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I’M STILL KICKING myself for not getting a new Medicare Part D prescription drug plan during the enrollment period for 2023, even though our premium had gone up significantly. Most people, it seems, are like me: They stick with their current plan, rather than shopping for one that meets their needs at a lower cost.
For 2024, I vowed to do better.
Medicare’s open enrollment period ran from Oct. 15 to Dec. 7, 2023. During that time, I received an email from Medicare encouraging me to compare all of my coverage options, especially the prescription drug plans. The email stated: “There are 23 Medicare drug plans in your area. Explore your choices on Medicare.gov today!”
I get this type of email from Medicare every year. Don’t ignore Medicare’s reminder—because drug-plan prices can fluctuate greatly. According to the Centers for Medicare and Medicaid Services, the average monthly Part D plan premium for 2024 is $55.50.
Lowering costs. It’s easy to compare your current plan to others available to you. All you have to do is log into Medicare.gov, and then enter your zip code and the drugs you take. Medicare saves your drug information, so you don’t have to reenter it each year. It’s also easy to edit your list of drugs, if necessary.
When I compared my current Medicare prescription drug plan, AARP Medicare Rx Saver (from United Healthcare), to the others available to me, I could save a lot if I switched to Wellcare Value Script (PCP). My current plan’s 2024 premium was jumping from $50.70 a month to $89.80. Meanwhile, the premium for Wellcare’s plan is unbelievably lower at just 40 cents a month. In addition, Wellcare provides better coverage for the drugs I take. Both plans have a $545 deductible, but my prescriptions are in Wellcare’s tier categories that have zero deductibles, which isn’t the case with my current AARP plan.
At first, I thought this was too good to be true. How could there be such a big difference in cost? Is there something wrong with the quality of Wellcare Part D plans? It seems not. The Centers for Medicare and Medicaid Services, which rate health care plans, gave it a 3.5 star rating out of four, which is higher than the three-star rating for the plan I currently had. I’ve read that Wellcare is the second-largest company that offers Medicare Part D plans and generally has lower premiums, with some at zero cost.
I take inexpensive generic drugs and my wife doesn’t take any. My total estimated drug cost under Wellcare is $124.80 a year, which is less than half the cost if I stayed with AARP. I figured that, if my wife and I both switched to Wellcare, we’d save approximately $2,300 in 2024. Almost all of the savings are due to the lower premiums.
We decided to enroll in the Wellcare Value Script (PCP). It was simple to do on Medicare’s website. You just click the enrollment button under the plan you want, and some of the information needed for the application is already filled in. Once you complete the application, you can submit it from the Medicare website.
Triggering IRMAA. I’m glad we switched plans because we’re facing higher 2024 premiums for Medicare Part B and Part D. I’m talking here about the premiums charged by the federal government, as opposed to those charged by insurers for supplemental plans.
The Social Security Administration determines the premium surcharge, or income-related monthly adjustment amount (IRMAA), based on your income from two years earlier. The savings from changing our Medicare drug plan will help offset part of the Part B and Part D premium surcharge we’ll pay in 2024.
I never thought I’d be subject to IRMAA. When I retired, my income was primarily from capital gains and dividends, plus the interest I earned on my savings account. One reason I delayed Social Security benefits until age 70: It gave me the chance to do Roth IRA conversions at a relatively low tax rate. Those conversions shrank my traditional IRA, resulting in smaller required minimum distributions (RMDs) once I turn age 73.
When Rachel and I were married in 2020, our income was still well below the IRMAA threshold. But after our marriage, we sold Rachel’s old home, and the 2022 sale ended up increasing our income for IRMAA purposes. Should we have sold the house before we got married? I won’t bother you with all the details. But the short story is, by waiting a few years to sell, we ended up pocketing far more, and the extra proceeds easily cover our 2024 Medicare surcharge.
We didn’t challenge the Social Security Administration’s IRMAA decision because our decrease in income after 2022 was not caused by one of the required life-changing events. The notice we also received stated: “We cannot make a new decision if your income has changed for a reason other than those listed above, such as receiving one-time income from capital gains.”
Meanwhile, even though I’ll start taking RMDs this year, we’ll avoid having to pay IRMAA surcharges two years later, thanks to all the Roth conversions I did earlier in retirement. Holding our bonds in our IRAs has also helped reduce our taxable income.
My wife will start her RMDs in six years. At that point, we’ll be up against IRMAA again. We’re planning on doing qualified charitable distributions (QCDs) from our IRAs. That should lower our modified adjusted gross income and, fingers crossed, continue to keep us under the IRMAA threshold.
Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. Check out his earlier articles and follow him on X (Twitter) @DMFrie.
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The pharmacy will never tell you the good rx or single care prices for obvious reasons and lack of personnel. COSTCO WILL!!
My Harris Teeter does. Also tends to have the lowest RX prices.
My Walgreens does
While taking account of your current prescriptions is important, beware of a new health issue that crops up with prescriptions that may be covered at substantial co-payments or not at all. All for saving a buck, but a changing health situation can leave you stuck till next open enrollment, and maybe just sticking with a little more expensive drug plan is worth the peace of mind and maybe even less costly. This is what insurance addresses, unexpected bills, which definitely are unknown and can be big.
I am in SE Florida and my broker put me on Wellcare and I respect her
Speaking of GoodRx, after the pharmacy tells me the prescription price under our Part D plans (likewise SilverScript SmartSaver), I’ve learned to always ask for a GoodRx quote. The pharmacy folks don’t usually offer this without prompting.
Frequently the GoodRx price beats our Part D price, and sometimes by a lot. Recently I ordered a prescription for my wife and the Part D price was around $75 while the GoodRx price was around $16!
Also if you are on an expensive medication that you take regularly check out Mark Cuban’s Cost Plus Drugs
I kept the same drug plan for several years, not because it was necessarily the cheapest, but because I was taking an expensive medication that required prior approval, and that was not even covered on some plans. Having received approval from my current drug plan I didn’t want to risk losing it by switching. However, I am no longer taking that medication. I checked my options on medicare.gov last fall, and although Wellcare had the lowest premium, my total drug costs were lower with Aetna SilverScript SmartSaver, which is charging me $5.20/month. I was surprised at how high some of the premiums had risen.
The drugs that you take, or can reasonably expect to take, make a huge difference. If I decided to buy my steroid eye drops with a GoodRX coupon instead of through my drug plan, Wellcare would be the cheapest. It will be interesting to see what effect next year’s $2,000 OOP cap will have on premiums.
I went through a similar analysis to arrive at moving from AARP to Wellcare for 2024. I figure it will have a few bumps as I cannot easily move my prescriptions and am getting them reissued. I also was notified this morning that AARP’s mail order provider, Optum, still wants to ship me drugs on the old plan. To save over $1000, I will deal with the bumps. If Wellcare wants to buy some marketshare, I’m willing to help.
Be cautious of WellCare. What they are doing probably can’t be sustained. They are buying customers to build up their enrollment base. Except for Tier 1 and 2 drugs they have a high $545 deductible.
In effect, the low or no premium is being traded for more OOP costs for certain Rx users.
For many it’s a good deal for now, but you need to ask what can they actually do so different from other plans to sustain the low premiums. If they have attracted high users in 2023, 2024 may be a shock.
I had horrible experience dealing with WellCare years ago when being responsible for my disabled brother’s healthcare and finances. I chose Aetna’s SilverScript even though it was slightly more expensive.
Scrutinizing the various Medicare supplements and drug plans is beyond what most folks are either capable of or interested in doing. I count myself lucky to have come across an insurance agent who does through analysis of our (and all of her clients) plans every year. This was a good year for us, as our Wellcare drug plan premiums were reduced to $0.
Not all agents are like mine though. My cousin has an agent in Florida who never contacts him. At age 70 he has never had a drug plan, so will be penalized if he ever needs to buy one. This is something that his agent never explained to him.
Regarding IIRMA, you’ve done a great job analyzing a strategy to minimize the bite. Readers who are on the tipping point of the increased Medicare premiums would be well advised to heed your advice.
Picking a Part D plan is a gamble because of the unknown variables in Rx use during following year.
Picking a Medicare supplement is easy, but has been made too complicated.
For most people the best strategy is a Plan G Medigap plan. Total freedom of choice, and costs limited to the Part B deductible.
MA plans appear attractive, but they limit access, employ more care review and use internal deductibles. The extra benefits many claim to offer are often more fluff than substance.
In short, MA plans use all the techniques to control costs that people loudly complain about with their pre-Medicare health insurance.
I too have Wellcare, and they are charging me 50 cents a month. I can barely believe it, but I guess the deductible is so high they can cover the cost of the generic drugs with the government subsidy. I don’t really care, anyway, as my main purpose in having this insurance is the part where you don’t have to pay more than $2000 a year out of pocket. If you need, say, $500K in exotic drugs, the 50 cents is well worth it.
I have been paying IRMAA ever since I signed up for Medicare 5 years ago – if you are good at saving and investing, it goes with the territory.
As I have written previously those whom have to pay IRMAA should feel blessed that their income is so high in retirement (less than the top 5% of retiree income)!
Are you saying that the Wellcare plan has a $2,000 OOP limit? The government’s $2,000 OOP limit goes into effect in 2025, not 2024. However, you will not have to pay anything once reaching catastrophic coverage this year, which can be a significant saving. This is a good overview.
You are right in your 2025 OOP limit. But per KFF (formerly Kaiser Family Foundation) a leading nonprofit healthcare foundation that researches healthcare, “Eliminating this 5 percent coinsurance requirement means that in 2024, Part D enrollees will pay no more than about $3,300 for all brand-name drugs they take”.
Yes, that 5% could add up. Drug plans were allowed to charge $10 and change instead of the 5%, as the Medicare Advantage plan I was on last year did, but I never saw one that did so. The year before I went into catastrophic coverage in February and paid around $250/month for the rest of the year.
You’re right – it’s $8000 in 2024, and $2000 in 2025. I’m OK with that.