Retirement 2.0blog

How to take the Medi-scare out of retiree healthcare costs

Annual open enrollment season offers chance to defang drug expenses

Oct 23, 2017 @ 12:10 pm

By Mary Beth Franklin

I don't think it's a coincidence that Halloween and Medicare open enrollment season occur at about the same time each year. Although some people like to celebrate Halloween by dressing up as ghosts and zombies, for seniors, no costumes are needed to trigger goosebumps.

Health care costs — especially paying for prescription drugs — is one of the scariest parts of retirement.

A majority of Americans cite healthcare costs as the leading obstacle to financial security in retirement, according to new data from Northwestern Mutual's 2017 Planning & Progress Study.

The number of Americans citing healthcare costs as their chief concern spiked dramatically this year from 45% in 2016 to 58% is 2017, according to Northwestern Mutual's annual survey of more than 2,700 American adults.

Separately, four out of five seniors say they would have trouble paying for their drugs without the Medicare prescription drug plan known as Medicare Part D, according to a new survey of more than 1,000 seniors conducted by Russell Research on behalf of Express Scripts, a pharmacy benefit management service.

Medicare Part D is a voluntary outpatient prescription drug benefit for people on Medicare that went into effect in 2006. All Medicare beneficiaries, including those ages 65 and older and those under age 65 with permanent disabilities, have access to the Medicare Part D drug benefit.


During the Medicare Part D annual enrollment period that runs between Oct. 15 and Dec. 7 each year, beneficiaries can choose to enroll in either a stand-alone prescription drug plan to supplement traditional Medicare or an all-inclusive Medicare Advantage plan that covers all Medicare benefits, including drugs.

Yet very few people ever re-shop their Medicare Part D plans after making their initial selection when they first enroll at age 65. That sort of inertia could become increasingly costly as the average increase in prescription drug spending continues to accelerate.

Premiums for stand-alone Part D prescription drug plans will be about 9% higher in 2018 compared to 2017 and will average about $43 per month, according to the Kaiser Family Foundation.

But premiums vary widely. Among the top 10 plans with the highest enrollment, average premiums will range from $20.21 per month ($243 per year) for Humana Walmart Rx to $83.68 per month ($1,004 per year) for AARP Medicare Rx Preferred, the Kaiser analysis found.

Part D enrollees with higher incomes, defined as $85,000 or more for individuals or $170,000 or more for married couples, will pay an income-related monthly premium surcharge ranging from $13 per month to $74.80 per month in 2018, in addition to the monthly premium for their specific plan. An estimated 3.3 million people, representing about 7% of Medicare Part D participants, will pay income-related surcharges next year, according to the Centers for Medicare and Medicaid Services (CMS).


Financial advisers should encourage their clients to compare their Medicare Part D prescription drug plans during open enrollment season.

Clients should start by reviewing the Annual Notice of Change from their current Medicare Part D plan provider or Medicare Advantage plan that comes in the mail each September. The notice lists changes to premiums, cost-sharing or the rules under which a medication will be covered each year.

Then they should go to the Plan Finder on the Medicare website where they can plug in their Medicare numbers and the name and dosage of each of their prescriptions. The Plan Finder displays a list of plans that match their needs, including estimated total costs. (However, these cost estimates do not include any high-income surcharges).

When comparing plans, clients should look beyond monthly premiums to consider overall cost-sharing features. In general, co-insurance, which is a percentage of total costs, tends to result in higher out-of-pocket costs for expensive drugs than co-pays, which are flat amounts.

Shopping for a new Medicare Part D plan can be confusing but free help is available through all 50 of the State Health Insurance Assistance Programs and the Medicare Rights Center.

Or, if clients are willing to pay a fee, they can consult a professional counseling service, such as Goodcare or Allsup Medicare Advisor, for guidance on the best prescription drug plan to fit their needs.

Just as Thanksgiving always follows Halloween, your clients will be thankful that you nudged them to compare their Medicare Part D options that could take a bite out of their health care costs next year.


What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

May 02


Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


What's the first thing advisers should do when they get home from a conference?

After attending a financial services conference, advisers can be overwhelmed by options, choices and tools. What's the first thing they should do when they get back to their office?

Latest news & opinion

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

Galvin's DOL fiduciary rule enforcement triggers industry plea for court decision

Plaintiffs warned the Fifth Circuit that Massachusetts' move against Scottrade signaled that the partially implemented regulation can raise costs for financial firms.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print