Phil Castell
Castell Insurance
426 E. Washington St., Sequim, WA 98382
Phone: 360-683-9284 • Fax: 360-683-9026
Phil@CastellInsurance.com
www.CastellInsurance.com  

 

As I write this, we are at the halfway point for the year 2010 and it around this time that my phone starts to ring with multiple questions about the Medicare Part D coverage gap or doughnut hole.

To recap, the Medicare Part D program is the prescription drug plan offered by private companies with funding from both the federal government and subscriber premiums.

The basic design of the plans for 2010 provides coverage for drugs until the total retail costs of those medications reach $2,830, after which time a person enters the coverage gap where there is no coverage until their out-of-pocket expenses have reached $4,550.

The dollar amount is no easy computation for the average consumer as the system relies upon two different formulas to reach the desired figure.

For example, the initial coverage level of $2,830 is comprised of a combination of your co-pays as well as the amounts paid by the insurance company. For example if your prescription costs $100, that is the amount that is counted toward your coverage level.

However, once your drugs have reached the total of $2,830, that formula changes. Then it becomes your "True Out Of Pocket" (TROOP) that counts. Using the above example of the $100 medication, if your co-pay had been $30, then only the $30 would count toward your $4,550 TROOP limit. So if your co-pays had totaled $1,000 when you reached the $2,830, that is the amount that counts toward your TROOP limit of $4,550. This means that you would have to pay 100 percent of the next $3,550 before you would emerge from the other side of the coverage gap.

The following are but two examples of Part D dilemmas I have received from customers in the past two weeks.

_ Client 1 called to say she has been paying for her medications all year and has not met her deductible yet, and why is the insurance company not paying any of the bills?

I called the pharmacy and, after numerous calls and a trip to the Port Angeles pharmacy with the client, we finally were able to figure it out.

The pharmacist was trying to save the client money by using multiple discount cards as well as her Part D coverage to always give the best price available for each particular medication.

However, the pharmacist was not looking at the big picture, and that was that once the client met the deductible, the costs of the drugs would drop dramatically. So while the pharmacist was acting with good intentions, the client had paid more than $600 and had met only $180 of her deductible.

This is why, generally speaking, people should usually run all their drugs through the drug program.

__Client 2 was mentioned in my article of December 2009 as she was taking a medication called Femara that cost $375 per month. Well folks, you guessed it, she has hit the coverage gap and her cost for that one medication alone will increase from the $30 co-pay to the retail cost of $375 until either she has met the TROOP of $4,550 or, more likely, the new plan year that starts in January.

Not a good situation when she said she probably would stop using the medication until it would be covered again in the new year.

__This next case was not one of my clients but was rather an example given in the national press that made me cringe.

It concerned a person whose total drug costs were in the region of $1,000 per month or $12,000 per year. He would hit the coverage gap after only three months and then he would have to pay the full costs until he reached the TROOP of $4,550. The advice suggested was that a person could save $500 per month by purchasing the medications from out of the country through mail order.

The writer was taking the short-sighted approach of what would cost a person the least amount of money that month. However, what was missing was the fact that once a person exits the coverage gap, he then has 95-percent coverage and that $1,000 per month of medication becomes a more manageable amount of $50. So in this situation, the numbers would work something like this.

After three months, a person hit the coverage gap and then between three or four months later he would exit and then be at the catastrophic level where he only has a 5-percent co-pay. So, his total costs would be the $4,550 TROOP and then either five or six months at $50 per month, far less than using foreign mail order. That may be a good way to get a bride but not a good way to get drugs.

Good news for those who do hit the coverage gap is that the government now is sending out checks for $250 for people who do reach that amount.

I eagerly am awaiting news of how the plan designs will change for 2011.

In the next few weeks we also should learn what the Medicare Part B deductibles and, more importantly, what premiums will be for 2011. Remember, due to the fact that there was no Social Security cost-of-living adjustment for 2010, Medicare could not increase the Part B premiums. However, those people who have just started Medicare are paying $110 per month as opposed to the $96.40 most folks are paying.

So, if there is to be a Social Security increase next year, you also can count on a corresponding increase in your Part B premiums.

Stay tuned for more news next month.



Phil Castell is an independent insurance agent in Sequim. He can be reached at 683-9284 or PhilCastell@msn.com.