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Confusion Ahead: New Medicare Plans for 2007

Seniors' Mailboxes Brace for New Round of Offers

By Fred Yager
ConsumerAffairs.com

October 3, 2006

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If you're one of the 43 million Americans with Medicare, listen up. Just when you thought you'd figured out all those confusing drug-benefit options that went into effect for 2006 a whole new batch of Medicare drug plans are becoming available.

Somewhere between 50 and 60 new 2007 Medicare Drug Benefit plans are going to hit the senior citizen market starting next week. That's when insurance companies can start filling your mailbox with their latest offering.

The actual number of plans to choose from will depend on which state you live in, but on average you can figure there are nearly twice as many plans being offered for 2007 as there were for 2006.

You'll have six weeks between November 15 and December 31 to study them and decide whether or not you want to sign up, otherwise you'll be stuck with what you already have. Medicare program leaders are urging anyone who wants to change plans to do so by Dec. 8 to avoid problems when the new year begins.

Obviously, if you're satisfied with your current plan, you don't have to do anything.

Some experts are predicting most of you won't switch plans, especially after all the trouble you went through to choose the plan you already have. The Centers for Medicare & Medicaid Services, which runs Medicare claim 80% of beneficiaries are satisfied with their current drug plans.

Still, you may want to see how your plan compares to the 2007 models. Some contain added benefits such as doing away with co-payments for generic drugs. While others actually reduce coverage for some brand-name drugs which means you'll have to pay more. Some plans have no deductible and several offer limitless coverage of some medicines. So read the plans carefully.

Medicare recipients will be able to choose from more plans that offer enhanced benefits, claims Mike Leavitt, Secretary of Health and Human Services.

"This is good news for seniors who have underestimated their drug costs this year and want more coverage next year," he said.

Part D

Optional prescription drug coverage, known as Medicare Part D plans, became available for the first time this year. The federal government contracts with private companies to provide the coverage. Companies that are selling Medicare Part D plans next year will start marketing their benefits to potential enrollees next week.

Overall, for the most basic plans, monthly premiums are going to range somewhere between just over $10 for the least expensive plans to just over $30 for the pricier options with the average being around $24. The more expensive plans may have added benefits, however, and could end up saving you more in the long run.

Some of the changes will impact anyone who has a drug benefit plan that provides coverage for something called the "doughnut hole." Government-subsidized plans are going to offer coverage up to $2,400 in spending in 2007 until the senior pays $3,850 in out-of-pocket expenses.

Once that amount is reached, the plan covers 95% of all drug spending for the remainder of the year. The "doughnut hole" refers to that $1,450 gap in drug spending which is basically uncovered.

Currently only a few plans offer coverage for drug expenses through the gap, and they come at a higher premium.

Starting in 2007, more than a quarter of the plans will provide "doughnut hole" coverage, but they aren't going to be cheap. These plans will range between $38.20 and $71.20.

Health insurers and pharmacy benefit managers are the main providers offering the prescription-drug plans, also known as Medicare Part D coverage.

To help untangle these options and clear up some of the confusion, the government will be setting up tools on websites later this month that will let you compare costs and benefits of the 2007 plans to your current plan.

These sites include www.medicare.gov and www.mymedicare.gov as well as owww.medicare.gov/medicarereform/local-plans-2007.asp or by calling 800-633-4227.

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