Medicare Prescription Drug Plans
Help offset the cost of high prescription drug prices with a low-cost PDP plan.
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Medicare Prescription Drug Plans – PDP
Medicare requires that Medicare eligible consumers have drug coverage, either through a Medicare approved insurance carrier, or other creditable coverage through an employer or union plan. The creditable coverage must be as good as or better coverage than what Medicare offers. If it is not, you will typically receive a letter from Medicare explaining your options. If you don’t obtain coverage, you will start accruing financial penalties.
You Must Have Prescription Drug Coverage Even If You Don't Currently Take Medications
Prescription Drug Plans were first introduced as mandatory in 2006. The penalty for not having drug coverage is 1% of the national average monthly premium. So if the national average monthly premium is $35.00 and you miss 12 months of coverage, your MONTHLY penalty removed from your Social Security check will be $4.20 for as long as you have part D coverage [$35 x .01 = .35 x 12 = $4.20]. However, only the Centers for Medicare & Medicaid are able to determine this penalty (mine is for example purposes only).
Almost all Prescription Drug Plans work with both Mail order pharmacies and Retail store pharmacies and you can mix and match how you receive your medications. Certain medications that require refrigeration or are opioids cannot be purchased through mail order. Almost all the major pharmacies in Maryland will work with your plan, while some offer greater discounts depending on their relationship with the insurance carrier.
Those pharmacies that are considered “Preferred Pharmacies” will offer you the best prices while pharmacies not on your insurance carrier’s “preferred” list will not. So you can save some money by changing your shopping habits.
Costs of Medicare Prescription Drug Plans vary greatly, so it’s best to work with a Medicare Insurance broker to determine which carrier and which plan offers you the best savings on your current medications.
All medications are placed into what the industry calls Tiers and this determines the price you pay. Tier 1 is typically generic medications, like Atorvastatin. Tier 2 medications are a bit more expensive than Tier 2. Tier 3 medications are normally Brand name medications like Lipitor (which has a generic equivalent called Atorvastatin). Tier 4 medications are even more expensive and depending on the company, Tier 4 and Tier 5 can include injectables (such as insulin) either injected by the consumer or initiated at a medical facility on regular intervals (such as cancer treatments).
SAVINGS TIP: As a Medicare beneficiary, you can call the insurance carrier and ask that your expensive Tier 3 or Tier 4 medication be dropped down to a lower Tier so you can afford to purchase it. By law, the insurance company must consider your request and have an answer back to you within 72 hours.
How Do Medicare PDP Plans Work?
There are several stages to having Medicare drug coverage as seen above. Stage 1 is the deductible stage where you must personally spend $435 out of your own pocket prior to the insurance carrier helping with any of the costs. Once this is spent, you then move to Stage 2.
In Stage 2, you are essentially eating away at your "credits" or what we call Coverage Limit. Think of this as the "meat" of your coverage. This amount changes every year and for 2020 it is set at $4,020. Once you have used up all your available credits to purchase medications, you move to Stage 3.
In Stage 3 you fall into the Coverage Gap, this used to be called the "Doughnut Hole." While in this stage, you will pay up to 25% of the cost of the medications, no matter which tier they fall into. You will stay in this stage until you have spent at least $6,350 out of your own pocket, or what we call True Out Of Pocket (TrOOP). These costs start adding up from the first of the year and include your co-payments and co-insurance you pay each time you fill a prescription. They do not include your monthly premiums you pay to your insurance company. Once your TrOOP reaches $6,350 you finally move into the last stage.
The final stage of Medicare's prescription drug plan is Catastrophic Coverage. In Stage 4, you have spent at least $6,350 out of your own pocket for your medications, so at this point, your costs are drastically reduced. You will pay 5% or $3.60 per 30 day prescription (whichever is higher) and $8.95 for brand name medications.
You can easily determine what your costs will be for the coming year by entering your drug list, milligrams and how often you take your medications at Medicare.gov. It's a free service.
What If I Can't Afford My Medications?
I can still help you enroll into a plan. But first, you should apply for a Low Income Subsidy (LIS) from Social Security. It's easy to do here. Medicare Part D Low Income Subsidy Application Page
If your income is too high to qualify for the LIS levels, you can apply for Maryland's SPDAP program. You may be eligible if your income is at or below $37,470 ($3,123 monthly) for a single person or $50,730 ($4,227 monthly) for a couple. To apply simply call SPDAP at 1-800-551-5995 or go to http://marylandspdap.com/.
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