Updated: Nov 14, 2024

Prescription drugs are an essential part of many healthcare plans, especially for seniors. Explore how Medicare Part D can help cover your prescription costs and find ways to save on medications with the right plan.

Medicare Part D is prescription drug coverage available to anyone enrolled in Medicare. It helps pay for the cost of prescription medications, which Original Medicare (Part A and Part B) does not cover. Part D plans are offered by private insurance companies and provide a wide range of coverage levels. Choosing the right plan can save you money on your medications, but it’s important to understand how these plans work and the various ways you can reduce out-of-pocket costs. In this article, we’ll break down Medicare Part D and share practical tips for finding affordable prescription drug coverage, including real-world examples of popular plans.

What Is Medicare Part D?

Medicare Part D helps pay for prescription drugs, and it’s available either as a standalone plan (if you have Original Medicare) or as part of a Medicare Advantage Plan that includes prescription drug coverage (MA-PD).

Here’s how Medicare Part D works:

• Private Insurance: Part D plans are provided by private insurance companies approved by Medicare. Each plan can vary in terms of which drugs are covered, how much you’ll pay, and which pharmacies you can use.
• Formulary (Drug List): Every Medicare Part D plan has a formulary, which is a list of covered drugs. These drugs are typically categorized into different tiers, with each tier representing a different cost level. Higher-tier drugs (like brand-name or specialty drugs) generally cost more than lower-tier drugs (like generics).
• Cost Structure: Medicare Part D plans generally have a cost structure that includes premiums, deductibles, and co-pays or coinsurance for each prescription.

Costs Associated with Medicare Part D

To better understand how Part D works, it’s important to be familiar with its key costs:

• Monthly Premium: The amount you pay every month to keep your Part D coverage. Premiums vary based on the plan and the provider, and higher-income earners may pay more.
• Annual Deductible: This is the amount you must pay out of pocket for your prescriptions before your plan begins to cover costs. The maximum deductible for 2024 is $545, but some plans offer lower or even $0 deductibles.
• Co-pays/Coinsurance: After meeting your deductible, you will typically pay a co-pay (a flat fee) or coinsurance (a percentage of the cost) for your prescriptions. These amounts vary by plan and by the drug’s tier on the plan’s formulary.
• Coverage Gap (Donut Hole): After you and your plan have spent a certain amount on covered drugs (the initial coverage limit is $5,030 in 2024), you enter the coverage gap. While in the gap, you’ll pay 25% of the cost of brand-name drugs and 25% of generics until you reach the catastrophic coverage threshold, after which your costs decrease significantly.

How to Choose the Right Medicare Part D Plan

Choosing the right Medicare Part D plan can make a big difference in both your monthly costs and how much you spend on prescriptions. Here are some steps to guide your decision:

1. Check the Plan’s Formulary

Make sure the plan covers the medications you take. Each Part D plan has a formulary that lists which drugs it covers and what you’ll pay for each one. If your medications aren’t covered, or if they fall into a high-cost tier, you may want to look at other plans.

• Tier 1 (Preferred Generics): Typically the lowest-cost drugs, these include common generic medications.
• Tier 2 (Generics): Still low-cost, but slightly more expensive than Tier 1.
• Tier 3 (Preferred Brand): These are brand-name drugs that usually have lower co-pays.
• Tier 4 (Non-Preferred Brand): Brand-name drugs that have higher out-of-pocket costs.
• Tier 5 (Specialty): Expensive drugs that often treat complex conditions.

2. Compare Premiums and Deductibles

Part D premiums can vary widely. You’ll want to find a plan with a premium you can afford, but also consider the plan’s deductible. Some plans have $0 deductibles but may charge higher co-pays, while others have lower premiums but higher deductibles. Balance these costs based on how often you need prescriptions filled.

3. Look at Network Pharmacies

Many plans work with specific pharmacy networks, and you’ll save the most money by using these preferred or in-network pharmacies. Make sure that your local pharmacy is included in the plan’s network or consider switching to one that offers the lowest co-pays and best pricing.

4. Evaluate Out-of-Pocket Costs

In addition to premiums and deductibles, consider what you’ll pay for each prescription at the pharmacy. Review the plan’s co-pays or coinsurance for the drugs you regularly take and make sure the costs fit your budget.

5. Watch for the Donut Hole

If you take a lot of medications or expensive drugs, you may hit the coverage gap (or donut hole) during the year. Some plans provide additional coverage in the donut hole, so if you expect to spend a lot on prescriptions, consider plans that offer this extra protection.

Ways to Save on Prescription Drugs

Even with Medicare Part D, prescription drugs can be expensive. Here are some strategies to help you save money:

1. Use Generic Drugs

Generic medications typically cost less than brand-name versions and are equally effective. Ask your doctor or pharmacist if a generic equivalent is available for your prescription.

2. Consider Mail-Order Pharmacies

Many Part D plans offer lower prices if you order a 90-day supply of your medication through a mail-order pharmacy. This can save you money and make it easier to manage long-term prescriptions.

3. Look for Extra Help Programs

If you have limited income and resources, you may qualify for Medicare’s “Extra Help” program, which assists with Part D premiums, deductibles, and co-pays. This program can significantly reduce your prescription drug costs.

4. Use Prescription Discount Programs

Even with Medicare, you can sometimes find lower prices through prescription discount programs like GoodRx, which offers coupons that can be used at pharmacies to lower the cost of your medications.

5. Review Your Plan Annually

Drug prices and Part D plans can change each year, so it’s essential to review your coverage during the Medicare Annual Enrollment Period (October 15 to December 7). Compare new plans to ensure you’re still getting the best deal for your prescriptions.

Real-World Examples of Medicare Part D Plans

Here are a few examples of popular Medicare Part D plans to give you an idea of what to expect in terms of costs and coverage.

Aetna Medicare SilverScript Choice (PDP)

• Monthly Premium: $0 – $30 (varies by location).
• Annual Deductible: $545 for Tiers 3-5, $0 for Tiers 1 and 2.
• Co-pays: $0 for Tier 1 (Preferred Generics); $1 – $3 for Tier 2 (Generics); $30 – $47 for Tier 3 (Preferred Brands); $70+ for Tier 4 (Non-Preferred Brands).
• Coverage Gap: Standard 25% co-insurance during the donut hole for both brand-name and generic drugs.

This plan is a great option for those who take mostly generic drugs, thanks to the $0 deductible for lower-tier drugs and low co-pays. However, the deductible for higher-tier drugs may make it less attractive for those on more expensive medications.

Humana Premier Rx Plan (PDP)

• Monthly Premium: $55 – $70.
• Annual Deductible: $250 for all tiers.
• Co-pays: $1 for Tier 1 (Preferred Generics); $5 – $8 for Tier 2 (Generics); $47 for Tier 3 (Preferred Brands); 40% coinsurance for Tier 4 (Non-Preferred Brands).
• Coverage Gap: Additional coverage for select generics in the donut hole.

Humana Premier Rx is designed for individuals who take a wide range of medications, including more expensive brand-name drugs. The relatively low deductible and additional coverage during the coverage gap make it a good choice for people with higher prescription drug costs.

WellCare Value Script (PDP)

• Monthly Premium: $10 – $15.
• Annual Deductible: $545.
• Co-pays: $0 for Tier 1 (Preferred Generics); $3 – $7 for Tier 2 (Generics); $30 – $40 for Tier 3 (Preferred Brands); 44% coinsurance for Tier 4 (Non-Preferred Brands).
• Coverage Gap: Standard coverage with 25% co-insurance for both brand-name and generic drugs.

WellCare Value Script is one of the most affordable plans in terms of premiums, but it’s best suited for individuals who mostly take generic medications. The high deductible for higher-tier drugs may not be ideal for those on costly prescriptions, but it’s a budget-friendly option for low-cost medications.

Conclusion

Medicare Part D helps cover the cost of prescription drugs, but the right plan for you depends on your specific medications, budget, and pharmacy preferences. By carefully comparing plans and exploring cost-saving strategies such as generics and mail-order services, you can ensure that your prescription costs stay manageable. Don’t forget to review your Part D plan each year to confirm it continues to meet your needs and offers the best savings possible.