Avoid Paying Too Much Out of Pocket for Medicare

Welcome to Money Monday with Suze, a weekly newsletter designed to inspire your financial life and give you actionable insights from the World’s Personal Finance Expert. Like what you’re reading? Subscribe and share with your friends. Let’s dive in…

Help Your Parents by Checking on This?

If your parents are enrolled in?Medicare?I want you to help them check if they can pay less for their prescription drug medications. I recently heard of a son who thought his father was paying too much out of his own pocket for his medications. He was right! Dad is now enrolled in a new Part D plan that will save him more than $2,000 a year.?

If your parent is enrolled in Original Medicare (and not Medicare Advantage),?he or she should also have a separate Part D plan that covers prescription medications.

Every year from October 15th?through December 7th?everyone enrolled in a Part D plan is free to switch to a different plan for the coming calendar year. There are no gotchas here, you can switch to another Part D plan regardless of pre-existing conditions.?

It’s a bit more complicated if a parent is enrolled in a Medicare Advantage?(MA)?plan that includes Part D drug coverage. Because Part D coverage is embedded in their overall plan, to make a switch to save on drug costs requires switching to another new MA plan. That’s entirely doable. But just be sure that the network of doctors and facilities in the new plan, and coinsurance, is right for your parent. You don’t want to save on drugs only to upend everything else.?

The Annual Part D?Check-Up?

Very few enrollees bother to do an annual shopping comparison. That’s what happened to the Dad I heard about. He is in his 80s and just kept on paying the premiums for his original Part D plan. When a drug he was taking was no longer covered by his plan he just kept paying for it out-of-pocket. His son helped him see if there was another Part D plan that did cover that drug. And he sure found one, saving his?Dad?plenty.?

I want you to help your parents make sure they have the best Part D plan. Here’s how:?

• Ask parents to be on the lookout for mail from their Part D insurer.?Every year around late September, the Part D insurer or the Medicare Advantage insurer must send enrollees an Annual Notice of Change (ANOC). It will state if the premium is changing, and even more important if there are changes to what it will pay for the drugs the enrollee is paying.
• It’s not uncommon for insurers to change their “formulary.” That’s the term for how it categorizes drugs. A Tier 1 drug is typically a generic, and it may be covered free of charge or for a small copay of a few dollars. Tier 2 and Tier 3 drugs are more expensive.
• And here’s what you need to understand: there is no consistency across Part D plans over how a drug is categorized. One Part D plan may consider a drug to be Tier 1 and another insurer may say the same exact drug is Tier 2. And insurers often move drugs around from year to year.
• Don’t shop on premium alone.?You want to understand what the copay is for a medication for a chronic condition. It can make sense to pay a higher monthly premium if that means having no copay or a lower copy for a medication.?
• Log in?to Medicare’s free shopping tool. Beginning in mid-October the Medicare plan finder should be updated to include 2022 policies.?You can see plan costs in your parent’s coverage area, based on the specific drugs he or she takes. (You manually input the names of their meds.)?
• Get help.?Independent insurance agents that specialize in Medicare will shop?for?the best policies. They are paid by the insurer, not you. Many independent agencies, work with enrollees in most states. Another option is to?contact your State Health Insurance Assistance Program (SHIP)?and?be connected to local counselors who will help you sort through the options.

Suze School: Revisiting Retirement Accounts

Sunday's podcast brought us another great Suze School, this time on the important details we need to know about investing in crypto currencies inside of our retirement accounts. Listen and subscribe to Suze Orman's Women & Money Podcast?on your favorite streaming app.