Strong Medicine
It'll take some heavy lifting to find the right Medicare drug plan. These five steps will lighten the load--for you or someone you love.
By Ellen McGirt

(MONEY Magazine) – For the nation's nearly 42 million medicare beneficiaries, holiday shopping comes with a new twist in '06: prescription drug plans. Heavily marketed and available in dozens of varieties, the long-awaited new Medicare prescription drug benefit has finally arrived, complete with a decoder website, toll-free hotlines, armies of helpful volunteers and massive amounts of confusion. "Most seniors are so overwhelmed that they need assistance," says Dan Koski, a pharmacist in West St. Paul, Minn. who's been flooded with requests for help from customers, 75% of them Medicare beneficiaries. "The process is needlessly complicated--a real headache." But the payoff is well worth a little pain: Here's a government benefit that could actually save you or someone you love a bundle of money.

Enrollment began Nov. 15 and continues through May 15, with coverage starting as soon as Jan. 1 for anyone signed up by year-end 2005. Early reports confirm that picking the right plan is a lengthy and confusing process--which the government tries to play down. "A lot of things in life are complicated," Health and Human Services Secretary Michael Leavitt told befuddled seniors at a recent Medicare rally in Manhattan. "Filing a tax return, registering your car, choosing a cable provider. All complicated."

But unlike taxes, cars and cable television, Medicare Part D, as the new drug coverage is called, is a wholly unfamiliar beast. "This is not a benefit that behaves like anything anyone has ever seen before," says Amy Bernstein, the director of the Health Insurance Information Program for New York City. Anyone eligible for Medicare now has a staggering number of drug plans to choose from--more than 60 in some states. And while the plans, sold through private insurers but subsidized and regulated by Medicare, all have to meet the same basic drug coverage and pricing requirements, they differ dramatically in the details. Every plan, for example, carries a deductible under $250 and offers at least two drugs in each treatment category. Premiums range from as little as $1.87 a month to more than $100, depending on the level of coverage offered (the average: around $32). Cost-sharing structures vary, as do the lists of covered drugs. And a few of the plans also provide, for an extra fee, relief for the famous "doughnut hole"--a coverage gap in the basic plan that requires you to pay the full tab on drug bills between $2,250 and $5,100.

Confusing? Certainly. Maybe even maddening. But given estimates that the average participant will save nearly 40% on drug costs, slogging through the sign-up process will soon feel like time well spent. The steps below will help you make the right choices with minimal pain.

1 Get Your Act Together

The more organized you are before you start shopping for a plan, the easier the process will be. "A folder is your best friend," says Bernstein. Ignore the marketing materials from the drug plan companies, but do throw in every piece of official Medicare correspondence you've gotten from the government, former employers (if you have retiree health benefits) and Medigap providers (if you have a policy). Also toss in a copy of your Medicare card, which contains your ID number and the date your benefits began. You'll need to refer to this material repeatedly as you search for drug plans.

Another Medicare file essential: a detailed worksheet of the drugs you take. Record all your medications, including the dosages, the frequency, how you take the drug (pills, drops, cream) and what you pay for a 30-day supply. Include drugs you've needed only occasionally, like antibiotics. And make note of the prescribing doctor for each medication and the pharmacy you used as well. If you routinely go to one store to fill your prescriptions, the pharmacist may be able to generate a computerized list for you. Make sure the spelling of each medication is correct: If the Medicare website doesn't recognize what you've typed, it may prompt you to select a different drug than you intended, and you could end up with a list of plans unsuited to your needs. As a final step, calculate how much you spent on prescriptions in the past year--you'll need that total to evaluate how much money, if any, you'll save overall.

If you're helping an older loved one assemble this information, understand going in that it's likely to take more than one attempt and fray everyone's nerves along the way. You may be frustrated to find that your dad's record keeping is nonexistent. Or shocked to learn, say, that your mother is being treated for depression. "This is pretty personal stuff," notes New York City gerontologist Mary-Louise Flood. Take it all in manageable chunks. "Stay calm and focused on the task at hand," she advises. "And above all, remember: patience, patience and more patience."

2 Set Your Priorities

The majority of Medicare beneficiaries will save some money with the new drug benefit. But cost shouldn't be your only consideration. Maybe you'd be willing to pay a little more for the reassurance of dealing with a trusted pharmacist or the convenience of filling prescriptions by mail. If you live in two parts of the country during the year, signing up for a plan available in both places will be key.

Thinking through what's most important to you before you start shopping will help you narrow the prescription drug plan (PDP) field. The Medicare website (at and call-in center (800-MEDICARE) will then let you sift through plans accordingly. Create a short list of only those PDPs accepted by your preferred pharmacist or that work with national drugstore chains. Or you can call your pharmacy to find out which plans it's taking and narrow the search from there.

You'll also need to consider some major financial trade-offs. "For some people, meeting a $250 deductible, plus a new monthly premium, early in the year may be tough," says Bernstein. If cash flow is a problem, you may want to focus your search on PDPs with low deductibles and rock-bottom premiums, particularly if you're relatively healthy and don't spend much on drugs now. You can find plans that cost less than $10 a month in most areas and, in many cases, less than $5.

On the other hand, if you have health problems and will quickly hit that doughnut hole, where you'll have to pay full freight for medicine (once your drug bills exceed $2,250), you'll want to look seriously at plans that offer some coverage in the gap. Your monthly premiums will be higher, but your total outlay may be lower--a worthwhile compromise, perhaps, for someone on a fixed income.

Fortunately, help is available if money is tight. The income cutoff for premium subsidies is $14,355 for singles and $19,245 for married couples (that adds up to 37% of the Medicare population). Everyone in this group should have received a yellow letter from Social Security by now explaining what help they'll be eligible for. People who haven't been notified but think they're eligible can contact Social Security ( or 800-772-1213) for help.

3 Start Shopping

Armed with the Medicare info you tossed in your folder, plus your list of drugs and personal priorities, you're finally ready to sort through the options in your area. You can deal with Medicare directly by phone or on the Web, or turn for help to the veritable army of volunteer counselors on standby at local agencies on aging, community centers and, often, churches and neighborhood pharmacies.

If you call Medicare yourself, you'll first be connected to a voice-activated system that will ask you a series of identifying questions. Speak clearly: One sneeze or mumble and the system won't understand you. After a few minutes, you'll be switched to a counselor who will take you through the Medicare website's questions to generate a list of suitable plans that will be mailed to you.

If you're even remotely Web-savvy, you can hop on the Medicare website yourself. It takes a few hours, the occasional screen freeze or site crash included. The site's plan comparison tool allows you to sort PDPs by cost or by participating pharmacy, to search for ways to lower costs by substituting generic drugs or using different pharmacies, and to get side-by-side comparisons of up to three plans at a time. But inputting your data is a pain, the navigation system takes time to learn, and if you run out of time before you finish, or want to conduct additional searches, you'll have to start all over again--the site won't save any of your personal information.

Once you generate a list of suitable plans, print it out immediately--a necessary precaution, given the technical glitches that the system has been experiencing during the early days of enrollment. "If the site melts down during your visit," says Bernstein, "you'll be glad you have a hard copy of your search."

4 Work Out the Kinks

If your situation seems simple--you've found a plan that covers your drugs and saves you money--then look no further. But running into a hitch or two is common. For instance, you may find that one or more of the drugs you regularly take aren't covered by the PDPs available to you. "Contact your doctor or pharmacist and find out if you can change or adjust your medication," says pharmacist Koski. If not, choose the plan that covers your most expensive drugs.

You may also encounter plans that mandate "step therapy," requiring that you try a cheaper equivalent drug for a medication you routinely take. If you are unwilling or unable to accept the change, your doctor or pharmacist will need to call the drug plan directly and discuss your drug therapy options.

Spend a few more moments comparing the stand-alone plans with the available Medicare Advantage plans; these managed-care plans that package doctor and hospital coverage with a drug benefit will be among the choices that the website generates. Although most seniors elect to stick with traditional Medicare, the managed-care plans can offer some enticing bells and whistles. Some now allow you to see any doctor rather than restricting you to physicians in the plan's network; others offer dental benefits, access to a health club or services like chiropractic, massage or acupuncture.

Once you've finally settled on a choice, sit back, take a deep breath and then run your analysis all over again. Why put yourself through such torture? Because while the Medicare website is a good resource, mistakes do sometimes crop up in the program, and there's always the possibility that you may have tripped up somewhere along the line as well. "Do a Web search, then confirm your results using the Medicare call center or a local volunteer counselor," Bernstein advises. If you have additional questions, call the plan provider directly and let a customer service rep walk you through the details of its offering. If any new information emerges about the coverage or restrictions, consult your doctor or pharmacist.

5 Ready, Set, Enroll!

Once you've found a plan, the actual enrollment process is easy. You can sign up through Medicare, either online or by phone, or go directly to the issuer offering the plan you've selected. The latter may be the better move, giving you one last chance to confirm that you understand how the plan works and that the information you've been given about cost and drug coverage is accurate.

If you're still uncertain about which PDP to choose, though, don't feel pressured into a rush decision. Although the plan has a Dec. 31 deadline for coverage starting Jan. 1, you have until May 15 to enroll without incurring a penalty. In fact, some experts advocate holding off a few months even if you're sure of the plan you want. "There's so much we don't know about how the benefits will work," says Koski. "If you wait until May, more information may become available."

Remember too that the decision you make, whether today or a few months from now, isn't a life sentence. If you don't like your choice or your circumstances change, you can simply opt for a different plan during the next open enrollment period in the last six weeks of 2006. In other words, there's always next year.