Lowering Your Medication Costs

While Medicare does not directly provide coverage for prescription drugs obtained from a pharmacy or via mail order, it does establish a template for drug coverage offered by private insurance companies. Part D was created to give Medicare recipients the ability to get their medications at a reduced cost compared to paying retail prices.

Each Part D drug plan offered by an insurance company is approved by CMS to meet their standards set for prescription coverage. This doesn’t mean that all plans are the same though.

Formulary

Each plan offers a list of covered medications called a formulary and it’s important when evaluating your options to make sure your medications are on this list. Formularies are divided into multiple tiers of medications ranging from generic to name-brand to specialty and generally the lower the tier number, the cheaper the medication is to fill.

Pharmacy Network

Part D plans are usually contracted with certain pharmacy networks and you may find significant savings by filling your prescriptions at a preferred network pharmacy. Some plans also offer a secondary standard network of pharmacies where you can get prescriptions filled at a higher cost than that of the preferred pharmacies.

Review Annually

Pharmacy networks and formularies can change from year to year so it’s important to evaluate these options in the Fall during the Annual Enrollment Period from October 15 through December 7th. It is especially important to do this if your prescribed medications have changed at all during the current year as there may be significant savings available to you by choosing a new Part D plan.

Formularies

Part D plans all have a list of medications they cover called a formulary. These formularies categorize your medication into tier levels that determine what you pay for each covered medication. Generally the lower the tier number, the less expensive your medication will be.

Tier 1 - Preferred Generic $
Tier 2 - Non-Preferred Generic $$
Tier 3 - Preferred Brand Name $$$
Tier 4 - Non-Preferred Brand Name $$$$
Tier 5 - Specialty $$$$$
Non-formulary medications are not covered and you will pay the full retail price for the medication

Pharmacy Networks

Most Part D plans have a network of pharmacies they use to offer you your medications at a discounted rate. Some plans have both preferred and standard network pharmacies in their network. Many plans also offer a mail order service to have your medications shipped to you directly.

Preferred pharmacies are in-network and offer the lowest co-payment or co-insurance price for your medications
Standard pharmacies are in-network and offer a higher co-payment or co-insurance price for your medications
Non-network pharmacies do not provide coverage for your medications, but certain plans may offer exceptions

The 4 Stages of Drug Coverage

Part D plans have 4 stages of coverage: Annual Deductible, Initial Coverage, Coverage Gap (Donut Hole), and Catastrophic Coverage. Below you will see how these stages work and how you will progress through them annually. Not everyone utilizes all 4 stages of coverage, but knowing how they can impact your prescription costs is important to determining which plan will work best for you.

<strong>Annual</strong><br/><strong> Deductible </strong>

Annual
Deductible

Not all plans have a deductible or they may have a lower deductible
Some plans only charge deductible for higher tier medications
Once your deductible is met, you move into the Initial Coverage stage

<strong>Initial</strong><br/><strong>Coverage</strong><br/>

Initial
Coverage

Pay predictable co-payments or co-insurance for your medications depending on their tier level
Once you and your plan combined have spent $4,660 (in 2023) on your medications, you move into the Coverage Gap (Donut Hole) stage

<strong>Coverage</strong><br/><strong>Gap</strong><br/>

Coverage
Gap

Pay no more than 25% of the cost of generic or brand name medications
Items that count towards the coverage gap: annual deductible, co-insurance or co-payments, drug manufacturer's discount
Items that don't count towards the coverage gap: drug plan premium, -pharmacy dispensing fee, cost of drugs not covered by your plan
Once you reach $7,400 (in 2023), you move into the Catastrophic Coverage stage

Catastrophic Coverage

Drug co-pays drop for the rest of the year when you reach the: Catastrophic Coverage stage
Generic medications - $4.15 or 5%, whichever is greater
Brand name medications - $10.35 or 5%, whichever is greater

Let me help you save money on prescriptions

By far, the biggest area I've seen people save money when discussing insurance with me is their Part D Prescription Drug plan. Choosing a plan that doesn't cover your medications can be a costly mistake that can add up to thousands of dollars per year. As your agent, I will help you evaluate all of your options to see which plan can save you the most money on your current medications and I am happy to review with you annually to make sure you always are getting the best deal on your prescriptions.

I can meet in-person, via the phone, or even via video-conference with my laptop and your internet-connected computer, smartphone or tablet. Simply fill out the form below and I'll be in touch shortly to schedule a time to review your medications, answer your questions, and help you find the Part D Prescription drug plan that can best meet your needs. Or if you prefer, you can call me directly at 309-696-7933.

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Next Up: Medicare Advantage Plans

In this final section we'll exam how Medicare Advantage plans work to provide you medical coverage and additional benefits.

Learn more

Part D Prescription Drug Plans