Medicare open enrollment offers opportunity for savings

Medicare’s open enrollment period, which runs Oct. 15 through Dec. 7, gives beneficiaries nearly two months to re-evaluate their prescription drug plans and make a change that could cut their costs by nearly one-third.

But only 10 percent actually make a switch, despite the fact that research shows only 12 percent of people are in the least expensive plan.

On average, beneficiaries can save 31 percent by switching plans, according to Louanne Bakk, assistant professor and director of the Institute on Innovative Aging Policy and Practice in the Social Work, and an expert in program evaluation and social welfare policy for older adults.  

“The actual savings in the end will vary depending on the individual,” Bakk says. “It’s going to be based on the medication cost, the number of medications currently being taken, the copay average, premiums and deductibles.”

There are many factors responsible for why enrollees do not change plans, she says, including lack of awareness, which can take a couple of different forms.

The problem is not just that people don’t know they can change plans. Those who are aware of open enrollment often become overwhelmed by the process, which can be complex, daunting and confusing.

For example, there are approximately 45 plan options available to beneficiaries for 2016. Additionally, beneficiaries can choose to remain in traditional Medicare and purchase a stand-alone Part D plan or enroll in a Medicare Advantage plan — typically an HMO or PPO — with or without prescription drug coverage. Regardless of their choice, plan premium, deductible and out-of-pocket costs can vary significantly from plan to plan.

To illustrate potential savings, Bakk selected 10 common prescription drugs used by older Americans and plotted how the costs vary across plans for 2016.

A drug like Synthroid can more than double in cost from one plan to another. Lexapro can cost seven times more in one plan than another. A detailed chart is provided at right.

Another factor beneficiaries need to be aware of is costs change from year to year. For example, Lansoprazole — a generic for Prevacid — was removed from one of the examined plan’s formulary for 2016. As a result, the cost for a 30-day supply increased from $17.90 to $169.34.

In addition to out-of-pocket drug costs, beneficiaries need to be aware that premiums, deductibles and pharmacies used by plans can change from year to year. For example, while three of the five plans examined had a deductible in 2015, all five had this requirement in 2016. Additionally, while one plan had a monthly premium decrease for 2016, the remaining four had increases between 9 percent to 26 percent, or ranging from $2.80 to $14.30. Finally, while a pharmacy participates with a plan one year, there’s no guarantee this will continue — whether a pharmacy participates or not can dramatically affect costs.

Another factor is that beneficiaries are unaware there are resources available that can help people struggling with the costs of their prescription drugs to explore various options.

“This is a national resource, signed into law at the same time as Medicare Part D,” Bakk says.

The low-income subsidy, sometimes called “Extra Help,” can provide considerable savings for those who qualify.

Several states offer resources as well, such as the EPIC program in New York, which supplements Medicare Part D coverage.

Even those enrollees in cost-effective plans should re-evaluate their options during the open enrollment period, Bakk says, because the plans can change annually and what was the best plan one year might not be the best plan the following year.

Bakk’s previous research has shown that it’s particularly important for racial and ethnic minority populations to review their choices. Medicare Part D’s coverage gap affects African-Americans age 65 and older particularly hard. In 2016, beneficiaries enter the coverage gap when their total drug spending reaches $3,310, and are responsible for approximately 50 percent of their prescription drug costs until total spending reaches $7,062. At this point, beneficiaries are responsible for minimal prescription drug costs.

The problem is that people in the gap, or even those approaching the gap, often stop taking their medications or stop taking the recommended dosages.

“This is cost-related non-adherence,” Bakk says. “We see that it’s largely driven by the coverage gap, but the gap can vary depending on the plan and what the copays are once they get into the gap.

“That’s why it’s in the best interest of patients struggling with drug costs to re-evaluate their plan.”

Bakk suggests starting with online research at www.medicare.gov. Beneficiaries can also obtain assistance by calling 1-800-MEDICARE, or by contacting their local State Health Insurance Assistance Program.