Medicare Part D: It Pays to Shop Around

[Originally posted Oct 16, 2012]

Medicare Open Enrollment began yesterday, October 15, and continues through December 7, 2012. The enrollment period ends earlier than in previous years, so those considering making a change should not procrastinate. 

Medicare beneficiaries should pay particular attention to their choice for Part D (prescription drug) coverage. A recent study from the University of Pittsburgh shows that seniors tend to overpay for Part D coverage. The study looked at 2009 data and compared seniors' choices of plans to the least expensive that would serve their needs. The results: only 5% of Medicare beneficiaries chose the most cost-effective plan.  Thirty percent of those in the study group overspent by $300 - $500, and 20% overspent by $500 - $1000. 

Researchers chalk up the findings to over-cautiousness. Many of the subjects were determined to stay out of the doughnut hole, or to avoid all deductibles, at any cost; others paid more for features they didn't need, like generic drug coverage in the coverage gap. They also tended to choose their plan based on the monthly premium alone. Moreover, other studies reveal that seniors are reluctant to change plans and often stick with the same insurers, even when better options are available.

Politicians often tout the value of the free market, arguing that more choice results in a better deal for consumers. In the case of Medicare Part D coverage, the array of choices don't always translate into better decision-making and more savings. Perhaps there are too many choices. Plans change from year to year, a drug that may have a high co-pay on one plan may have a tiny co-pay on another. A drug that was covered by a particular plan one year may be dropped from coverage the next.  The researchers conclude that "beneficiaries need more targeted assistance from the government to help them choose plans, such as customized communications about the most cost-effective plans that would cover their medication needs."

This enrollment period, you can avoid spending money on more coverage than you need by using Medicare's online tool to enter your prescriptions and dosages and then compare plans that fit your needs. The plans are rated on a one to five star rating scale.

Attorney Joseph S. Karp is a Florida Bar Certified and Nationally Certified Elder Law Attorney focusing on Elder Law, Probate, Estate Planning, Asset Protection, Special Needs Planning and Estate Litigation. He is AV rated by Martindale Hubbell. Mr. Karp is the founder of The Karp Law Firm, a South Florida law firm with offices in Palm Beach Gardens, Boynton Beach and St. Lucie, Florida.  Mr. Karp was named a 2011 SuperLawyer by SuperLawyer Magazine and a member of the 2011 Florida Legal Elite by Florida Trend Magazine. He is admitted to practice law in New York as well as Florida. Visit Mr. Karp's Florida Elder Law and Estate Planning website. 

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