August 23, 2022

Good Riddance Medicare Donut Hole!

Medicare’s donut hole is the bane of existence for retirees with expensive medications.

They will get substantial relief in 2025, when the Inflation Reduction Act, signed by President Biden last week, will cap all retirees’ annual drug copayments at $2,000. Monthly drug plan premiums are not included in this cap.

The cap will effectively eliminate the donut hole that currently requires retirees to pay 25 percent of the cost of their prescription drugs until they reach a threshold amount. The threshold increases every year and hit $7,050 this year.

A relatively small group of about 1.5 million retirees pay more than $2,000 for their prescriptions. But many of them are spending $5,000, $10,000 or more.

“It’s going to be an amazing thing” if the cap is implemented as Congress intended, said Ashlee Zareczny, compliance supervisor for Elite Insurance Partners, a Medicare health insurance broker outside Tampa.

Some of her firm’s retired clients pay so much for their medications that they have to make difficult choices between medications and food or other essential items. People who rely on Social Security “shouldn’t have to make those choices,” Zareczny said.

The cap will apply to all Medicare beneficiaries, whether they get their prescription drug coverage through a Part D plan or Medicare Advantage insurance plan, she said.

Under the current system, insurers that sell Medicare drug plans have a $480 maximum they are permitted to charge for the deductible. After meeting the deductible, retirees make their predetermined copayments under the insurance plan. They enter the donut hole after they spend $4,430 out of pocket, and then they are required to pay 25 percent of the cost of their drugs until they reach a threshold that pushes them into the catastrophic phase of Medicare’s drug coverage.

Once the catastrophic coverage kicks in, however, they are still responsible for 5 percent of the remaining drug costs. In 2024 – a year before the $2,000 cap goes into effect – the new healthcare law will eliminate the 5 percent copay.

The cap on total spending will protect any retiree who develops a medical condition requiring them to take very expensive medications. Currently, there is no limit on how much they may have to spend.

And, Zaraczny said, “They’re not prepared to put forth this money.” …Learn More

August 31, 2021

Part D: More Retirees Face High Drug Costs

Several million retirees have spent so much on their prescriptions in recent years that they crossed over into the “catastrophic” phase of their Medicare drug plans.

Once catastrophic coverage kicks in, Part D drug plans require retirees to pay only 5 percent of their medication costs out of their own pockets. But there’s a catch: there is no cap on total annual spending, which can quickly rise to thousands of dollars if they need chemotherapy or a brand-name designer drug for a rare medical condition.

Juliette Cubanski, deputy director of the Kaiser Family Foundation’s Medicare policy program, said that could change, because proposals to place a cap on total out-of-pocket spending in Part D plans have a bipartisan tailwind behind them. Democrats in the House recently reintroduced a bill that would limit spending to $2,000. Last year, the Republican-controlled Senate Finance Committee approved a $3,100 cap, which is currently part of a Republican prescription drug bill.

Now, President Biden says he wants to limit retirees’ spending in their Part D plans. However, the bills circulating on Capitol Hill could also become tangled up in a more complex debate about a related issue: the best way to control drug prices.

A flat dollar cap – if it passes – would be simpler than the current system for determining out-of-pocket drug costs, though it would mainly help people with extraordinarily high spending. Cubanski said most people on Medicare spend less than $2,000 out-of-pocket annually.

But in a given year, she said, “that could be anybody.” And as baby boomers stampede into retirement, more people will be pushed into catastrophic coverage at a time of continually rising drug prices. …Learn More

May 13, 2021

Tapping Home Equity – Retirees’ Relief Valve

One telling indication that retirees are in serious financial straits is when they take less of their medications or don’t fill prescriptions.

Nearly one in four low-income retirees has difficulty paying for medications, despite passage of Medicare Part D in 2006, which reduced out-of-pocket drug costs. Between 2011 and 2015, the average Medicare beneficiary spent $620 to $700 a year on prescriptions, and people with diabetes, lung disease, and cardiovascular disease spent more than $1,000 a year.

One way retirees can address such hardships would be to tap some of the equity in their homes. Although a homeowner probably wouldn’t use this strategy just to cover drug copayments, new research finds that older Americans who tap equity significantly increase their adherence to their medications – and this finding has broader significance for improving their retirement security.

Most older homeowners are, on the one hand, reluctant to pull cash out of their homes – often their largest asset – through a home equity loan, mortgage refinancing, or reverse mortgage. Yet many of them don’t have enough income to live comfortably and could put this asset to good use to reduce their debt or pay medical bills if they become seriously ill.

To test how home equity might help retirees, the researchers used a series of surveys between 1998 and 2016 that have data on older people’s finances and ask whether, at any time in the past two years, they took “less medication than prescribed … because of the cost?” The analysis controlled for various influences on financial well-being, including education, marital status, and cognitive health, as well as financial resources.

Extracting home equity improved adherence to medications in the short term, particularly for homeowners over 65 who have little wealth outside of their homes. Separately, the researchers showed that retirees who tapped home equity were significantly more likely to take their medications at a critical time – after experiencing a serious illness.

“Housing wealth can play an important role in reducing economic insecurity,” concluded the study, which was funded by the U.S. Social Security Administration. …Learn More

March 14, 2019

Drug Discounts, Other Help Available

Consumers are powerless to control spiraling medication prices, but low-income, uninsured and under-insured individuals can often get help paying for their drugs.

The help, in the form of subsidies or prescription price reductions, comes from four sources. The first is exclusively for seniors on Medicare, but the rest are available to everyone.

Federal aid

Medicare’s Extra Help program provides up to $4,900 to subsidize retirees’ drug copayments and Medicare Part D premiums. Individuals are eligible for this assistance if their income is less than $18,210 and the value of their investments, bank accounts and other assets is under $14,390. The limits for couples are $24,690 in income and $28,720 in assets.  Retirees who own their homes do not have to include the property’s value in this limit. Social Security’s website explains what does and does not count as assets.

Social Security takes the applications for this Medicare program. Applications can be submitted either online (SSA form 1020) or in person by making an appointment at a local Social Security office.  Social Security also notifies seniors about whether they qualify.

Price discounts in an app

If your drug is not covered by your health insurance, Consumer Reports suggests trying two cell phone apps (or go online) to search for the lowest-cost prescriptions at various pharmacies in your area. On the apps – GoodRx and BlinkHealth – search your drug name and dose and enter your zip code to find the discounted prices, which can vary dramatically. These companies act as middlemen between consumers and Pharmacy Benefit Managers, which buy generic and brand-name medications in bulk from manufacturers and pass the volume discounts on to consumers. GoodRx provides a coupon that can be saved on a phone or printed out for the pharmacist. BlinkRx requires consumers to pay for the drug on its website and provides a voucher for the pharmacist. These cash prices will not be run through insurance – and won’t count against your deductible – said Lisa Gill, Consumer Reports deputy editor and a specialist in medication pricing.

Walmart also offers discounts on generic drugs, and Costco has very low retail drug prices. Which option is best for you? “It’s going to depend on which medication you take and probably where you live,” Gill said. Not everyone will have success in reducing their costs but, she added, “if the drug’s not covered by insurance, it’s worth trying.” …

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