Your Plan’s Part-D Is What You Will Use Most: Know What It Costs and Covers
Every aspect of your Medicare Advantage plan is important, but your Part-D is paramount (in my humble opinion). Why? With few exceptions, you will use this the most, and if not chosen correctly, it will cost you the most. You may visit your primary care provider or specialist twice or four times a year, on average. But you most likely take prescriptions monthly. The wrong plan can be expensive. So, let’s take a look at how to use the formulary to choose a plan that will be best for you.
First, you want to look at the fee schedule. Does it have a deductible? If so, how much and for what tiers? Many Part-D plans have no deductible, in order to be competitive. However, some, especially PPO (Preferred Provider Organization) plans, will either charge the complete deductible Medicare stipulates (which for 2022 is $480 dollars), while others will charge a reduced deductible. Some may even apply the deductible to only certain tiers, typically tiers three through five, making the generic tiers (tiers one and two) $0 deductible.
If you mainly use generic drugs that fall in tiers one and two, then it may not be a huge factor. However, if you take a name-brand medication, which falls in tier three or four, you will need to pay that deductible before the insurance plan covers anything.
If you have a deductible, once you’ve met it, copays will apply. Most HMO (Health Maintenance Organization) plans, and some PPOs, typically have $0 copay for tiers one and two at preferred retail or mail-order pharmacies. If you go to a standard pharmacy, typically there is a copay charge. So, it makes sense whenever possible to use a preferred pharmacy – it will save you a lot of money!
Tiers three through five vary widely based on the plan. They could range from $35 to $55 (on average) for tier three, $95 to $120 on tier four, and a coinsurance of 25% to 33% for tier five. What does this all mean? Let’s break it down.
The lower the tier, the more expensive the drug. So, hypothetically, a tier-three drug’s retail price (if you were paying for it with no insurance) may be anywhere from $100 to $500 per month. A tier-four prescription could range from $500 to $1,000+ per month. And tier-five medication, which is usually a life-sustaining medication, could run into the high 4 to 5 figures.
A good example might be the new Alzheimer’s drug, Aduhelm, which was initially going to cost $56,000 per monthly injection and now is projected to be $28,000. Moreover, anyone taking this medication must take it for life. If your tier-five coinsurance were 33% and this were listed as a tier-five drug, your cost would be $9,240 per month. OUCH! With that said, I have no clue how CMS will handle this prescription, so do not take my hypothetical example as gospel on Aduhelm; it may be a tier-four medication for all I know. This was just for an example!
Let’s say you were taking Symbicort, a popular COPD (chronic obstructive pulmonary disorder) inhaler. When my mom took this medication two years ago, it was in the ballpark of about $500 per month. It was a tier-three medication on Mom’s plan, so she would pay $35 per month for this medication.
Now, just because it was a tier-three drug on a very popular plan, does not mean it will be in tier three on all plans. Another plan may decide to rank it as a tier-four prescription. If that were the case on Mom’s plan, it would’ve cost $110 per month (or $60 with the fee schedule above). Which is why you need to know where your medications rank in the formulary of any plan you consider. We will cover more on this shortly.
If you are receiving a life-sustaining prescription which falls in tier five, usually these are used for one or two years, to treat diseases like cancer. In a situation like this, many are not aware that your doctor may request an exception for you, due to the life-sustaining nature of the medication. If this is granted, your insurance can waive the coinsurance for a predetermined period, like one or two years, saving tens-of-thousands-of-dollars. So, if you ever find yourself in this situation, speak with your doctor about requesting one.
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While the fee schedule decides how much you will pay, if anything, the formulary tells you:
Different plans have different formularies. Just like not all drugs fall in the same tier in all plans, not all drugs are covered in all plans. If you need a certain medication and choose a plan that does not cover it, you may be left to fend for yourself. Which is why it’s crucial to make no assumptions. Always check to see that all your medications are covered and how much it will cost you.
Fortunately, all insurance companies have made this pretty simple online. If you have an agent helping you, he or she will do this for you as part of the assessment process. If you are reading this as a subscriber to my newsletter, then you will have already received my prescription chart that helps you organize all your meds. If you have not subscribed and are reading this online, on Facebook or because you found it in Bing or Google, (okay…shameless plug), I recommend subscribing and getting the chart. You can do so above in the call out bar.
This chart will have all your medication information at your fingertips for easy use, whether sharing it with your agent, doctor, or a caregiver.
Give your agent this information, or if you are doing so yourself, once you choose a plan to assess, click on ADD YOUR MEDICATIONS (or something along those lines). Some plans will give you the option to pull this information directly from CMS, saving the hassle of having to type them in.
Once you have inputted or imported all your prescriptions, it will look at the formulary of the plan and give you an annual cost. This will be based on several factors:
If you are not technically savvy and prefer a paper formulary, you can request one from your plan carrier. It will be ordered alphabetically. Simply find your prescription, choose the dosage and see what tier it falls under. Then look at the fee schedule. If you don’t find your specific drug, then it’s not covered. In which case, you can ask your doctor if an alternative is available or choose another plan.
When in doubt, if you are still a little confused (don’t be embarrassed, many are), simply gives us a call, send us an email or just leave a comment below. I will get back to you with an answer pretty quickly. Also, if you have any questions pertaining to Medicare in general, don’t hesitate to reach out to us as well.