Drug Costs Too High?
August 3, 2016
Medicare Part D is the most individual part of Medicare. We generally take the approach with our clients that Medicare drug plans should fit you like a shoe: person A wears shoes of a different size than person B. And so it goes with prescription plans; two people in the same house generally take different drugs and therefore need different drug plans to get the best prices for their medications.
Medicare Part D is broken up into four different phases:
- Some plans have none. Some have a small one, others make you pay the maximum allowed deductible for the year. And still others waive the deductible for generics while keeping it in place for brand drugs.
- Cost-sharing. In this phase, you are paying a co-pay or co-insurance based on the drug. Each drug on your plan is “tiered,” which means there is a set dollar amount or percentage amount you pay for your drugs. The amount of time you spend in this phase is based on the total cost of your drugs.
- If your drug costs get high enough (both your share and what the insurance company pays for you), you enter the next phase called “Coverage Gap.” It was formerly known as the “donut hole.” When you enter this phase, costs change. You begin paying 45% of the retail costs for brand drugs and 58% of the cost for generics. In some cases, this cost is lower than the co-pays for your drugs, but typically this represents an increase in costs to you. Before the Affordable Care Act, you paid 100% of the retail costs in this phase, but this is not the case anymore.
- Catastrophic coverage. When you reach a threshold in your costs, the plan steps back in and pays 95% of the costs of your drugs. You typically pay only 5% of the cost or $2.95 for a generic and $7.40 for a brand.
Going through the phases of Medicare Part D are typically the same regardless of which prescription plan you are in. There are, however, things that you can do to lower the cost.
The easiest remedy to investigate begins with the deductible. Do you have one? Is it on all drugs? Brand drugs only? The reality is, sometimes it is in a person’s best interest to have a plan with a deductible if the overall costs are lower. When evaluating plans, overall drug costs can sometimes be reduced by taking a plan with a deductible but lower drug co-pays.
Next place to save has to do with the plan’s drug list. Drug plans are allowed to consider certain drugs brand instead of generic, even if you are, in fact, getting the generic. Some plans may cover a drug as a non-preferred while another might consider it a preferred drug and give it a lower cost. When was the last time you checked? These drug lists change on an annual basis.
Pharmacy is the next consideration. Except in certain circumstances, you must always use networked pharmacies. But many plans have preferred and non-preferred networks for their pharmacies. Are you going where you can get the best price available? Mail order is also available on some plans for a discount. Do not assume prescriptions are always less costly by mail.
Finally, does your plan offer additional coverage during the coverage gap? This benefit needs to be carefully considered since it does not always lead to the savings people expect, but this benefit can lead to significant savings for some people with certain drugs.
For a greater analysis of how Medicare Part D prescription drug costs work, we've got a page that explains it along with a handy guide you can download and share with others.
We very strongly advise all of our clients to reexamine their prescription drug plan each and every year. With all the changes a plan goes through and the potential changes a client has with their medications, it has become an annual review process with us. If you feel you are paying too much for your prescription drugs on Medicare, we encourage you to reach out to a knowledgeable insurance advisor. Or contact us today for an honest evaluation of your costs.
Keywords: medicare part d, prescription drug plans
