Wednesday, May 28, 2008

AARP may offer much better Part D (precscription drug coverage) than do employer retiree (supplementary) plans

In looking at my own situation while turning 65, I’ve encountered an anomaly with Medicare prescription drug benefit plans. I talked to someone with United Health Care this morning and found that the prescription plans range from about $30 to about $64 a month if started within a certain time period of Medicare eligibility. A preferred plan would eliminate the copay for Atenolol if the prescription was filled by mail order (Medco).

But then why does the employer sponsored plan for Medicare-covered retirees for prescription drug coverage cost over $240 a month for the same coverage with the same carrier? The representative says, employer plans work differently and are often more expensive that individual plans arranged with a carrier having a business agreement with the AARP. Another factor is that the lower premiums with AARP are predicated on joining at age 65. Employer plans (which often "replace" Part D; one cannot be enrolled in both at the same time) are based on total claims experience and may cover people who have medication claims (like anti-cancer chemotherapy) of thousands a month. Heart medications, in persons with previous infarctions or surgeries, also add up. Often, retiree health insurance "rolls over" automatically into overpriced "supplementary" drug-only coverage without the retiree's noticing if he or she doesn't check. But to be more expensive by a factor of 6 does sound hard to believe. Also, remember that the drug plans have the “doughnut hole” or “coffee cup” effect.

I certainly welcome more feedback on how employer prescription drug plans for retirees work now.

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