Medicare’s annual open enrollment period, which runs from Oct. 15 through Dec. 7, gives you the chance to make changes to your Part D prescription drug coverage. Whether you get your drug coverage through a stand-alone prescription drug plan that you’ve added onto Original Medicare (Parts A and B) or as part of a Medicare Advantage plan, you can keep the plan you have, but you owe it to yourself to review other options.
A recent analysis of many 2018 Medicare plans by the non-partisan Kaiser Family Foundation, for example, found wide differences in plan expenses. Depending on the drugs you take and the pharmacy network you use for prescriptions, expenses can differ by thousands of dollars a year, according to Tricia Neuman, the head of Kaiser’s Medicare research efforts.
Beyond premium differences, she said in an interview, your review of plans should include looking at differences in annual deductibles, copays, the pricing tiers that plans use to charge you for drugs, and whether plans require you to first try generic drugs before they’ll cover brand drugs prescribed by your doctor.
With so many factors to consider, and so many plans to compare, the process can be a little daunting. So I’m sharing the tips I usually provide to people who are in your shoes and trying to figure out whether it makes sense to switch to a new Part D plan for the year ahead.
Tip #1: You already should have what’s called an Annual Notice of Change from your existing plan. It should have arrived in your mailbox back in September. It will outline important changes in your plan for next year, including changes in prices or covered medications, rules about the drugs your doctor can prescribe, and how your plan works with pharmacies to fill your prescriptions. Carefully review this notice. If it includes changes that adversely affect the price or availability of your prescription medications, you can look at other available plans to find one that better fits your needs. Your plan also should have sent you an expanded explanation of how your plan works called an Evidence of Coverage. If you still have questions, you can call the plan directly for answers.
Tip #2: Even if your existing plan has not changed, your health and prescription drug needs might be different than they were last year. If you are taking a new mix of medications, you should check to see how your existing plan covers them. The list of medications covered by your plan is called a formulary. It should be available on your plan’s website, but you also can call the plan and ask for a printed formulary to be sent to you in the mail.
Tip #3: Once you’ve confirmed that your drugs will continue to be covered by your plan, you should check the copays and coinsurance for your drugs next year as well as your plan’s deductible. It can be tempting to focus just on the monthly premium, but your out-of-pocket costs for your drugs are equally important. The maximum deductible for Part D plans in 2018 is $405, but some plans offer a lower or even $0 deductible. Others waive it for certain tiers of drugs on their formulary (more on formulary tiers in tip No. 5 below). Make sure you can cover the costs of your drugs out of pocket until you reach your plan’s deductible in 2018, at which point your plan coverage will kick in and you’ll start paying copays or coinsurance for your medications.
Tip #4: Once you’ve reached this point, I recommend that you use Medicare’s Plan Finder tool to compare your plan with others that are available where you live. The most time-consuming but useful feature of Plan Finder is that you can enter your specific prescription drugs into the tool. It then will show you the plans that cover these medications and an estimate of what they will cost you. You can find tutorials on how to use Plan Finder on the site.
Tip #5: You need to understand the 2018 Part D coverage gap, which is commonly known as the “donut hole.” Once you have paid your plan’s annual deductible, it will cover you until the total cost of your drugs – what you and your plan have paid – reaches $3,750. Once this happens, you will be responsible for paying 35 percent of your plan’s discounted price for brand-name drugs and 44 percent of the cost for generic drugs. You’ll stay in the coverage gap until your out-of-pocket costs have reached $5,000.
This calculation can be tricky. I wish the government’s rules for Part D coverage weren’t so complicated, but then I might be out of a job answering your questions! That $5,000 includes what you’ve paid for your drugs and the discount you received for brand-name drugs. But it does not include the 56-percent discount on generic drugs.
If your out-of-pocket costs reach $5,000, you leave the donut hole and enter what’s called the catastrophic stage of your plan’s coverage. While this stage has a scary name, it will actually bring some relief when it comes to your drug costs. In this stage, which is the same for all plans, you will pay no more than 5 percent of the cost of your prescription drugs. Of course, if you take really expensive medications, this can be 5 percent of a large number.
I mentioned that the government’s rules for Part D can be complicated. To that end, keep in mind that the $3,750 trigger that puts you in the donut hole and the $5,000 out-of-pocket limit that puts you in the catastrophic phase are measuring two different things. That’s because the $3,750 trigger includes what your plan has paid on your behalf. So, once you reach that trigger, you probably will need to spend much more than $1,250 before your total out-of-pocket costs reach $5,000.
If your head is spinning, don’t worry – you’re not alone. Part D coverage phases are the focus of many of the questions I’ve received from Medicare beneficiaries over the years. It might make you feel better to know that most people don’t fall into the donut hole, so chances are you won’t need to worry about this in 2018. But if you take a lot of medications, and particularly high-cost drugs, it would be wise to bone up on your knowledge of Part D coverage phases. Some people find that a one-on-one conversation with a reliable source helps demystify some of these concepts and how they apply to their own personal situation. Contact your local State Health Insurance Assistance Program or a licensed sales agent if you think this personalized attention could be helpful.
Tip #6: Plans organize the drugs they cover into several tiers, or levels, and charge different amounts for prescription drugs based on their tier. Most plans use five tiers – preferred or recommended generic drugs, other generics, preferred or recommended brand-name drugs, other brand-name drugs, and expensive specialty medications. Typically the lower the tier, the lower your cost.
While different plans may have the same number of tiers, what they charge you for medications within these tiers will not be the same. A tier 1 drug from Insurance Company X might have a $2 copay, while a tier 1 drug from Insurance Company Y has a $3 copay. Further, the medications you take may not be in the same tiers in different plans. This may result in meaningful price differences for the same medication from one plan to another.
Tip #7: Look at the pharmacies participating in different plans, and be sure to check if they have preferred pharmacies where your drug costs will be lower. If you like to walk to your neighborhood drug store, make sure it is in your plan’s pharmacy network and that the price you pay for prescriptions there is not out of line with prices at other pharmacies. For additional savings, check if the plan offers 90-day supplies of prescriptions via a mail-order pharmacy. In addition to the convenience of getting your drugs delivered right to your mailbox, you might also be able to save on your copays by choosing this option.
Journalist Phil Moeller is an expert on retirement and aging. He writes the “Ask Phil” column for the PBS NewsHour and is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” as well as the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” You can follow him on Twitter (@PhilMoeller) or reach him via e-mail: AskPhilByUHC@gmail.com.
Plans are insured through UnitedHealthcare Insurance Company or one of its affiliated companies. For Medicare Advantage and Prescription Drug Plans: A Medicare Advantage organization with a Medicare contract and a Medicare-approved Part D sponsor. Enrollment in these plans depends on the plan’s contract renewal with Medicare.