Choosing prescription drug coverage (which is separate from what they call "original" Medicare - Parts A and B) was pretty simple for me, since I take two generally inexpensive generics. However, just to be sure, I decided to do my due diligence.

Thankfully, "due diligence" is made simple by the good folks at CMS (Center for Medicare & Medicaid Services), thanks to their Part D plan finder online.

A bit of an aside at this point: You may be wondering why in the world Medicare has all these "parts." A short history of Medicare explains it. When Medicare was first implemented around 1965, it covered hospital costs. Within a year or so, a few additional services (office visits, durable medical equipment, etc.) were added in. So the earlier (hospital) coverage was dubbed Part A and the latter, Part B.

Originally, Medicare did not cover prescription drugs at all. As more and more new and expensive drugs came onto the market and were prescribed, it created (as you can imagine) a real hardship for many seniors taking multiple high-priced prescription drugs. So in 2003, Congress added prescription drug coverage to Medicare benefits. Since Medicare Advantage program (a privatized way of receiving Medicare benefits, which I won't go into here) was called "Part C," the drug coverage was labeled Part D.

So, although it's handy that Part D is the drug coverage, it's just a happy coincidence that the next letter in the alphabet happened to parallel the type of coverage.

Okay, back to choosing my own Rx coverage. I went to the drug plan finder at medicare.gov and opted for the Personalized Search, since that will save any prescription drugs that are entered. This is helpful because every year there is an Annual Enrollment Period (yes, another AEP!) for Part D coverage.

The smart Medicare recipient re-shops Part D coverage every year during the AEP from October 15 - December 7 for the following year's drug plans. For example, this year's AEP will be for drug plans beginning January 1, 2016.

This is because not only do the prescriptions you're taking possibly change over time, but the Part D plan benefits and their premiums definitely DO change every year. What was the best and smartest choice for you (and me!) this year, might not be the best choice for 2016.

This process is simplified by having some or all of your drugs already entered and saved from the previous year.

So why do all this stuff with the "Plan Finder" and not just buy the cheapest plan?

Because the Plan Finder tool doesn't just take into account the monthly premium. Far from it! The default setting is for it to sort for the lowest total out-of-pocket costs.

Quoting from the Plan Finder site:

This is an estimate of the average amount you might expect to pay each year for your prescription drug coverage. This estimate includes the following costs, as applicable:
  • Monthly premiums
  • Annual deductible
  • Drug copayments/coinsurance
  • Drug costs not covered by prescription drug insurance

If you entered your drugs into the Medicare Plan Finder, then this estimate includes the cost of those drugs.

If you selected "I don’t take any drugs," then this amount includes only the cost of the monthly premiums that you would pay for the plan and it does not include any drug costs.

If you selected "I don’t want to add drugs now," then this estimate includes the average drug costs for people with Medicare and may differ depending on your age and health status.

I highly recommend you take the few extra minutes to enter your prescription drugs into the system and do it right. The difference in annual costs could be anywhere from hundreds to thousands of dollars!

In my case, going with the lowest-priced plan did turn out to be my best option. But I wouldn't have been sure that was the best fit if I hadn't gone through the process as I recommend you do!