Author Archives: Dianne Savastano

The Changing Cost of Prescription Drugs Under Medicare

At Healthassist, we conduct detailed analyses for our clients that identify the out-of-pocket cost (co-pay or co-insurance amounts) for the prescription drug component of Medicare – Part D. Whether they choose a separate Part D prescription drug plan or a retiree or Medicare Advantage Plan that includes Part D coverage, we help our clients unravel the complexity of Part D, choose wisely, and avoid surprises.

And so I was dismayed recently when I had to pass along the news to a client newly enrolling in Medicare that beginning month one, his monthly out-of-pocket cost for Medicare drugs was going to exceed $1000.

We went on to discuss the four phases of the current Medicare Part D Prescription Drug Program. These include:

  1. Prior to meeting a deductible
  2. Coverage Phase — once a deductible is met and co-pays and co-insurance amounts are assessed
  3. The Coverage Gap (formally known as the “Donut Hole”), when the co-pay or co-insurance amount can change and be higher than during the coverage phase
  4. The “Catastrophic Coverage Phase,” in which the insurance plan covers 95% of the cost of the drug and the individual is responsible for 5% 

Because the retail cost of my client’s prescribed biologic medication was approximately $20,000 per month, he found himself in the catastrophic coverage phase in month one.

Changes to Medicare

Fortunately, I was able to deliver some good news to my client. As a result of the recent passage of the Inflation Reduction Act (IRA), some relief is on the way. However, it will take time.

History of the Medicare Part D Prescription Drug Plan

Prior to 2006, Medicare did not provide any prescription drug coverage at all. That changed in 2003 under the Bush administration when the Medicare Modernization Act was passed, establishing a prescription drug benefit that was governed and regulated by Medicare. But it still took three more years until 2006 for Part D drug plans to become available to Medicare beneficiaries.

Since then, there have been modest changes to the benefit, primarily due to the passage of the Affordable Care Act. Over the next few years, Part D will continue to evolve, gradually decreasing the cost of prescription drugs for the Medicare population.

Key changes to Medicare Part D Prescription Drug coverage from the Inflation Reduction Act

Here are some of the changes on the horizon:

Insulin Cost Cap: Millions of Medicare Part D drug plan enrollees use insulin products; many struggle to afford the cost. Beginning in 2023, the cost for insulin products will be capped at $35 per month for beneficiaries who enroll in participating plans.

Capping Out-of-Pocket Costs: Our current Part D drug plan structure requires Medicare beneficiaries to pay approximately 5% coinsurance when their retail drug costs exceed $7,050. Known as the catastrophic drug phase, even a 5% cost share can be burdensome for those who use high-cost drugs. Starting in 2024, this cost share will be eliminated and the total amount of out-of-pocket expenditure for Part D prescription drug plan enrollees will be limited to $2000 per year.

Negotiated Pricing: The Federal Government will now be able to negotiate pricing with drug manufacturers for certain high-cost prescription drugs. This change will be implemented gradually, beginning in 2026. Initially, the government will negotiate for reduced pricing for ten drugs. In 2027 and 2028, the prices of an additional 15 drugs each year will require negotiations. By 2029, the number of drugs subject to price negotiations will be increased each year by 20.

Recommended Actions

As we do every year, we advise our clients to act during the Annual Medicare Open Enrollment Period from October 15 to December 7:

#1. If you have a part D prescription drug plan, be sure to reanalyze your premium and out-of-pocket costs based on your specific drugs, dosages, and frequencies. Make sure to include both your preferred and competing pharmacies in the analysis. This process will help identify the most cost-effective plan for you for 2023.

#2. Once you identify the most cost-effective plan, enroll in the new plan within the open enrollment period timeframe, so that your new plan will become effective on January 1, 2023.

#3. Complete this analysis each fall. This is especially important going forward because the new legislation is being phased in over time. By creating a My Medicare account and using the Plan finder tool on the Medicare website, your data will be saved so that in future years, all you will need to do is update your prescription drug list.

Final Thoughts

Medicare can be confusing as there are several components to it and many different options to choose from. That’s why, as with all aspects of our healthcare and insurance systems, we encourage you to become informed and analytical consumers so that the choices you make are understood and fully meet your needs.

Recommended Reading and Resources: Diets

Available evidence demonstrates that the typical American diet is shortening the lives of many Americans. I’m pleased that more attention is being paid to the topic and that the current administration will hold the White House Conference on Hunger, Nutrition, and Health on September 28th, during which they will announce a new national strategy.

As I look forward to the national strategy, I was intrigued by this article about personalized diet apps.

Returning to Work After Medicare Enrollment

Thanks to the type of work I do, I am often asked questions about Medicare during the course of casual conversation. I always hesitate to reply, since given all the nuances and situation-specific considerations, there is no single answer that applies across the board. So, I often start my response with, “It depends.

”Nowhere is “it depends” more appropriate than on the question of whether or not and how to disenroll from Medicare coverage if an individual has decided to rejoin the workforce. However, here are some things to understand and think about…

Can I change my Medicare coverage if I go back to work?

The answer is yes. But the key question is, “Should you?”

Before moving forward, you’ll want to embark on a detailed analysis, and you’ll want to do this early on in the job recruitment process. Early on because the outcome of the analysis may be very helpful during a negotiation for benefits and/or some other form of compensation if you choose not to take advantage of the company’s health insurance offering. Here are things to consider:

  • What is the complete cost for you now under Medicare, including your premiums and its associated products, your Income Related Monthly Adjustment Amount (IRMAA) (if you are subject to one), and your projected out-of-pocket cost for both healthcare and prescription drugs?
  • What benefits will the new insurance include and what restrictions will it impose on your access and choices?
  • When newly employed, what will be your contribution toward the premium?
  • What is the deductible and the out-of-pocket maximum for the new employer plan?
  • Do you have additional family members who could avail themselves of the employer coverage and, if so, how will the cost, benefits, and requirements impact them and compare to their current experience?
  • Will I be participating in a high-deductible health insurance product with a Health Savings Account (HSA) with my new employer? (If so, there may be tax implications to staying enrolled in Medicare Part A.)
  • How soon can my new coverage begin?
  • How long will it take to disenroll from Medicare? (I have seen it take weeks to months.)
  • How long do I plan to stay gainfully employed and covered under my new employer plan? (Be honest with yourself about this one.)

Keep in mind that while you may reenroll in Medicare without penalty if your employment status changes (since you will be subject to a Special Enrollment Period (SEP)), you should begin this process at least three months before you want Medicare to start again, as there are many nuances involved. The reenrollment process itself can take up to 60 days once initiated.

How do I disenroll?

If you decide to take this step, you’ll now want to consider:

  • How do I do it?
  • Should I disenroll in both Parts A and B, or just one or the other?
  • How much time will all of this take?

“It depends” is the answer here too. This link describes the process; this link reviews the paperwork required.

The next step is to do your homework, complete the disenrollment form to the best of your ability, and prepare any supporting documentation that may be required or helpful to explain what you plan to do. But — do not send anything anywhere until you’ve spoken to a representative from Social Security.

Call your local Social Security office (or stop in now that offices have reopened), describe what you are attempting to do and why, and rely on the knowledge of the Social Security representative to help you accomplish your task. Ask for timeframes within which outcomes should be determined and mark your calendar to follow up with a phone call or another in-person visit if deadlines are not met.

Be sure to document names, dates, and outcomes of any interactions and verify that your interaction was documented within the Social Security System.

Every Situation is Different

One of our clients retired and paid a significant amount for Medicare because she was subject to a high IRMAA. Her spouse and two dependent children were on an open market health insurance plan that was expensive, had a high deductible, and limited provider networks.

The new employer was subsidizing 75% of a Preferred Provider Organization (PPO) plan that afforded greater choice and out-of-network benefits. For this family, the amount of administrative work it took to disenroll from Medicare was well worth it.

A second client and his wife were paying much less while on Medicare than the premium contribution would have been for them on the employer plan (they were not subject to an IRMAA). They had in place a Medicare Supplement Plan and a Medicare Part D prescription drug plan that afforded them choice, flexibility, and predictable costs.

Further, they had the same coverage all over the country, no need to designate a primary care physician, no required referrals, and limited out-of-pocket cost. So they stayed on Medicare and the man was able to negotiate receiving a stipend towards his health insurance cost from his new employer.

Final Thoughts

Health insurance may not be the most exciting topic to think about, but it is certainly important to our lives. Whether you are retiring and going on Medicare for the first time, or considering a change in status as you reenter the workforce, a thorough analysis is key.

Every situation is different, which is why… it depends!

Recommended Reading and Resources: True costs of health care

How much health insurers pay for almost everything is about to go public

Over the past 20 years, many efforts have been made to help consumers become more aware of the true cost of health care so that they can make informed choices. I’ve long been critical of the lack of transparency in the system. That is changing, although ever so slowly, as this article explains.

How to get rid of medical debt — or avoid it in the first place

Here’s a great piece regarding medical debt.

Can a ‘Magic’ Protein Slow the Aging Process?

This article, about a drug company trying to increase life span by capitalizing on research showing that a protein can slow the aging process, really captured my attention!

A Life Well Lived

I was introduced to Rosalie in April 2009 as she was about to embark on her first total knee replacement. Her children recognized that living alone and scheduling a major orthopedic procedure at the age of 86 required forethought and outside support.

In April 2022, Rosalie passed. Over our 13 years together, we managed numerous health-related issues that involved shared decision making with her physicians and her family. Shared decision making refers to when a physician works closely with a patient regarding diagnostic testing and treatment, as well as surgery. It is based on clinical evidence while also balancing risks and expected outcomes with patient preferences and values.

In Rosalie’s case, we always took into consideration her goals for how she wanted to live and how she wanted her life to end. I am so pleased that we were able to carry out her desires. She often comes to mind as a positive example of my hopes and wishes for my clients, my family, and myself.

What follows are some of the decisions Rosalie made while we worked together.

Surgeries at the Age of 86, 87, and 89

At 86, Rosalie’s arthritic knees were restricting her ability to get around and to embark on activities she loved. She had a highly active lifestyle that included lots of walking. As she was in great health, she and her physician made a mutual decision to not only have her first knee replaced, but also her second replaced 18 months later when she was 87.

Although no surgery is easy, the combination of a good surgeon, well planned rehabilitation, and a motivated patient, led to a great outcome that allowed her to resume all her favorite activities. Her quality of life improved considerably after each procedure.

At the age of 89, Rosalie developed carpel tunnel syndrome that prevented her from sleeping comfortably. This made her irritable and increased her risk of falling, as she was up and down all night. A minor surgical procedure to correct this was successfully performed. Again, her quality of life improved.

Decisions that made sense for Rosalie at the time, may not have been appropriate for others. Underlying health, functional abilities, and quality of life are all considered along with prevention of suffering.

When to Make a Change in Living Environment

After Rosalie’s first knee surgery, she decided she would no longer winter in Florida. She researched new living environments and moved into an independent apartment in a Continuing Care Retirement Community (CCRC). What a great decision! She had an elegant apartment furnished with some of her favorite antique furniture and beautiful artwork.

She loved her new home and made it truly clear to both me and her children, over and over again, that she intended to live there through the end of her life.

Her new community offered fabulous amenities, including an outpatient medical center with physical therapies, an inpatient skilled nursing facility that she used as a steppingstone to return home following her second knee surgery, a gym, and fabulous communal dining. Additionally, there were many opportunities to socialize with others as she pursued her intellectual interests and enjoyed the arts.

The physical environment was such that she had to walk a long distance to get to dinner. The medical clinic and I credit the positive outcome of her second surgery with her high level of physical activity. She remained ambulatory almost to the end of her life.

Knowing When You Need Additional Help

At 90, Rosalie decided to stop driving. This is a difficult decision and can often cause a major disruption within families and relationships. On this topic, I encourage families to think practically about how someone will now conduct their “life-management functions” and to provide alternatives that still promote a sense of control.

In Rosalie’s case, she was fortunate to be able to hire a companion to provide 3–4 hours per week of time to perform errands on Rosalie’s behalf and to escort Rosalie on others.

In other families, it might be a child, grandchild, or sibling who dedicates a few hours a week to assist. Different forms of public transportation such as The Ride, cabs, and Uber can all be interchanged. CCRC’s also offer options for local transportation.

Managing Cognitive Decline Well

When she reached 92, Rosalie mentioned to me that she had concerns about her memory. She was struggling to keep up with her mail and manage her finances, two activities that she had always performed with speed and accuracy. This was her first indication that something was not quite right. How I wish that all our clients could be so self-aware — unafraid to speak up and open to evaluation and treatment as cognitive changes occur.

In Rosalie’s case, we started with her primary care physician who conducted in-office testing. We then proceeded with a referral to more complex neurocognitive testing that revealed a degree of cognitive decline. This diagnosis facilitated open and honest discussion about her strengths and areas in which she could use assistance. Most important, it allowed Rosalie, her family, and me to plan ahead.

Because she had clearly and consistently expressed her desire to remain living in her apartment, all was done to promote Rosalie’s abilities and her sense of control over her environment. With her participation in the decision making, we gradually increased the use of private in-home assistance, ultimately involving 24/7 care in her home. She was fortunate to be able to afford such care and we were fortunate to hire a group of women who delivered care of impeccable quality, treating Rosalie with dignity and grace.

When to Discontinue Further Evaluation or Treatment

At the age of 94, through an incidental finding from an ultrasound, an abdominal mass was discovered. Surgery was a potential treatment option, however Rosalie, her children, her physician, and I all agreed not to embark on further treatment. We discussed the fact that suffering would be inflicted, and it would not be consistent with Rosalie’s wishes.

We did not ignore the situation. Rather, we thought through potential complications and how growth of the mass could manifest. In fact, it was one of the conditions used to substantiate Rosalie’s eligibility for Hospice Care when the time came.

When to Embark on Hospice Care

Hospice Care is a philosophy of care that provides comfort for patients who are terminally ill and not seeking cure. It is designed to wrap around the care that families and caregivers provide to an individual. It does not use life-prolonging medications, but effectively uses medications that provide comfort.

One criterion for eligibility for Hospice services is a life expectancy of 6-12 months. In individuals like Rosalie, such predictions are difficult to make, but a combination of medical conditions made her eligible.

The extra layer of support — not only for Rosalie, but for her family, her caregivers, and me — helped us satisfy Rosalie’s wishes to pass in her home surrounded by incredible love. For that, I am eternally grateful.

Final Thoughts

I so admired Rosalie. In our numerous interactions over 13 years, she taught me so much on so many topics — having a successful marriage, raising children, politics, Jewish traditions, and the importance of love and family.

Additionally, she taught me how important it is to consider one’s wishes in every healthcare-related decision. Rosalie exemplified how open and honest conversations, together with decisions made more than a decade in advance of one’s passing, can have a positive impact on oneself and those who love us.

I am hopeful that Rosalie’s example will prompt you to think about these issues for yourself and to initiate conversations among members of your family.