Prescription Drug Plans
Prescription Drug Plans: What you need to know
Original Medicare does not cover prescription drug plans. Seniors obviously needed a way to get prescriptions covered and Medicare Part D was created. Part D also goes by the names Prescription Drug Plans or PDPs.
PDPs help you lower your costs for prescription medications. The government does not offer PDPs, only private insurance companies.
They offer them in two main formats. The most common is on a standalone basis. The second option is Medicare Advantage. Some Advantage plans do include prescription coverage. Sometimes they are abbreviated MAPD then. (Isn’t insurance fun? Gotta love the acronyms)
Prefer to watch a brief video on Medicare drug plans instead?
HOW MUCH DOES IT COST
The cost can vary dramatically for PDPs, and not just the premium. There are many factors to consider when adding up costs.
- Premium – the first and probably easiest to compare. All plans post their premium publicly. Premiums can range from around $20 a month all the way past $150 a month.
- Deductible – this is what you have to pay before medications are covered by the plan. Again this varies by which plan you choose. Some plans have ZERO deductible and others can be several hundred dollars.
- Initial Coverage – this is what you have to pay after you reach your deductible for the year. An example would be a $20 copay for a month supply of a medication and the insurance company covers the rest of the cost.
- Coverage Gap – Sometimes this is referred to as the donut hole. This can be a particularly stressful time if you hit this point in the plan year. Your costs for medications during this time end up being higher compared to the Initial Coverage level
- Catastrophic coverage – Once you get through the coverage gap, then you enter catastrophic coverage. Thankfully at this point most of the costs end up being covered by the insurance company
NOT ALL MEDICATIONS COVERED THE SAME
Many people have 20 or more prescription drug plans to choose from. These are far from identical. We’ve already talked about differences in premium.
What most people don’t know is that there can be large differences in how medications are covered. Not only how, but WHICH medications are covered. This means that you could potentially pick a plan that does NOT cover the medication you need.
Or you could pick a plan that covers you medication as long as you pay a $50 copay. But there could be a plan available that would cover that same medication for a $10 copay.
Insurance companies use a formulary to identify which medications are covered. This formulary also shows you which “tier” the medication falls into for them which can make a difference on how much you have to spend. Typically each plan has its own, unique formulary.
HOW DO I FIND THE PLAN FOR ME AND ENROLL
There are several ways you can sign up fort Part D, each with their own pros and cons. These include enrolling using the Medicare Plan Finder tool at Medicare.gov, calling 1-800-MEDICARE, contacting an insurance company directly, or using an agent.
Medicare Plan Finder gives you an opportunity to enter your current medications into the tool. After you finish, you will see your personalized estimate of the total costs Medicare expects. This is really useful as long as you know what you are looking for.
Two key points are hugely important here. The first is that you make no changes to your current prescriptions. Adding new prescriptions, taking them more or less often, or stopping a prescription would completely change your estimate. The second is looking for alternatives to save money on your prescriptions. Many companies offer medications at significantly less for 90 day mail order supply.
You can contact 1-800-MEDICARE and talk to a representative over the phone. They will listen to what medications you are in, recommend the plan that will give you the best savings, and help you enroll in that plan.
You can also contact an insurance company directly and sign up. Companies often offer more than one plan so the rep you talk to can compare their plans for you. This is helpful if you are “married” to a company or have already done some research and no what company you want.
The fourth option is to consult with an insurance broker. This person can help you find the company to cover your current medications. They can give you advice on options for saving money. And there are two more big differences that make this option unique.
Over time your life will change. This is a fact. Do you want to start over every time from scratch when you have to find a new plan? Because these plans may change every year. Having a relationship with an independent broker can save you time of researching the market.
A second advantage is having someone to contact directly. Life runs smoothly most of the time. But not always. If you have a hiccup with your plan, do you know how to resolve it? Do you have a person to contact at the insurance company that can help with all areas? Approvals, billing, claims, etc.
WHAT IF I DON’T SIGN UP
You’re not taking any prescriptions right now. So why should you pay a premium each month for something you are not using? Good question.
Enrollment in a prescription drug plan is NOT mandatory. BUT. You knew there was a but coming right? But if you enroll in a prescription drug plan later, for whatever reason, you may have a penalty.
Unfortunately this is not a one-time penalty either. This penalty stays with you for as long as you have the coverage. The penalty is calculated by multiplying the average premium by 1% for each month you did not have coverage. That’s 12% a year. Compare that penalty to your mortgage rate. You will continue to pay this penalty for as long as you have a prescription drug plan.
SAVE MONEY ON PRESCRIPTIONS
Prescriptions can be expensive. We all know this. So how can we save money so we don’t have to blow our nest egg? There are a number of possibilities so let’s see what applies to you.
Switching to generics
Are you able to switch to a generic form of that medication? Many times these medications are covered with a much smaller copay than the brand name. This can lead to lower copays for you and also help you avoid the donut hole.
Mail order pharmacy
Many companies offer substantial discounts for switching to 90 day mail order pharmacy. I’ve seen clients save $50 a month by doing this. That’s $600 a year. And you don’t have to drive to the pharmacy.
Extra Help
Depending on your income and resources, you could be eligible for Extra Help. If you are single and your income is less than $17,820, you should see if you are eligible. For married couples, your combined income must be less than $24,030.
There are additional requirements to qualify, so you may not be eligible even if your income is below these levels. But it’s definitely worth checking because the benefits to you can be very important.
Wisconsin SeniorCare.
SeniorCare is a prescription drug assistance program for Wisconsin residents who are 65 years of age or older and meet enrollment requirements. SeniorCare is designed to help seniors with their prescription drug costs.
This is another resource that can help lower your prescription costs. Check out the income limits here to see if you qualify.
Mike Lovell
608-571-4461
Mike@askMedicareMike.com
Many people who choose a prescription drug plan also look for Medicare supplement coverage to fill in the gaps of Original Medicare.
Other people look to combine their prescription drug plan with their medical coverage into 1 plan called Medicare Advantage.