Medicare Part D is optional prescription drug coverage. It may help pay for the medications you take at home, such as blood pressure medicine, insulin, inhalers, or other prescriptions. Choosing a Part D plan can feel confusing because plans may look similar at first, but the details can make a meaningful difference for your medications.
The best Medicare Part D plan is usually not simply the one with the lowest monthly premium. A plan that costs less each month may have higher costs for your particular prescriptions or may not include your preferred pharmacy. The goal is to find a plan that works well with the drugs you take, the pharmacy you use, and your budget.
What does Medicare Part D cover?
Part D plans are offered by private insurance companies approved to provide Medicare drug coverage. Each plan has its own list of covered drugs, called a formulary. A formulary is simply the plan’s approved medication list.
Most Part D plans cover a broad range of common prescriptions. However, they do not all cover the same drugs in the same way. One plan may cover your medication at a lower cost level, while another may require you to pay more or try a different drug first.
If you have Original Medicare and a Medicare Supplement plan, also called Medigap, you may want to consider a separate Part D plan. Medicare Supplement plans generally do not include outpatient prescription drug coverage. Many Medicare Advantage plans include drug coverage, although some do not, so it is important to check the plan details.
What should you compare in a Part D plan?
It helps to compare plans using your actual prescriptions instead of guessing. Have a current list ready with each drug’s name, dosage, and how often you take it. You will also want to know which pharmacies are convenient for you.
- The formulary: Check whether each of your medications is covered by the plan.
- Drug tiers: Plans place medications into cost groups called tiers. Lower tiers often have lower costs, while higher tiers may cost more.
- Your pharmacy: A plan may have preferred pharmacies where you could pay less. Your regular pharmacy may be in the network but not preferred.
- Deductible: Some plans have a deductible, which is an amount you may pay before the plan begins sharing more of the cost for certain drugs.
- Copays and coinsurance: A copay is a set amount for a prescription. Coinsurance is a percentage of the drug’s cost. Either one may apply depending on the plan and medication.
- Plan rules: Some medications may require prior authorization, step therapy, or quantity limits. These are rules the plan uses before it covers certain prescriptions.
These details can change how much you pay throughout the year. A plan may be a good fit for someone taking a few low-cost generic medications but may not fit a person using brand-name drugs or specialty medicines.
Why does the pharmacy network matter?
Many people focus only on the plan premium and forget to review pharmacy choices. But the pharmacy you use may affect your out-of-pocket costs.
Part D plans often work with a network of pharmacies. Within that network, some locations may be labeled preferred. A preferred pharmacy may offer lower copays for certain medications. Mail-order pharmacies may also be available for longer supplies of some drugs, but they are not always the lowest-cost choice for every prescription.
Before enrolling, consider checking prices at your nearby pharmacies as well as mail order if that is something you would use. A pharmacy that is convenient may still be a good choice, even if another option is slightly less expensive. The right balance often depends on your needs.
How do drug tiers affect what you pay?
Drug tiers are one of the most important parts of a Part D plan. While the names of tiers can vary, many plans use a structure similar to this:
- Lower tiers often include preferred generic drugs.
- Middle tiers may include generic drugs and preferred brand-name drugs.
- Higher tiers may include non-preferred brand-name drugs.
- A specialty tier may include certain high-cost medications.
A medication can be covered but still fall into a higher tier. That is why it is helpful to look beyond the word “covered.” Check the estimated cost for the specific drug, dosage, and pharmacy you expect to use.
If your doctor believes a covered alternative is appropriate, switching to a lower-tier medication may sometimes reduce costs. That is a medical decision to discuss with your doctor or pharmacist, not just an insurance decision.
Can your Part D plan change each year?
Yes. Part D plans may change their premiums, formularies, pharmacy networks, deductibles, and drug costs from year to year. A plan that worked well this year may not be the best fit next year.
Medicare generally has an Annual Enrollment Period each fall when you can review and change your drug plan for the following year. Reviewing your coverage during this period is often wise, especially if your medications have changed or your plan sends a notice about upcoming changes.
It is also important to pay attention when you first become eligible for Medicare. Delaying Part D without other creditable prescription drug coverage may lead to a late enrollment penalty in some situations. Creditable coverage generally means drug coverage that Medicare considers at least as good as standard Part D coverage. If you have drug coverage through an employer, union, military program, or another source, ask the benefits administrator whether it is creditable.
Should you choose the lowest-premium Part D plan?
Not always. A lower premium may be appealing, especially if you take few medications. But it is only one part of the picture. A slightly higher-premium plan may sometimes provide better coverage for your prescriptions, use your preferred pharmacy, or have fewer restrictive rules.
On the other hand, paying for a plan with broad coverage you do not need may not make sense either. The most practical approach is to compare the estimated total cost based on your medications. This includes the premium, deductible, copays, coinsurance, and pharmacy pricing.
Getting help with your Medicare drug plan choice
Part D choices can be easier when you review them with a complete medication list in hand. Benefits, formularies, pharmacy networks, and premiums may vary by plan, carrier, service area, and year. Taking time to compare your choices can help you feel more confident about your coverage.
If you would like free, no-pressure help reviewing Medicare prescription drug plan options, reach out to Eric. With 25 years of experience helping people understand Medicare, Eric can help you compare choices in a clear, straightforward way.