How to compare Part D drug prices with buying retail

in /Ask Phil by

Janice – Ill.: I’m totally tired of overpaying for my prescription drug coverage right now and for the last four years. I currently use only three cheap generics. I’m thinking of dropping Medicare Part D coverage entirely and going with a retail pharmacy discount plan with a $20 annual enrollment fee.  Your thoughts, please.

Phil Moeller: Healthy people with insurance wind up subsidizing sicker people with insurance. That’s the concept and reality of putting people into large risk pools, which is what Medicare (and the Affordable Care Act) do. Otherwise, only sick people would get insurance and their rates would be unaffordable. Having said that, I’m with you that drug prices are out of hand and that it’s time for Congress to give Medicare stronger tools to negotiate with pharmaceutical companies over prices.

For now, however, I would advise you not to end Part D coverage. If you do, you will face potentially stiff premium surcharges should you ever need Part D again. And as you get older, the odds grow that you will need this coverage. These surcharges will raise your Part D premiums by 1 percent for each month you’ve been without Part D coverage. These surcharges can be substantial if you’ve been without a plan for a long time, and the surcharges last for as long as you have a Part D plan. Instead of leaving Part D, use this year’s open enrollment period to find a plan with lower premiums. So long as your drug use remains modest, you will pay less, and by staying in Part D, you won’t later incur any of those nasty surcharges.