole, so I pay 5% of the next 13,846.25:
692.32
My total cost: 5,522.32
Canadian Cost:
14,000.00
Part D result
is I gain:
$8,477.68 |
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