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Take another look at Medicare

By Jennie L. Phipps · Bankrate.com
Thursday, October 21, 2010
Posted: 3 pm ET

Choosing the right Medicare supplementary plans is an important part of retirement planning. Open enrollment for those covered by Medicare health and prescription drug plans begins on Nov. 15 and ends on Dec. 31. During this time, you can make changes to an existing plan that you are enrolled in or choose a different plan. The new coverage starts on Jan. 1, 2011.

Medicare.gov offers what it calls a resource locator where you can identify Part C Medicare Advantage plans and Part D prescription drug plans available to you -- Medigap policies aren't included. This online database is created by DestinationRx and licensed to the government.

Jim Yocum, executive vice president of DestinationRx, says changes in the prescription drug portion of Medicare driven by health care reform make it especially important for recipients to take another look at their plan this year and make sure they are getting the best deal available.

To use this calculator, you'll need a list of every drug you take -- with the name spelled correctly, because many drugs are similarly spelled but aren't the same thing at all. Once you have all your drugs identified, the calculator will figure out the cost per dosage, taking into account the gap in coverage known as the "doughnut hole," and give you a total and a list of the drug plans that cover your needs at the lowest cost.

In 2010 and 2011, the prescription drug deductible is $310. But in 2011, the initial coverage limit -- the point where you reach the doughnut hole -- increases $10 from $2,830 to $2,840. At that point in 2010, you would have paid 100 percent of drug costs until you had spent an out-of-pocket total of $4,550. Then catastrophic coverage kicks in and pays 95 percent.

In 2011, thanks to the beginnings of health care reform, once you hit the (slightly smaller) doughnut hole, you'll pay 93 percent of the costs of generic drugs, while the government pays 7 percent (in 2012, it will pay 14 percent), and 50 percent of the cost of branded drugs, while the drug companies eat the other 50 percent.

Yocum says these differences change the equation significantly and urges every Medicare recipient to use the calculator on the Medicare.gov website. According to DestinationRx research, the average Medicare participant takes seven drugs -- five of them generic and two branded, although the calculator can handle up to 25 drugs.

The difference in cost between the most expensive and the least expensive plans is about 16 percent, but as Yocum says, 16 percent of thousands of dollars is a lot of money.

One thing the calculator can't do is take into account the $4 for 90 generic drugs plan available at stores like Costco and Walmart. If you've already identified that this price for the drug you take is the lowest available, then just leave that drug out of the calculator.

If you're not yet retirement age, you can still use the calculator to estimate how much you are going to have to pay. If you'll turn 65 in 2011, the calculator will figure out a partial year total. Or just fudge your birthdate and get an estimate for planning purposes only. This is a totally anonymous tool.

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