Medicare in 2007: What you need to know

(Money Magazine) -- When Medicare began offering Part D prescription drug coverage for the first time this year, seniors had six months to sort through the chaos - and it was chaos - to pick a plan.

This time you'll have just six weeks to enroll or change plans for 2007, with a deadline of Dec. 31. "That includes the holidays," warns Tricia Neuman, director of the Kaiser Family Foundation's Medicare Policy Project.

There's a lot to consider. Some plans have expanded drug coverage, while others have reduced it. Some premiums are higher, others lower. And many consumers still have to grapple with how to pay drug costs in the program's infamous coverage gap, a.k.a. the doughnut hole.

The good news is that in a midyear survey of Part D participants, nearly half of respondents said they were saving money. Need to make a decision for yourself or a loved one? Read on.

With a few tweaks in the numbers, the basic plan structure remains the same. Participants usually pay a deductible (for 2007, $265 or less), after which they pay 25 percent of "total drug costs" up to a preset level ($2,400 next year).

Then comes the gap: Coverage stops until bills reach $3,850. At that point insurance kicks in again, picking up 95 percent of the tab. Now for what's changed:

More choices: Last year there were 40 or so plans to pick from in most states; this year the majority have 50-plus.

Enhanced benefits: Many plans have reduced or eliminated deductibles and done away with co-pays on generic drugs. Roughly twice as many plans will offer coverage in the doughnut hole, typically for generics only.

Converging prices: This year, monthly premiums for basic stand-alone plans varied widely, from $1.87 to over $35. In 2007, most will fall between $10 and $30. Premiums for plans that cover the doughnut hole are higher ($40 to $135).

Ask yourself these two key questions:

Does it have the drugs you need? Plans differ considerably on which drugs they cover. Look at each plan's formulary, or list of covered medicines, to see if the ones you take (brands and dosages) are on it, what co-payment is required (many plans break drugs into three cost tiers) and whether you'll need additional authorization from your doc.

It's crucial to do all this even if you're just re-enrolling, as many formularies have changed.

Does it give you enough coverage? Ask your pharmacist(s) for a list of the prescriptions you've filled so far this year and their current selling price - not your co-pay - then calculate your bill for the year. (Remember those total drug costs? They are figured not by what you lay out but by the retail price.)

If the total is near or above $2,400, where the doughnut hole begins, consider a plan that offers gap coverage. If your drug costs are well below $2,400 and you're fairly healthy, you should be okay with a more basic, less costly plan.

Making sense of the Medicare mumbo jumbo isn't easy. Don't go it alone.

Compare plans... at Medicare's Prescription Drug Plan Finder. Plug in the medicines you take and your zip code, and the site spits back your estimated costs and other details about plans in your area.

If you don't feel comfortable using the Internet, ask someone you trust who's Web savvy to help or call 800-MEDICARE to have a trained counselor run a comparison and mail it to you.

Get personalized advice... via your State Health Insurance Assistance Program (800-677-1116). These agencies can put you in touch with local resources that provide one-on-one sessions with trained volunteers.

Whichever plan you choose, be sure you sign up by Dec. 31 (Dec. 8 if you're changing plans and want to prevent a lapse in coverage). Miss that deadline, and you'll have to wait a year and pay a permanent 1 percent penalty on premiums for every month you went without coverage.

- Curtis Pesmen is co-author of Your Prostate Cancer Survivors' Guide.

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