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Taking My Medicine

Dennis Friedman

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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