WHY AM I PAYING $101 A MONTH FOR MEDICARE PART D?

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Every December, the Social Security Administration sends Americans receiving a monthly Social Security benefit a statement of the “New Benefit Amount” for the following year.  Sometimes the amount doesn’t change from year to year, but occasionally it does. My statement arrived two weeks ago, informing me that on January 3, 2014 my benefit will increase by 1.5 percent because of a rise in the cost of living.

However, there are deductions from the gross monthly benefit amount, which are itemized on the statement.  No deduction for Medicare Part A, of course.  That’s the part of Medicare which pays for visits to doctors for approved medical services. [Note:  I stand corrected here by a perceptive reader.  See the comment section below.  Part A covers hospitalization, not doctor visits.]  It’s also the part of health insurance for elderly Americans entitled to collect Social Security which is truly single-payer.  (And the only health insurance in America which is.) You pay in as long as you work; the government pays out after you turn 65, for as long as you live.

[This is not a primer on Medicare, so I am limiting my observations to original Medicare, which is still in place for anyone who wants it.  There are some byways available, routing coverage through Medicare-affiliated plans managed by for-profit insurance companies.  I can’t speak to those, and won’t, except to voice my suspicion that they’re probably not the way to go.  Shareholders in those insurance companies will disagree with me.  But you can see where I’m headed here, so I’d better stop.]

The first deduction from the gross monthly Social Security benefit  is the premium for Medicare Part B.  This is optional. But anyone getting older would be a fool not to opt for it because Part B is the part of Medicare that covers you for visits to doctors for approved medical services.  You don’t have Part B?  You pay for every visit out of pocket, or you don’t go.

The Part B premium money stays with the government, which also administers that part of Medicare  — just like in those European countries that opponents of single-payer health coverage in our Congress call “socialist.”  Neither Medicare Part A (which is entirely single-payer) nor Medicare Part B (to which you contribute monthly premium once you’ve stopped working) asks you to pay anything else, after a tiny co-pay per year.

But what about medication?  AdminIstered in hospital, it’s usually covered by Part A.  Taken at home, it wasn’t covered at all until Medicare Part D came along.  [Just so you know, Part D was hailed at the time of its enactment as one of the (few) achievements of George W. Bush’s administration. Interestingly, no pharmaceutical or insurance companies objected to its passage.  Hmmm.]

Prescription drugs were — and remain — extraordinarily expensive in the United States.  Pre-Part D, if you were really sick, and not really rich, they sucked up all available income and then some.  Medicate or eat.  Not a great choice.

Part D could therefore be seen as truly remarkable progress in a truly pig-headed country. (Which happens to be my country, so the First Amendment to the Constitution permits me to call it that.  If I were French or English, which I occasionally think might be nice to try, I would have to mind my own business on this subject or get punched in the nose by some redneck.)

However, when you get to be 65, you may rethink your views about the “remarkable progress” encomium.  Of course you always understood that there would be a premium for this relatively new drug coverage.  But it, too, could be deducted from your monthly Social Security benefit, so you didn’t have to actually pay out of pocket.

Or it could be not deducted, as you chose; you might prefer to be billed directly. Or you might prefer not to participate at all.  (American freedom at work!)  If you’ve always been perfectly healthy, and pay out of pocket for no more than one or two rounds of doctor-prescribed antibiotics a year, non-participation might seem a good idea.  Why pay a monthly premium for what you don’t yet need?

“Yet” is the operative word.  Five or ten years down the road, when you’re older and suddenly sicker, you can’t just sign on for your Part D coverage.  You will have to pay a penalty every month, on top of the monthly premium, for the rest of your life, based on a percentage of the average national premium each month you didn’t pay since you were eligible for the coverage. (I didn’t make this up.  It’s what it says in the handbook helpfully titled, “Medicare and YOU: 2014.“)  Bummer, no?  Understandably, very few of us, if any, elect not to join up as soon as we can.

Okay, so what kind of Part D deduction are we talking about here?  [And this is what has got me so steamed up.]

Well, the first three things you need to understand is that (1) the premium may come out of your government Social Security benefit but it gets sent to a for-profit insurance company of your choice that’s licensed to administer Part D in your state;  (2) each insurance company sets its own premium;  and (3) the premium has gone up up every year since the inception of Part D (presumably because there’s no law against raising it) — even when your Social Security benefit doesn’t!

There’s more: each insurance company gets to decide what drugs it will include in its “formulary” ( a list of the drugs it “covers”).  Yours isn’t covered?  Tough.  Your doctor will have to try to treat you with something that is covered.  (Insurer as medical supervisor, so to speak.)  Your insurer of choice also gets to decide what it will charge you for the medication it has contracted to help you pay for. That’s right:  there’s not only an annual deductible — unless you pay a significantly higher monthly premium — but a co-pay for each approved prescription filled, calculated as a percentage of the whole:  smaller for generics, larger for brands. (And you thought your medicine was going to be free once you paid the premium?  Hah!  Think again.)  Of course the prices of the drugs go up each year (right in step with the monthly premium), which also drives up the dollar amount of the co-pay. [Medicare and YOU: 2014 tells me the insurer I chose for my coverage will be charging me up to $76 for a thirty-day supply of a non-generic medication this year. Nice to be warned.]

And then there’s the “doughnut hole” — that sweet spot between the point where you and the insurer combined have spent $2,850 for covered drugs and the point where the amount of such expenditure reaches $4,550.  Once you’re in the “hole”  — described legislatively, and less pejoratively, as “the coverage gap” — you’re on your own.  You pay for everything all by yourself, even though you’re still paying the monthly premium! 

Knowing all that, you can imagine my surprise on learning that in 2014, $101 in Part D premium will be deducted from my infinitesimally increased Social Security benefit every month. (Not quite wiping out the increase, but almost.)  That premium comes to $1,212 annually, whether I ever have a prescription filled in 2014 or not.

I’m not a hothead.  But when I think about it, I must conclude that I will be diverting $1,212 of my Social Security benefits to my insurance company in 2014 to compensate it for paying about two thirds of the first $2,850 in costs of covered medication that I may need over the course of the year. (So far I haven’t come close in any year since Part D began.)  In addition, the size of the premium compensates the insurer for underwriting the risk that an over-65 person like myself might run up more than $4,550 in costs of covered medication before the end of the year, at which time the insurer would have to begin coughing up all but 5% of those costs until December 31.  After that, we all go back to square one  — with increased premium, new formulary, new drug pricing, new co-pay beginning in January 2015.

For me, as I have parenthetically stated above, this is still somewhat theoretical:  I have not yet come close to reaching the doughnut hole in any year since Part D was enacted.  So think of this post as an expression of premium sticker shock.  Nina flying off the deep end.

Because yes, even in my dotage I continue to be outraged that I live in a country where the bottom line drives everything, including federal legislation supposedly designed to “help” the elderly sick but principally engineered to grow profits for large pharmaceutical and insurance corporations.

Okay, I’ve got that out of my system now. Instead of ranting and raving, what I should be doing is counting my blessings that I’m not yet — how that “yet” keeps creeping in! — really sick and making every effort to stay un-sick for as long as possible. So I’m going to tuck away my heads-up statement from the Social Security Administration in a large folder marked “2014” and try to forget the whole thing until 2015. (At which time you may hear from me again.)

You have to pick your battles.

Thanks for reading.

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13 thoughts on “WHY AM I PAYING $101 A MONTH FOR MEDICARE PART D?

  1. Thanks for writing about this difficult subject. A possible correction: Medicare Part A is the hospital part, according to my Medicare card. Part B is the medical part, which pays the doctors, as I understand it. I just signed up this year. Every who’s eligible for Medicare gets Part A. Part B is optional. I think everyone who can possibly afford it should sign up for Part B. As you say, the small monthly premium is deducted from your Social Security check.

    Note that even with Part A and Part B, a person still owes a small deductible at the beginning of the year. More importantly, Part A and Part B only cover about 80 percent of the bills, as I understand it. That leaves 20 percent that you and me will have to pay. For that reason, many Medicare recipients also buy private “Medigap” insurance (also called Medicare “supplementary” insurance), which relieves you of worrying about the annual deductibles and the 20 percent that regular Medicare doesn’t pay.

    I bought my Medigap insurance through AARP (the actual insurance coverage is by United Healthcare Company). Many other private health insurance companies offer Medigap supplementary insurance for varying rates. I trusted the AARP endorsement enough to go with United Healthcare Company. Supplement Plan F seemed the best deal for me, but everyone needs to choose the supplementary plan best for them.

    Medicare Part D, the prescription drug coverage, is the infuriating part. Thank you, President Bush. The monthly premiums can be expensive, and as you say, the drugs actually covered and the copays charged are set by the private insurers.

    Ideally, I think every senior should have the Part D prescription coverage, even with its shortcomings. However, the premium was high enough, compared to my fixed retirement income, that I decided to forgo it. That might turn out to be one of the worst decisions I ever made. But right now, I can get most generic prescriptions for $4 or a little bit more at Walmart or Target.

    These are extremely important decisions, and it’s a shame we as a democracy can’t provide simple, single-payer coverage for everyone, including prescription drugs. The government could negotiate much lower drug prices, if it were allowed to. For now, the Big Pharmaceutical lobby is powerful and rich enough to buy off Congress.

    Liked by 1 person

    • A whole post in the comment section! We’re actually having a discussion at last!

      You may be a newbie at medical insurance for the elderly, John, but you’re very well informed. I’ve been covered by both Medicare A and B for seventeen years and you caught me out on two misstatements! I just went to look at my card, and saw that you are quite correct. Part A covers hospitalization, Part B the doctors. You are also correct about the 80% coverage. Thank you for making both those points. (I did mention the small deductible, though.)

      I did not discuss Medigap because it has nothing to do with federal legislation (which was the subject of this post) and is an entirely private decision. You’re right, though; it’s important to have it. Mine comes from Blue Cross Blue Shield of Massachusetts, but I understand the AARP plans are also good.

      But you really ought to rethink your Part D decision — at least every year. That’s because every year it will become more and more expensive for you than if you had bought in at the beginning. And the time may come (God forbid, as my parents would have said) when you may need it big time. (And need it way past the doughnut hole.) Yes, it is a shame that all aspects of health care cannot be a basic right in this country, as it is in almost every other first-world country — and not just for the elderly on limited incomes, either. But I’m not equipped by either experience or inclination to write posts that address public issues. You see, I made two mistakes in this one! Think of it as a one-time explosion of wrath at the sudden jump in the premium since last year!

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  2. I’ve edited some of the best newspaper reporters, and believe me, EVERYONE makes little mistakes here and there. That’s why God created copy editors, like me. (Copy editors insert our own mistakes while we’re correcting other people’s mistakes. It’s hopeless.) Anyhow, you’re just as qualified as anyone to comment on public issues. The world needs your input!

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      • Gwen Southgate

        I heartily endorse Nina’s suggestion that John, and every Medicare recipient who has opted out of Part D, should re-consider at least once a year.
        I fretted about the cost when I, too, could meet my needs for considerably less than the premium, but suddenly (somewhere in my mid 70s I think), my prescription costs sky-rocketed and I was so glad to have Part D ready and waiting. Even with that monstrosity, the do-nut hole–where I spent a scary couple of months, until that much-awaited date, Jan 1, made me free as a bird again…

        That being said, oh for the simplicity of a single payer health care provider! When will the American taxpayers/voters wake up?? Not in my lifetime I fear. (Unless, by some miracle, it sneaks in through the back door via making Public Option available as part of Obamacare. OK, I am allowed to dream on.)

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  3. I maybe late to the conversation but one of my pet peeves, next to the cost is the complexity (and of course the fear of getting a devastating illness that requires high end meds). I have Medicare and a sup plan. All things go to Medicare first, then to the sup plan, then whatever is not covered to me. I don’t understand why it can’t be simplified. I’ll get a notice from Medicare, then my sup plan, then the bill. A tree has been killed every time I go to the doctor. Oh yes, anything done in January, I get the notices in August. I keep detailed notes because I’m old and can’t remember what I did last week let alone 6 months ago. Good rant that is still relevant.

    Liked by 1 person

    • You’re not supposed to understand, or keep notes. Just keep folders, if that makes you feel better. You can’t really fight what they do anyway (although the small print always says you can). Actually, when I first became eligible for Medicare (in 1996), any medical provider that accepted Medicare (they don’t all have to) was supposed to be content with the amount of the charge approved by Medicare. After Medicare paid, then the supplemental would pay the balance up to the approved amount, and that was supposed to be the end of it (except for the small deductible every January). Now it seems one has to sign papers up front promising to pay whatever Medicare doesn’t approve that the “provider” decides it will charge. An even bigger mystery is why this is referred to, even by the guys on our side, as an “entitlement!”

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