Which Medicare prescription plan is right for you?

Under Medicare Part D, which covers prescription medications, plans are offered by insurance companies, and seniors select the plans during open enrollment period each fall.

Last year, according to the Centers for Medicare & Medicaid Services (CMS), 43 million of the 60 million people covered through Medicare had prescription drug coverage under a Medicare Part D plan. Most of those (58 percent) are covered under a stand-alone prescription drug plan (PDP) but a growing share (42 percent) are enrolled in Medicare Advantage prescription drug plans (MA-PDs).

The annual Medicare Open Enrollment period began on Oct. 15 and continues until Dec. 7, for 2020 coverage. During the annual enrollment period, you can make changes to various aspects of your coverage, including switching from one Medicare Advantage plan to another, or from one Medicare Part D (prescription drug) plan to another.

When in the Donut Hole

Most Medicare drug plans have a coverage gap, also called the “donut hole” or “doughnut hole,” which places a temporary limit on what the drug plan will cover for drugs.

The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. This year, once you and your plan have spent $3,820, you’re in the coverage gap. The amount may change each year. Those with Medicare who qualify for Extra Help, an income-based program, won’t enter the coverage gap.

When in the donut hole, the amount you pay for your prescriptions increases. However, as a result of the Affordable Care Act, federally funded discounts are available, which helps pay for drugs during the donut hole.

This year, there is a 75% discount for most brand-name drugs, paid for by the manufacturer and the federal government — with the enrollee responsible for covering the remaining 25% of the cost. For generic drugs, the government provides a 63% discount — the remaining 37% is paid by the enrollee.

Getting Out of the Donut Hole

In all Part D plans, after you have paid $5,100 in out-of-pocket costs for covered drugs, you leave the donut hole and reach catastrophic coverage. During this period, you pay significantly lower co-pays for your covered drugs for the remainder of the year.

Per MedicareInteractive.org, an information website by the Medicare Rights Center, the out-of-pocket costs that help you reach catastrophic coverage include: your deductible; what you paid during the initial coverage period; nearly the full cost of brand-name drugs (including the manufacturer’s discount) purchased during the coverage gap; and amounts paid by State Pharmaceutical Assistance Programs (SPAPs), and other drug assistance programs.

Costs that do not help you reach catastrophic coverage include monthly premiums, the cost of non-covered drugs, the cost of covered drugs from pharmacies outside your plan’s network, and the 63% generic discount. During catastrophic coverage, you will pay 5% of the cost for each of your drugs, or $3.40 for generics and $8.50 for brand-name drugs (whichever is greater).

Your Part D plan tracks how much you have spent out of pocket for covered drugs, and you will receive a running total in the monthly statements that you receive from the insurance company.

Paying More Out of Pocket

Increasingly, Medicare recipients are paying more out of pocket expenses on their prescription drugs through the donut hole.

Medicare is a health insurance program for people age 65 or older, those under age 65 with certain disabilities, and for those of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant).

Specialty-tier drugs for multiple sclerosis, cancer and other conditions — defined by Medicare as those that cost more than $670 a month — account for more than 20 percent of total spending in Part D plans, up from about 6 percent before 2010, according to a report by the Medicare Payment Advisory Commission, a nonpartisan agency that advises Congress about the program.

Just over 1 million Medicare beneficiaries’ in Part D plans who did not receive low-income subsidies had drug costs that pushed them into catastrophic coverage in 2015, more than twice as many as the 2007 total, an analysis by the Kaiser Family Foundation (KFF) found.

“When the drug benefit was created, 5 percent (what people are responsible for during catastrophic coverage) probably didn’t seem like that big a deal,” said Juliette Cubanski, associate director of the Program on Medicare Policy at the Kaiser Family Foundation, in an article published on Kaiser Health News.

“Now we have such expensive medications, and many of them are covered under Part D — where, before, many expensive drugs were cancer drugs that were administered in doctors’ offices and covered by other parts of Medicare,” she said.

Closing the Donut Hole

Prior to 2011, Medicare Part D enrollees paid the full cost of their medications while in the donut hole.

Since then, the Affordable Care Act (ACA) has been steadily closing the donut hole, and it will be fully closed by 2020, when enrollees in standard Part D plans will pay 25 percent of the cost of their drugs all the way up to the catastrophic coverage threshold, according to medicareresources.org.

The Bipartisan Budget Act of 2018 (BBA 2018) closed the donut hole one year early — this year, for brand-name drugs. As a result, out-of-pocket costs for brand-name drugs are limited to 25 percent of the cost in 2019 (down from the 30 percent that was originally scheduled) and 37 percent of the cost of generic drugs (down from 44 percent in 2018).

The cost of closing the donut hole one year early was shifted onto drug manufacturers. The donut hole will also close for generic drugs in 2020, when enrollees will pay no more than 25 percent of the cost of generics.

The Medicare Part D maximum deductible will be $435 in 2020, according to medicareresources.org.

What Drug Plans Cover

Each Medicare drug plan must give at least a standard level of coverage set by Medicare. Plans can vary the list of prescription drugs they cover (called a formulary) and how they place drugs into different “tiers” on their formularies.

Every Medicare Prescription Drug Plan has a formulary — that is, a list of covered drug. The formularies vary among plans and may change at any time. Enrollees should be notified by mail or email when these changes occur.

Plans cover both generic and brand-name prescription drugs. The formulary includes at least two drugs in the most commonly prescribed categories and classes, but plans can choose which specific drugs they cover.

The formulary might not include your specific drug, but in most cases a similar drug should be available. If you or your doctor believes none of the drugs on your plan’s formulary will work for your condition, you can ask for an exception, according to Medicare.gov.

As drug therapies change, new drugs are released, and new medical information becomes available, your plan may change its drug list during the year.

Plans may also suddenly remove drugs from their formularies after the Food and Drug Administration (FDA) considers them unsafe or if their manufacturer removes them from the market, according to Medicare.gov.

Plans also can immediately remove brand name drugs from their formularies and replace them with new generic drugs, or they can change the cost or coverage rules for brand name drugs when adding new generic drugs. If you’re currently taking any of these drugs, you’ll get information about the specific changes made afterwards.

For other changes involving a drug you’re taking, your plan must either give you written notice at least 30 days before the date the change becomes effective, or provide a written notice of the change and at least a month’s supply under the same plan rules as before the change, at the time you request a refill.

If you use a drug that isn’t on your plan’s drug list, you’ll have to pay full price instead of a co-payment, unless you qualify for a formulary exception.

Tiers of medications

To lower costs, many plans place drugs into different “tiers” on their formularies. Here’s an example of a Medicare drug plan’s tiers, as shown on Medicare.gov’s website:

Tier 1 Lowest co-payment: most generic prescription drugs

Tier 2 Medium co-payment: preferred, brand-name prescription drugs

Tier 3 Higher co-payment: non-preferred, brand-name prescription drugs

Specialty Tier Highest co-payment: very high cost prescription drugs

In some cases, if your drug is in a higher (more expensive) tier and your medical provider thinks you need that drug instead of a similar drug on a lower tier, you can file an exception and ask your plan for a lower co-payment, according to Medicare.gov.

You can get Medicare Part D coverage through a stand-alone Medicare Prescription Drug Plan if you’re enrolled in Original Medicare. If you’re enrolled in a Medicare Advantage plan, you can get this coverage through a plan that includes drug benefits, also known as a Medicare Advantage Prescription Drug Plan.

Different insurers offer different types of plans, so your monthly plan premium and out-of-pocket expenses for prescription drugs will vary from plan to plan.

Get Help Paying for Prescriptions (Medicare Savings Programs)

State Medicare Savings Programs (MSP) programs help pay premiums, deductibles, coinsurance, co-payments, and prescription drug coverage costs.

In some cases, Medicare Savings Programs may also pay Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) deductibles, coinsurance, and co-payments if you meet certain conditions.

Medicare beneficiaries receiving the low-income subsidy (LIS) can get assistance in paying for their Part D monthly premium, annual deductible, coinsurance, and co-payments. The amount of subsidy depends on the individual’s income compared to the Federal Poverty Level and resource limitations set by the Social Security Act.

To see if you qualify for a Medicare Savings Program in your state, call the State Medical Assistance Office /Florida Agency for Health Care Administration, toll free at (866) 762-2237, or call 1-800-MEDICARE (1-800-633-4227).

Contact Information

▪ SHINE (Serving Health Insurance Needs of Elders) is a free program offered by the Florida Department of Elder Affairs and the local Area Agency on Aging. Specially trained volunteers can assist with Medicare, Medicaid, and health insurance questions by providing one-on-one counseling and information. Call 1-800-96-ELDER for to talk with a volunteer.

Medicare representatives can be reached at 1-800-633-4227 to help with finding a Medicare plan that fits your budget and covers your health and prescription needs.

▪ To enroll in Part D, you can do so directly through Medicare at www.Medicare.gov. If you are currently enrolled in Medicare, you are eligible for a Medicare Part D prescription drug plan.

▪ To compare prescription drug plans, you can use the Part D plan finder by visiting www.ehealthmedicareplans.com.

This story was originally published November 16, 2019 at 7:00 AM.