How Beneficiaries Chose their Plans


The Medicare Payment Advisory Commission (MedPAC) was created by the Balanced Budget Act (1997) to report on issues affecting Medicare. The June 2006 Report to Congress: Increasing the Value of Medicare ( includes an analysis of how beneficiaries chose the drug plan in which they enrolled.  The report also includes a discussion of Medicare Part D plans including enrollment in plans, plan benefits, and formularies, which was examined in the July 13 Weekly Alert.

How Beneficiaries Chose the Plans in Which They Enrolled

MedPac set out to answer the following questions: Why did beneficiaries choose to enroll or not enroll in Part D?  How did beneficiaries decide on specific plans?  What information sources did they use and was the information helpful to them?

Research Structure

The first process of data collection was obtained through telephone surveys conducted from February 8 to March 2, 2006.   Using random-digit dialing to those who qualify for Medicare, MedPAC researchers collected information to better understand the decisions beneficiaries made concerning PDPs.

Med Pac also studied beneficiaries’ plan choices through focus groups.  Six studies were done in two regions (three studies per region).  The first region, Richmond, Virginia, had one focus group of beneficiaries who are dually eligible for Medicare and Medicaid (dual eligibles), and therefore were automatically enrolled in a Part D plan. The second focus group included beneficiaries who received enrollment help from family members. The third focus group included beneficiaries who made their own enrollment decisions.  In the second region, Tucson, Arizona, one focus group included beneficiaries and their family members, and two focus groups included only beneficiaries.  All focus groups were of mixed gender, income, and race.

The final collection of research was done through interviews of Medicare counselors from such organizations as the state health insurance assistance programs (SHIPs), Access to Benefits Coalition, the Health Assistance Partnership and the Medicare Rx group.


The decision to enroll in a drug plan is a multi-step process. Beneficiaries must understand the benefits, accept the process of auto-enrollment if applicable, apply for the low-income subsidy known as extra help if eligible, and finally sign up for the right plan.

Knowing about the benefit is the first step in an individuals’ decision-making process.  Beneficiaries must examine the various Medicare drug plans available to them and (if they have other drug plan policy options) compare these offerings with their other drug plan’s benefits.  Survey findings showed 88% of beneficiaries knew about the Part D option.  Levels of understanding varied by individual on issues such as gap coverage, level of drug coverage and non-enrollment penalties.

The second step in an individuals’ enrollment decision, for dual eligible and LIS-eligible individuals who do not choose their own plan, is accepting auto-assignment.  26% of beneficiaries without another drug plan qualify for auto-enrollment.  Once auto-enrolled, beneficiaries must decide whether to remain in the plan to which they were assigned or to choose different coverage.  Of the 26% of beneficiaries who were auto-enrolled, better than half (58%) chose to remain with the Part D option to which they were assigned; about a third (31%) decided to change the plan they were automatically enrolled in, and the rest (11%) had not made a decision.

Another step in beneficiaries’ decision-making process is applying for “extra help,” the low-income subsidy (LIS; see the May 25, 2006 Weekly Alert for more on LIS) that provides assistance with premiums and cost-sharing.  SHIP counselors found that a small number of beneficiaries qualify for LIS, though counselors will help those who do qualify to fill out the necessary applications to receive LIS.

In the final step, a beneficiary without a better source of drug coverage must decide whether to enroll in a Part D plan.  Within the survey, 30% of beneficiaries without another source of drug coverage had enrolled, 16% were still in the decision making process and 34% had decided not to enroll.   The vast majority of those who had enrolled, 93%, stated they had done so to save money.  The most common stated reason not to enroll was due to another source of drug coverage, even though the surveyors did not ask this question of people with employer-sponsored insurance.  Another reason cited by beneficiaries for not enrolling in Part D was low usage of drugs (52% of beneficiaries), i.e., using two or fewer drugs on a regular basis.  Nearly 50% of this group had drug expenses below $20 per month.

Choosing a Plan

Once beneficiaries decide to enroll in a Part D plan they must choose a plan. Beneficiaries cited drug cost, premiums, and drug coverage and company reputation as the most important factors to make their decisions.  Education was a vital tool in a beneficiary’s decision-making process.  49% of beneficiaries cited using family members or friends as resources as they made decisions.  Other sources of assistance used by beneficiaries were insurance agents (17%), Part D plans (8%), pharmacists (3%), doctors (1%), counselors (6%), nursing home/senior housing (3%), and employer/ union (2%).

Medicare does provide informational sources for beneficiaries, including 1-800-MEDICARE,, and Medicare and You (a handbook of plan information).  However, overall, beneficiaries did not receive their information from Medicare.

Individual counseling services for Medicare beneficiaries are provided by the SHIPs, which are state-wide programs with federal funding.  In 2006, SHIP programs were allocated 32.7 million dollars to run Medicare counseling centers and to provide assistance with all Medicare questions, including questions about Part D.  The counselors’ main concerns were the lack of coordination among Medicare organizations and the lack of staff to handle the amounts of calls.  SHIP programs implemented a multi-step process to educate beneficiaries.  The process begins with a large meeting of beneficiaries, to get out basic Medicare information.  Next, beneficiaries are encouraged to call or make an office visit to an individual counselor to get answers to their specific questions.  Finally, after independent study and relying on the information provided by the SHIP, beneficiaries choose a plan which best suits them.

MedPAC survey findings show 51% who have enrolled in a PDP felt they had enough information to do so, though 50% have found the decision to be difficult.  The majority of beneficiaries (51%) who had already made plan decisions when surveyed stated it took eight or more hours to come to that decision.  49% of beneficiaries who had not yet chosen a plan stated they spent one hour or less reviewing their plan options.  The majority of beneficiaries recommended another source of information in the form of plan comparison charts to simplify enrollment decisions.  Counselors recommend that plan options should be limited to make decisions easier.


The data collected by MedPAC confirm that many beneficiaries will not access resources on the Internet, even though CMS promotes its web site and the web sites of sponsoring organizations as the best sources of information about Part D plans.   Therefore The Center for Medicare Advocacy recommends that more detailed, written comparison charts be made available to beneficiaries in order to comply with beneficiaries’ needs for information.  CMS needs to ensure that the comparison charts available in the Medicare & You Handbook are complete and accurate, and to avoid the problems that occurred with the 2006 edition, where plans were not properly identified as being eligible for low-income assistance.

The complexity of the decision-making process, as detailed by the MedPAC report, also confirms that Medicare beneficiaries would be better served by a single, uniform prescription drug benefit within traditional Medicare.

Copyright © Center for Medicare Advocacy, Inc. 08/19/2013