5 steps to choosing a Medicare Prescription Drug Plan

Choosing the right Medicare prescription drug plan is crucial to ensure you have access to the medications you need at an affordable cost. With a wide range of plans available, it’s important to assess your personal needs and priorities before making a decision. By following these five steps outlined in this guide, you’ll be equipped with the knowledge and tools to select the best Medicare drug coverage for yourself.

1. Understanding formularies

What is a formulary?

A formulary is a list of prescription drugs covered by a specific Medicare drug plan. Each plan has its own formulary, and it’s essential to check if your prescription drugs are included before enrolling. Formularies can vary significantly between plans, so it’s important to review them carefully.

Checking for your prescription drugs

Before selecting a plan, it’s crucial to ensure that your prescription drugs are covered. Most Medicare drug plans provide an online tool or a printed formulary (list of covered drugs) that allows you to search for specific medications. By entering the names of your drugs, you can determine if they are included in the plan’s formulary. Most plans have tiered copays, charging more for brand-name drugs than generics. There are also tiers for special needs and high-priced drugs. Some plans offer reduced prices if you use mail order or preferred in-network pharmacies.

Comparing costs

In addition to checking if your prescription drugs are covered, it’s essential to compare the costs associated with each plan. These costs can include monthly premiums, deductibles, copayments, and coinsurance. Evaluating the total cost of a plan will help you determine which option is the most cost-effective for your medication needs.

2. Extra protection: Coverage in the coverage gap

Explaining the coverage gap

The coverage gap, also known as the “donut hole,” is a temporary limit on what Medicare drug plans will cover for prescription drugs. Once you reach a certain spending threshold, you enter the coverage gap, and your out-of-pocket costs may increase. However, not all plans have a coverage gap.

Ensuring your drugs are covered

If you anticipate reaching the coverage gap, it’s crucial to check if the drugs you take are covered during this period. Some plans offer additional coverage in the gap for certain medications, while others may not cover them at all. By ensuring your drugs are covered, you can minimize your out-of-pocket expenses during this phase. It is important to ask about any special rules for a drug that you’ll need to follow, like prior authorization, quantity limit, dosages or step therapy.

3. Balancing drug expenses throughout the year

Low or no-deductible plans

Some Medicare drug plans have low or no deductibles, which means that you won’t have to pay a certain amount out-of-pocket before the plan starts covering your medications. If you prefer to have your drug expenses spread evenly throughout the year, a plan with a low or no deductible might be the right choice for you.

Additional coverage in the coverage gap

Another way to balance your drug expenses throughout the year is to choose a plan that offers additional coverage in the coverage gap. Some plans provide discounts or reduced cost-sharing for prescription drugs during this period. By selecting such a health plan, you can ensure that your out-of-pocket costs remain affordable even in the coverage gap.

4. Maximizing savings with generic prescriptions

Exploring pricing tiers

Many Medicare drug plans utilize tiered pricing, where different categories of drugs are assigned different costs. Generic drugs are often placed in lower tiers, which means you may have lower copayments or no cost-sharing at all. If you take a lot of generic prescriptions, it’s worth considering a plan that offers favorable pricing for these medications.

Paying low copayments for generic prescriptions

By choosing a Medicare drug plan with low copayments for generic prescriptions, you can maximize your savings. Some plans offer $0 copayments for generic drugs, making them an affordable option for those who rely heavily on these medications. Reviewing the copayment structure for generics can help you make an informed decision.

Coverage for peace of mind: Low monthly premiums

Planning for future prescription drug needs

Even if you currently have minimal prescription drug costs, it’s important to consider coverage for peace of mind and to avoid future penalties. Selecting a Medicare drug plan with a low monthly premium ensures that you have coverage in place in case your prescription drug needs change in the future.

Avoiding penalties

If you don’t enroll in a Medicare drug plan when you’re first eligible and go without creditable prescription drug coverage for an extended period, you may face a late enrollment penalty. This penalty is added to your premium and can increase your costs significantly. By enrolling in a plan with a low monthly premium, you can avoid these penalties.

5. Choosing a Medicare Advantage Plan with prescription drug coverage

Exploring Medicare Advantage Plans

Medicare Advantage Plans, also known as Part C plans, are an alternative to Original Medicare. These plans combine your Medicare Part A (hospital insurance) and Part B (medical insurance) coverage and may also include prescription drug coverage. If you prefer the convenience of having all your healthcare and drug coverage in one plan, a Medicare Advantage Plan might be the right choice for you.

Restrictions on healthcare providers

It’s important to note that Medicare Advantage Plans often have restrictions on the healthcare providers you can use. These plans typically have a network of doctors, hospitals, and other healthcare providers. Before enrolling in a Medicare Advantage Plan, make sure that the providers you prefer are included in the plan’s network.

Additional considerations: Medigap and drug coverage

Understanding Medigap

Medigap, also known as Medicare Supplement Insurance, helps fill the gaps in Original Medicare coverage, such as deductibles, copayments, and coinsurance. However, Medigap plans do not include prescription drug coverage. If you choose a Medigap plan, you’ll need to enroll in a separate Medicare Part D plan for prescription drug coverage.

How Medigap works

Medigap plans are sold by private insurance companies and offer different levels of coverage. To choose the right Medigap plan, consider your specific healthcare needs and compare the benefits and costs of different plans. It’s important to note that Medigap plans are standardized, meaning the benefits are the same across different insurance companies.

Conclusion

Choosing the right Medicare prescription drug plan requires careful consideration of your personal needs and priorities. By understanding formularies, comparing costs, and evaluating coverage options, you can make an informed decision. Whether you prioritize low monthly premiums, coverage in the coverage gap, or specific drug coverage, there’s a Medicare drug plan that’s right for you. Remember to review your options annually during the Medicare Annual Open Enrollment Period to ensure your current plan still meets your needs.

By following the steps outlined in this guide, you’ll be well-equipped to navigate the complex world of Medicare prescription drug coverage and choose the plan that best suits your needs. Don’t hesitate to reach out to Medicare resources or consult with a knowledgeable professional for further assistance. Call your State Health Insurance Assistance Program (SHIP) for free personalized health insurance counseling or visit Medicare.gov and use the Medicare plan finder for plans in your area. If you need help paying for the costs of Medicare, ask about Extra Help, the Medicare savings programs, Medicaid, and state pharmaceutical assistance programs. Your health and well-being are worth the effort to find the right Medicare drug plan.

Sources

• Choosing Medicare drug coverage – Medicare
• 6 tips for choosing Medicare drug coverage – Medicare
• How to Choose a Medicare Prescription Drug Plan in 5 Steps – NerdWallet