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If you rely on Medicare Part D (also referred to as a Prescription Drug Plan or PDP) to cover your prescription costs, it’s always best to keep up with policy changes, since not all PDPs are created equal. Each has its own unique formulary (the list of drugs it will cover), premium (the monthly fee you pay for your plan), and benefit structure (which will determine your out-of-pocket costs). Additionally, plans review and change these details from year to year, so simply retaining your coverage because it has worked for you in the past could end up costing you.
Each September, your plan provider sends you an Annual Notice of Change. This document will alert you to any changes being made to your plan’s premium, coverage, or benefit structure for the upcoming year. Make sure to review this document each year to ensure your prescription drug needs will continue to be met in the new year at a cost you can afford.
You should receive your Notice of Change before the Annual Enrollment Period (AEP) begins. The AEP begins on October 15 and ends on December 7 each year, and is your chance to get new coverage or switch plans, should you wish to find coverage that better suits your needs. Whether your plan is changing its coverage or benefit structure in an unfavorable way, or your own needs have changed, it may be time to switch to a new PDP.
More Comprehensive Coverage
Often, a plan’s formulary is separated into four tiers. You will pay a different copay for your prescription drug based on its given tier. Tier 1 drugs ordinarily have the lowest out-of-pocket cost, while tier 3 and specialty drugs have the highest. Suppose your plan has a four-tier formulary: if you need a prescription listed on the third tier of your plan (or not listed at all), it may save you a significant amount of money to switch to a plan that lists your drug in one of the first two tiers.
Lower Out-of-Pocket Costs
It may be tempting to select a plan with the lowest monthly premium, as this is often the first number you see when shopping for plans. While this number is significant, it is by no means the most important figure to consider when choosing a PDP. Think of it this way: if one plan has a monthly premium of $40 per month, but saves you $30 in additional out-of-pocket costs (such as copays) each month compared to a plan with a $20/month premium, it is effectively $10 cheaper.
Because your out-of-pocket costs depend on your plan usage (which drugs you purchase through your plan, and at what frequency), there is no formula to determine your expenses beyond your premium. The best way to get a sense of what your out-of-pocket costs will be is to look at your previous year’s prescription purchases, as well as your anticipated future prescription drug-related needs. It is always worth investigating whether another plan might cover your needs at a reduced cost.
Conversely, it is possible that you are paying for more coverage than you need. How much you’re willing to pay for coverage for services that you do not currently use is entirely up to you, as it can be comforting to be covered for services you may need in the future. If you find it aggravating to pay for coverage that you do not use, however, it may be time to switch plans.
Pricing Cap on Insulin
Beginning on January 1, 2021, some PDPs included a price cap on insulin costs. Under the new Senior Savings Model, beneficiaries will receive a 30-day supply of insulin for $35. This means the yearly cap on insulin is just over $420, which is a decrease in cost of 66% compared to the average price paid by seniors in 2020. According to the CMS, 1,635 plans, covering all 50 states, will offer this price cap. These plans will save daily users of insulin an average of $446 per year.
Not all PDPs include this insulin price cap. Since this change is new, it is worth figuring out if your plan is adhering to the new Senior Savings Model for insulin if you are one of the 14.3 American seniors with diabetes.
Information adapted from the Centers for Medicare and Medicaid Services
Additional data and cost information adapted from the American Diabetes Association.
Statistics About Diabetes, 2020. American Diabetes Association