Save Money on Prescriptions – It’s no secret that prescriptions can be expensive, especially if you need a specialized or name-brand medication. While Medicare beneficiaries have access to helpful Part D prescription drug plans, their coinsurance costs could become expensive if they find themselves in the Medicare donut hole.
If you find yourself in this situation every year, there are a few options you have to save money on your prescriptions.
What Is the Medicare Donut Hole?
The Medicare donut hole is also called the Medicare coverage gap. It is part of every Part D plan, whether you have a stand-alone drug plan or have one as part of your Medicare Advantage plans. During the coverage gap, you pay more for your prescriptions.
Part D plans have four coverage phases. The coverage gap is the third phase of coverage. Once you and your plan have spent a total of $4,430 (in 2022) on prescriptions, you’ll find yourself in the donut hole. When you are in this coverage phase, your coinsurance cost will depend on if the medication is name-brand or generic. Let’s take a look at your costs for each during the coverage gap and which costs count towards your out-of-pocket spending.
Name Brand Prescriptions
You will pay up to 25% of the cost of name-brand prescriptions. The manufacturer pays 70% of the cost, which is considered the manufacturer discount. Then, your plan pays 5%, and you pay 25%. Many times, there is also a dispensing fee. Your Part D plan will pay 75% of that fee, and you will pay the remaining 25%.
In the case of name-brand medications, only the discount and your coinsurance cost are counted towards the out-of-pocket expenses. The portions that your drug plan pays for the medication and the dispensing fee do not count.
Your cost for generic medications is the same as name-brand ones. Your Part D plan pays 75%, and you pay the remaining 25%. However, any discounts you receive for generic medications will not count towards the out-of-pocket limit. The only thing that counts is the amount you pay. And remember, whether for name-brand or generic medications, only covered drugs are considered. Your costs for non-covered medications are not counted towards the out-of-pocket limit.
When you’ve reached a certain out-of-pocket threshold, $7,050 in 2022, you’ll enter the fourth and final stage of your Part D plan: Catastrophic coverage. During this phase, you pay a very small copayment or coinsurance amount for your prescriptions. Expenses that count towards this threshold include your deductible, coinsurance or copayments, and discounts for name-brand drugs. Plan premiums, dispensing fees, and the cost for non-covered medications are not included in the threshold limit.
Cut Costs on Prescriptions
Whether you find yourself in the Medicare coverage gap or just need help with your prescription costs, there are a few ways you can save money throughout the year.
Use Your Plan Effectively
Make sure you are using your plan effectively. This is the simplest way to make sure you are paying the lowest possible amount for your prescriptions. For example, are you using a preferred pharmacy? Using a preferred pharmacy will offer you better coinsurance costs than using a standard or out-of-network pharmacy.
You may even find you can lower your costs by getting your prescriptions filled as a 90-day supply or as a mail-order option.
Switch to Generics
If you are taking name-brand medications, ask your doctor about switching to a generic. The Food and Drug Administration (FDA) requires that generic medications include the same components as their name-brand counterparts. Generic medications must be administered the same way and have the same effects. Switching to a generic version of your medication could save you thousands of dollars every year.
Drug Savings Programs
There are a number of prescription drug savings programs available today. GoodRx and CostPlus Drugs are two examples of free programs you can use to refill your medications. Simply use their online search function and see if you can find any of your medications at lower costs. Some programs allow you to use them at retail pharmacies, while others require mail orders.
Extra Help is a low-income subsidy program that offers assistance with Part D premiums, deductibles, and coinsurance costs. In addition, if you are currently paying a Part D penalty, the Extra Help program takes care of that, too. You can even apply for Extra Help if you are not enrolled in Part D. Your state may also have additional financial assistance resources.
Pharmaceutical Assistance Programs
Some drugs offer pharmaceutical assistance programs specific to that medication. They might offer manufacturer coupons or discounts, which allow you to purchase the drug at a much lower cost. You can enter your medication into Medicare.gov to see if there is an assistance program available.
Don’t Forget AEP!
Lastly, never ignore the Annual Enrollment Period! Part D plans change every year, and new ones are constantly entering the market. AEP occurs every fall and is a time when you can select a new drug plan for the upcoming year. Even if your current drug plan is working great, you may find an even better one next year. Every Medicare beneficiary needs to participate in AEP.
If you’d like to learn more about your current Part D plan or are ready to enroll, call us and speak with one of our Medicare advisors. We’ll make sure you’re getting the most out of your current plan and help you look for future options.