There are a lot of considerations when choosing a Medicare prescription drug plan: what to look for, understanding formularies, and more. Below are three items to look for when considering the plan that is best for you.
Evaluate Medicare drug plan options
There are two options to get prescription drug coverage under Medicare.
The first option is a stand-alone Medicare Part D prescription drug plan. Plan D only covers prescription drugs.
The second option is to choose a Medicare Advantage plan (Part C) that includes prescription drug benefits. Medicare Advantage plans combines Original Medicare (Parts A and B) and the Medicare prescription drug plan (Part D). Medicare Advantage plans often include extra coverage items such as vision and dental.
Check the plans Formulary
Medicare plans have a list of covered drugs called a formulary. An important part of choosing coverage is to make sure your drugs are covered.
Confirm if the plan formulary is organized into tiers. Medicare plans use tiers to organize drugs for determining costs. A general breakdown of tiers a plan may use:
- Tier 1. Lowest copay. This tier includes lower-cost and commonly used generic drugs.
- Tier 2. Low copay. This tier includes most generic drugs.
- Tier 3. Medium copay. This tier includes the most common brand names drugs (preferred brands) and some higher-cost generic drugs.
- Tier 4. Highest copay. This tier includes non-preferred generic and non-preferred brand drugs.
- Tier 5. Specialty Tier. Coinsurance. This tier includes unique and often very high costs drugs. You pay a percentage (coinsurance).
If a plan uses a tiered formulary, make certain to find where your drugs are listed to accurately estimate your annual prescription drug costs.
A note about special requirements: Some plans with tiered formularies may also have special requirements for certain drugs. One of these requirements is called “step therapy.” With step therapy, you must first try a less-expensive drug to see if it works for you. You can only “step up” to a more expensive drug if you and your doctor can show the less expensive drug didn’t work for you. Your plan’s formulary will tell you which drugs have special requirements, like step therapy.
Estimate your drug costs
Whether you choose a stand-alone Part D prescription drug plan or a Medicare Advantage plan, you will have to pay some of the costs for your prescriptions. This is called cost-sharing and your costs may include premiums, copays, coinsurance, and deductibles.