Most people are surprised to learn when they reach age 65 and sign up for Medicare that the standard government health plan does not cover prescription drugs. To get prescription coverage, you need to sign up with a private insurance company for Medicare Part D. That supplements Part A (which covers hospital stays, skilled nursing facilities and hospice care) and Part B (which covers doctor visits and other outpatient care).
Plans vary by state, but most Americans have more than 25 plans to choose from, each offering different premiums, alliances with certain pharmacies and varying coverage amounts for the same drugs. That makes choosing the best plan for a particular individual a challenge.
“There are a lot of plans offered for every individual to pick from. It is complicated,” says Jack Hoadley, a research professor at Georgetown University’s Health Policy Institute. “The differences among plans can be hard to sort out. For those who aren’t Web-savvy, it’s even harder.”
First decide which kind of Medicare plan you want: traditional Medicare, which operates like a fee-for-service plan with deductibles and co-pays, or a Medicare Advantage Plan, which is an HMO or PPO and requires you to stay within the network for your care. Most, but not all, Medicare Advantage Plans include prescription coverage.
If you choose traditional Medicare or a plan with no drug coverage, get ready to hit the computer (or ask a friend or a relative to do it for you). The right Medicare Part D plan for you depends upon the drugs you take and the pharmacy you choose. Plus, the best plan for you may not be the best plan for your spouse, because each plan covers different drugs. Plans can change from year to year as well. That means you need to evaluate all the available plans every year.
Here are answers to some of the most commonly asked questions about Medicare Part D:
When can I enroll or change plans?
You can sign up for Medicare Part D when you sign up for Medicare, starting three months before you turn 65, during the month you turn 65 and the three months after your birthday. After that, the open enrollment period or the time to change plans is Oct. 15 through Dec. 7 every year, with the new plans going into effect Jan. 1. If you don’t sign up when you are first eligible, you may have to pay a penalty, in the form of higher premiums.
How do I find out which plans are available in my area and what they cover?
Start your search at the federal government’s Medicare Plan Finder. Do a general search based on your ZIP code or a personalized search, based on your Medicare use so far. Once you enter your ZIP code, you are asked to choose pharmacies and you are then presented with information on available plans. To fully compare the Medicare Part D plans, see how each plan prices your drugs.
What do Medicare Part D plans cost? Do they cover the full cost of my drugs?
The monthly premium varies by the plan you choose, as do the co-pays for drugs. Some but not all plans have deductibles. Pay attention to the difference between co-pays, which are a set rate, and co-insurance, which requires you to pay a percentage of whatever the drug costs. If drug costs rise, so does your co-insurance.
To make sure you’re choosing the plan for you, start with the drugs you take. On Medicare.gov you can enter those drugs (including dosages and quantity) and a tool on the site will rank the plans by which would be cheapest for you, showing how much those drugs would cost on each plan and how much you’ll pay in premiums. You may need to do this search multiple times since the cost varies by pharmacy and you can compare only two pharmacies at a time.
Once you’ve narrowed your search to a few choices, you also want to check whether there are any restrictions on your drugs. Certain plans may require prior authorization or step-up therapy, where you have to try and fail with one drug before the plan will approve another, for a specific medication.
Do my drugs cost the same no matter where I buy them?
No. This is where you really need to drill down. The Medicare Plan Finder shows you what you will pay at various pharmacies under the same drug plan. Choosing a preferred network pharmacy is a way to save on drug costs.
What if I don’t feel comfortable using a computer to do all my research or want some personalized advice?
Call the State Health Insurance Assistance Program (SHIP) for your state and talk to advisers in person or on the phone. You can find the number at the Medicare website or at this site. You can also call Medicare (1-800-633-4227) and ask where to get assistance. Another option: Ask your pharmacist if the company has a preferred plan that would save you money on your prescriptions.
What about the “doughnut hole”?
The doughnut hole means once your drug expenses hit a certain amount ($3,700 in 2017), your coverage stops. You get a discount on brand-name drugs and generics, until your drug expenses reach $4,950. After that, you qualify for catastrophic coverage, which means you pay only 5% of your drug costs for the rest of the year. The doughnut hole is still with us and will be until 2020, though the out-of-pocket costs consumers will have to pay while in the doughnut hole will shrink every year.
What if I’m on Medicaid or need help paying for my drugs?
If you are on Medicaid, you should choose a Medicare Part D plan or the government will choose one for you. Lower-income people also are eligible for Medicare’s Extra Help program as well as some state programs. Drug companies sometimes help with drug costs, too.
This all sounds realty complicated? Where can I get more information?
It is really complicated, and we’ve just given you a brief overview. Here are four places to learn more:
- Your Guide to Medicare Prescription Drug Coverage, an 82-page official publication from Medicare.
- Medicare.gov, the Medicare website, has a Medicare Part D section.
- Choosing a Medicare Part D Plan, from AARP.
- Managing Medicare, by Consumer Reports.