Medicare Part D Drug List – Disclosure
Disclosure: This service to find the best Medicare Part D drug plan is FREE to ALL of our clients. By submitting a list of your current prescription medications, we will input those prescriptions into our special software. It will then search all 60 or so different drug plan options available in your zip code for the plans with your lowest out-of-pocket cost based on your specific drug list. The software will compare the top three Part D drug plan options available and can even show the cost differences between local pharmacies versus the mail order option.
Part D of Medicare, also called the Medicare prescription drug benefit, was enacted as part of the Medicare Modernization Act of 2003, and was signed into law by President George Bush becoming effective on January 1, 2006. This benefit helps seniors and others on Medicare cover part of the cost of prescription medications available at retail pharmacies across the United States.
You can enroll in a drug plan when first eligible for Medicare and you may change a drug plan each year during the Annual Election Period between October 15th and December 7th. If you do not enroll in a drug plan when eligible, and do not have other creditable prescription drug coverage, you will be subject to a Part D Late Enrollment Penalty. This penalty is assessed for each month you go without drug coverage and is a lifetime penalty.
Part D drug plans are offered on a county by county basis, but are usually available state-wide. In Minnesota, we average around 25 to 30 “stand-alone” drug plans and another 25 to 30 “embedded” drug plans built into Medicare Advantage plans. No two plans are the same. All drug plans are different. (Psst! – Don’t worry. We can help you choose the right plan.)
This drug benefit, as we like to say, has a lot of “moving parts”. It is virtually impossible to tell just how good or not so good a particular Part D plan will be for your specific list of prescription medications just by looking at or reading about the plan. What is required is a full, in-depth financial analysis of how each and every plan would handle your specific drug list and what your ultimate out-of-pocket cost would be should you enroll in that plan.
The Center for Medicare and Medicaid Services (CMS) is in charge of Medicare and has provided private insurance companies who wish to offer Part D drug plans, a guideline of minimum requirements to produce a qualified Part D drug plan. Every plan offered must meet these minimum guidelines; however, most plans go beyond the minimum requirements and offer plans that are better. This methodology has produced a wide variety of plans, of which no two are the same. This makes the task of choosing the “best” option out of 50 or 60 plans very daunting, to say the least.
All Medicare Part D plans include a variety of so-called “moving parts” such the following:
- Premium – this is the monthly cost of the policy you pay to the insurance company. Each insurance company sets the premium for the policy(s) it offers.
- Formulary – this is the list of drugs that are eligible for coverage under a policy. Every insurance company has its own formulary, and may even have multiple formularies if it offers more than one plan.
- Tiers – each prescription is assigned a tier (or level) by each insurance company, e.g., Tier 1, Tier 2, Tier 3, usually up to 5 tiers. Each tier is then assigned a copay (or co-insurance) amount which represents your out-of-pocket cost for a specific prescription. The copays generally get higher as you progress to higher tiers.
- Deductible – this is a fixed dollar amount that you must pay first before the plan starts to pay. The deductible may, or may not, apply to every tier.
- Copays/Co-insurance – this is your out-of-pocket expense usually paid at the pharmacy when you pick up a prescription. A copay is a fixed dollar amount, while co-insurance is a percentage of the cost of the drug.
- Coverage Gap (aka Donut Hole) – this is a phase of coverage included in all Part D drug plans. This phase is triggered once total prescription drug spending (what you spend and what the plan spends combined) reaches a predetermined threshold ($4,130 for 2021, for example). While in the coverage gap, you’ll typically pay up to 25% of the plan’s cost for both covered brand-name drugs and generic drugs. You will exit the coverage gap once your out-of-pocket drug costs reach a specific threshold ($7,550 in-network for 2021, for example).
- Catastrophic Coverage – this is the final coverage phase for Medicare Part D prescription drug plans. During the catastrophic phase, you will pay either 5% of the cost of each drug or a reduced copay set by Medicare each year, whichever is greater, for the rest of the plan year. Your Part D plan should keep track of how much money you have spent out of pocket for covered drugs and your progression through coverage phases. This information should appear in your monthly statements.
- Participating Pharmacies – each drug plan will have a list of participating pharmacies where you may order and pick up your prescriptions. Some plans will use “preferred” pharmacies, where you will usually pay a lesser copay amount than if you used a “standard” pharmacy. Also drug plans will usually have a Mail Order option allowing you to receive prescriptions by mail.
- Plan Restrictions – each insurance company may place restrictions on certain drugs. The most common restriction is a Quantity Limit, where you are restricted to the number of pills you can receive at any one time. Another common restriction is called Step Therapy, where the plan requires you try this drug first before you can try that one. This usually involves trying a less expensive drug first before being allowed to try a more expensive drug. The third most common restriction is called Prior Authorization. This means your doctor must get prior approval from the plan before prescribing a specific drug for you.
We call these “moving parts” because they are subject to change from year to year. Each “part” is critical in determining what your ultimate out-of-pocket cost will be for a particular drug plan. A change to any part could easily turn a suitable plan into an unaffordable plan. You need to be extremely cautious and mindful in deciding whether to either keep your current plan or switch to a new one.
Another reason to compare Medicare Part D prescription drug plans annually is that your drug list may have changed; you may have added a new drug or quit taking a prior drug which could potentially change your drug cost significantly.
To help you compare each and every drug plan option available in your county, we have developed a system that uses your specific drug list to review and analyze your drug plan options. You can simply complete the form to confidentially submit your list of current prescriptions for a private, personal analysis. By submitting your list, you agree to receive the results via a follow-up contact from our office.
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Long Term Care Insurance Advisors is an independent insurance broker serving Minnesota and western Wisconsin residents and small businesses for the past 3 decades.