By Christina Joseph
What do you need to know about prescription drug coverage? Let's unpack what you need to know. According to a 2016 study from the CDC 40% of people over the age of 65 take five or more medications a day. Medicare can help you pay for it. A Medicare prescription drug plan is also known as Medicare Part D. To get Medicare drug coverage you must join a plan run by an insurance company or a private company approved by Medicare. There are two ways you can sign up. The first, buy a stand-alone Medicare Part D plan. The second, purchase a Medicare Advantage plan that includes prescription drug coverage. And remember, you can only get these through private insurance companies.
Keep in mind each plan has a list of prescription drugs that it covers on a list called a formulary. The formulary has information like which tier the drug is on. Tiers help determine how much you'll pay for your medicine. The formulary also tells you about any special rules including whether there are quantity limits. You can get the most out of the Part D plan by checking different ways to save like reduced pricing at preferred pharmacies, extra benefits, or 90-day drug prescriptions. Don't forget. If you don't sign up when you're first eligible, you could pay more in the form of a late enrollment penalty. Got more questions? Learn more at AetnaMedicare.com.
Forty percent of those over 65 take five or more medications a day.1 It’s a staggering number, but it underscores the necessity of prescription drug insurance coverage. That’s why almost 74 percent of people who are on Medicare — or nearly 44 million people2 — are enrolled in a prescription drug plan.
As you figure out the best plan for your needs, here’s what you need to know about prescription drug coverage.
Medicare Part D, also known as a prescription drug plan, helps you pay for most of your prescribed medicine. Generally, Original Medicare does not include prescription drug coverage. Learn more here about the different parts of Medicare.
There are two ways to get prescription drug coverage.
Tip: If you don’t enroll in prescription drug coverage when you're first eligible to enroll in Medicare, you may face penalties. Find out how to avoid penalties.
Each year everyone can change their Medicare plan during the annual enrollment period (October 15 – December 7). Read about enrollment periods.
There might be exceptions to these timelines if you qualify for extra help paying for prescription drug coverage. Learn about your options for assistance with Medicare costs.
Every Medicare prescription drug plan has a list of drugs — also known as a formulary — that it agrees to cover. When you research a plan, check your list of medications against the prescription drugs on your plan’s list. You’ll also be able to see which "tier" it’s been placed into. Generally, the lower the tier, the less you pay. For example, you will often pay less for a drug in Tier 1 than you would in Tier 4. The Medicare Plan Finder is a useful comparison tool you can use to plug in the names of prescription drugs and find plans in your area that will cover them. View the Medicare Plan Finder.
Formularies will include both brand and generic drugs. Generic drugs have been deemed as safe and effective as brand-name medications by the Food and Drug Administration. Check with your doctor to see if a generic prescription drug is right for you.
Your plan will not remove any drugs from its formulary or negatively alter a drug’s tier until the start of the new plan year, unless there’s an extenuating circumstance, such as a recall.
Your formulary will give you the information you need to know about your drug, such as name, drug tier and requirements or limits.
Your formulary will include a table similar to the one below. It’s the key to helping you understand.
The drug(s) covered by your plan
The “tier” level or pricing category – drugs in different tiers may have different costs
Any special rules for a drug that you’ll need to follow, like prior authorization, quantity limit or step therapy
| Drug name | Drug tier | Requirements/limits |
|---|---|---|
| Sample_drug | 1 | MO |
| SAMPLE_DRUG | 4 | QL (30 EA per 30 days) MO
|
You’ll notice drug names are either in italics or CAPITAL letters. These mean:
Italics – generic drugs that generally have lower copays and costs
CAPITALS – brand-name drugs that generally have higher copays and costs
Phrases to know:
MO = mail order
QL = quantity limit
EA = each
There are two ways to find drugs in the formulary:
Medicare mandates that there be at least two drugs from every therapeutic class in a formulary. But in some instances, you may need a drug that just doesn’t make the list. If that happens, your doctor can contact the insurance company to request what’s called a “formulary exception.” Your plan will review the request to see if they'll cover it. Typically, if the drug is approved, it will be provided to you at the cost found in one of the top tiers, such as tier 4 or 5, which means you will usually be responsible for a higher percentage of the cost than if the medicine was in a lower tier.
During this stage, if your plan has a deductible, you usually pay the full discounted cost up to the deductible amount for drugs listed in tiers 3, 4 and 5 of your formulary. (Drugs in tiers 1 and 2 don’t have a deductible because they generally cost less; your copayment for these drugs will be the same whether you have met the deductible or not.)
Many people will fall into this stage
Once you reach the deductible amount, you pay a copayment or coinsurance in the initial coverage stage.
Up to $4,020
During this stage, you pay a copayment or coinsurance (your share of the cost) for the discounted price of each prescription you fill until your total drug costs (what you and your plan pay) reach $4,020.
Most people will remain in this stage
Once you satisfy $4,020, you enter the coverage gap or “donut hole.”
Up to $6,350
During this stage, your discount is less because you’ll be receiving a minimum level of coverage on brand-name and generic drugs until your yearly out-of-pocket costs reach $6,350.
Some people will move into this stage
Once your yearly out-of-pocket costs reach $6,350, you move to the catastrophic coverage stage.
Through the end of the year
In this stage, most members will pay only a small copayment or coinsurance amount for each prescription.
Fewer people reach this stage
Several factors determine how much you will pay for your prescriptions.
Your payments may vary throughout the year, depending on how much you have already spent on prescription drugs. Your cost-sharing will depend upon the benefit phase you have reached in your coverage.
Medicare prescription drug plans have a phase called the coverage gap or “donut hole.” When you reach this phase your cost-share may change based upon the type of drug(s) you are taking.
Here’s an example of how it works:
The “donut hole” refers to a gap in coverage, during which you may have to pay more for your prescriptions drugs. Some members may have supplemental coverage to help lower prescription drug costs. Here’s a look at how the “donut hole” works:
Once you and your drug plan spend $4,020, you enter the “donut hole” or coverage gap.
While in the “donut hole,” you may pay 25% of the total cost of brand name drugs and up to 25% of the total cost of generic drugs until your total costs reach $6,350.
After you reach $6,350, your plan will contribute more toward your prescription drug costs.
* All dollar amounts reflect 2020 Medicare policies.
Some prescription drugs require that you adhere to special rules before your insurer will cover them. For example:
Your formulary guide will tell you which drugs require step therapy, prior authorization and quantity limits. If your medication falls into any of these categories, you may need to take action before the plan will cover the drug. Check with your doctor about your options.
If you want to get the most out of your prescription drug benefits, check with your plan to see what extras it offers.
Research your plan options thoroughly based on your prescription drug needs, costs and convenience. You don’t want to be saddled with unnecessary drug expenses, so finding the right plan for you at the right price means one less thing you’ll have to worry about.
1https://www.cdc.gov/nchs/data/hus/hus16.pdf#079
2Centers for Medicare & Medicaid Services Office of Enterprise Data and Analytics, March 2018
Christina Joseph Robinson is a veteran editor and writer from New Jersey who still loves to read the old-fashioned newspaper. She’s raising two fruit-and-veggie loving daughters to balance all the treats Grandma sends their way. Christina’s health goal is to resume her workout routine after being sidelined by injuries.
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