How to Shop for Medicare Drug Coverage | Money.com

Q: I have a retiree medical plan sponsored by my former employer. It is a PPO with a $400 deductible per person and 20% co-insurance. The plan’s costs are reasonable, and it covers a wide range of drugs. There’s a $1,000 annual out-of-pocket maximum and one month of free maintenance drugs when you buy a 90-day supply from the preferred pharmacy. I will be Medicare eligible in 2016, and I do not think that my former employer will continue to offer a retiree health plan. Is there any insurer that will offer similar drug coverage to what I have now with no penalty for pre-existing conditions? How can I find such a plan, regardless of annual cost? Is there any way to avoid the $5,000 per year out-of-pocket cost that I hear is standard with Medicare Part D plans? Thank you. — Gary, N.Y.A: Gary’s question is a great opportunity to talk about the challenges that more and more retirees face as they shift from employer-sponsored group health plans to Medicare.As retiree health benefits have become increasingly expensive, many companies are dropping this coverage. In the best case scenario, the employer gives these retirees a lump sum, which is deposited into a health reimbursement account (HRA). The retiree can use the HRA funds to help buy an individual Medicare policy. But all too often, the employer may simply end the retiree health plan and provide no further support.Still, there is some good news. Gary won’t face pre-existing condition limitations as long as he signs up for Medicare on a timely basis. If he meets the enrollment deadlines, any pre-existing conditions he has will not affect him when purchasing Part D, or when signing up for Original Medicare (Parts A and B) or Medicare Advantage (Part C).If Gary chooses Original Medicare, he may want to buy a Medicare supplement policy, which also is called Medigap. Original Medicare pays only 80% of insured expenses, after beneficiaries pay annual deductibles and co-pays; policyholders must pay the other 20%. Medigap policies will pay that 20% plus other services that Medicare does not cover. If you purchase Medigap coverage at the time you become eligible for Medicare, you have guaranteed issue rights—you cannot be penalized for pre-existing conditions.

Source: How to Shop for Medicare Drug Coverage | Money.com