What should I look for in a Medicare prescription drug plan?Posted by Medicare Made Clear
Do you know what to look for in a Medicare prescription drug plan? What are the types of plans and how are they different? How do you find the plan that’s right for you? Here are some tips to help you get the prescription drug coverage you need.
There are two main ways people with Medicare get prescription drug coverage. The first is a standalone Medicare Part D prescription drug plan. This type of plan is offered through private insurance companies and only helps pay for prescription drugs. If you have Original Medicare Parts A and B and also need prescription drug coverage, a standalone Part D prescription drug plan might be a good choice for you.
The second way to get Part D prescription drug coverage is to purchase a Medicare Advantage plan (Medicare Part C) with a prescription drug benefit. Medicare Advantage plans are also offered through private insurance companies. They provide the same coverage as Original Medicare Parts A and B, plus extras, like a prescription drug benefit. Not all plans provide this, so if you need prescription drug coverage, be sure the plans you’re looking at do.
A Note about Part D late enrollment penalties: If you choose not to enroll in a Medicare Part D plan when you first become eligible for Medicare, you may have to pay a higher premium if you decide to join later. You’d have to pay this late enrollment penalty the whole time you have Medicare Part D coverage, no matter which plan you eventually chose. Visit Medicare.gov to learn 3 simple ways to avoid the late enrollment penalty.
One important part of choosing Medicare prescription drug coverage is making sure your drugs will be covered by a certain plan. A formulary is the list of drugs a plan will cover. Even if you already have prescription drug coverage, it’s a good idea to make sure the plan’s formulary will still cover your drugs in the coming year.
When looking at a plan’s formulary, you may also see the term “tier.” A tier is just a group of drugs. Here is a brief description of the drug tiers your plan might use:
Tier 1 – lowest copay: This tier includes lower-cost, commonly-used generic drugs.
Tier 2 – low copay: This tier includes most generic drugs.
Tier 3 – medium copay: This tier includes many common brand name drugs (preferred brands) and some higher-cost generic drugs.
Tier 4 – highest copay: This tier includes non-preferred generic and non-preferred brand drugs.
Tier 5 (Specialty Tier) – coinsurance: This tier includes unique and/or very high-cost drugs. You pay a percentage of the total drug cost (coinsurance).
As you can see, the lower the tier, the lower your copay will generally be. Many higher-tier drugs also have lower-cost options in lower tiers. Ask your doctor if you can switch to one of these drugs to help reduce your out-of-pocket costs.
A note about step therapy: Some plans with tiered formularies have special requirements for certain drugs. One of these requirements is called “step therapy.” With step therapy, you must first try a less-expensive drug to see if it works for you. You can only “step up” to a more expensive drug if you and your doctor can show the less expensive drug didn’t work for you. Your plan’s formulary will tell you which drugs have special requirements, like step therapy.
Whether you choose a standalone Part D prescription drug plan or a Medicare Advantage plan with a prescription drug benefit, you will have to share some of the cost for your prescriptions. This is called cost-sharing and can include premiums, copays, coinsurance and deductibles.
Premium: A premium is the amount you have to pay to be a part of a plan. Most premiums are paid monthly.
Copay: Your copay is the amount you pay every time you use a service. For example, you might have to pay $10 each time you fill a prescription.
Coinsurance: Coinsurance means splitting costs with your plan on a percentage basis. For example, you might pay 20% of the cost of a drug, and your plan would pay 80%.
Deductible: Your deductible is the set amount you have to pay before your plan will begin to pay some of your health care costs.
A note about the Part D coverage gap: Most Medicare drug plans have a coverage gap (sometimes called the “doughnut hole”). If you are in the coverage gap, you’ll pay most of the cost for your covered drugs. You enter the coverage gap when you and the plan together have paid a pre-set amount for your drugs. You remain in the coverage gap stage until you have spent your plan’s out-of-pocket limit in a single year. Deductibles, copays, coinsurance and other payments count toward the out-of-pocket limit, but premiums do not. Visit Medicare.gov for more information and helpful examples.
Your Next Steps
Now that you know what to look for in a Medicare prescription drug plan, how do you find a plan that meets your needs? One helpful resource is the Medicare.gov Plan Finder tool. Once you enter some basic information—like your ZIP code—you’ll see a list of Medicare prescription drug plans available in your area. You can compare plans side-by-side to see which offers the combination of coverage, cost and convenience you’re looking for. You can even enter the drugs you take to help estimate your costs and see only the plans that will cover your drugs. Start today!
For more information, contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048. If you have questions about Medicare Made Clear call 1-877-619-5582, TTY 711, 8 a.m. – 8 p.m. local time, seven days a week.
MedicareMadeClear: Understanding Medicare Part D
MedicareMadeClear: Medicare Part D costs
Medicare.gov publication (PDF) How Medicare Uses Pharmacies, Formularies and Common Coverage Rules
Y0066_120417_134542 File & Use 04292012