Prescription Drug Coverage: Things to Consider
To get Medicare coverage for your prescription drugs, you must choose and join a Medicare drug plan. Regardless of how a Medicare drug plan decides to offer this coverage, there are some key factors that may vary. Some of these factors might be more important to you than others, depending on your situation and drug needs.
This is the monthly cost you pay to join a Medicare drug plan. Premiums vary by plan.
Deductible This is the amount you pay for your prescriptions before your plan starts to share in the costs. Deductibles vary by plans. No plan may have a deductible more than $295 in 2009. Some plans may not have any deductible.
Copayment/Coinsurance This is the amount you pay for your prescriptions after you have paid the deductible. In some plans, you pay the same copayment (a set amount) or coinsurance (a percentage of the cost) for any prescription. In other plans, there might be different levels or “tiers,” with different costs. (For example, you might have to pay less for generic drugs than brand names. Or, some brand names might have a lower copayment than other brand names.) Also, in some plans your share of the cost can increase when your prescription drug costs reach a certain limit.
A list of drugs that a Medicare drug plan covers is called a formulary. Formularies include generic drugs and brand-name drugs. Most prescription drugs used by people with Medicare will be on a plan’s formulary. The formulary must include at least two drugs in categories and classes of most commonly prescribed drugs to people with Medicare to ensure that people with different medical conditions can get the treatment they need.
Some drugs are more expensive than others even though some less expensive drugs work just as well. Other drugs may have more side effects, or have restrictions on how long they can be taken. To be sure certain drugs are used correctly and only when truly necessary, plans may require a “prior authorization.” This means before the plan will cover these prescriptions, your doctor must first contact the plan and show there is a medically-necessary reason why you must use that particular drug for it to be covered. Plans might have other rules like this to ensure that your drug use is effective.
Most Medicare drug plans have a coverage gap. This means that after you and your drug plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit. Your yearly deductible, your coinsurance or copayments, and what you pay in the coverage gap all count toward this out-of-pocket limit. The limit doesn’t include the drug plan’s premium or what you pay for drugs that aren’t on your plan’s formulary.
Drug plans must contract with pharmacies in your area. Check with the plan to make sure your pharmacy or a pharmacy in the plan is convenient to you. Also, some plans may offer a mail-order program that will allow you to have drugs sent directly to your home. You should consider all of your options in determining what is the most cost-effective and convenient way to have your prescriptions filled.
Even if you don’t take a lot of prescription drugs now, you still should consider joining a drug plan. As we age, most people need prescription drugs to stay healthy. For most people, joining now means you will pay a lower monthly premium in the future since you may have to pay a penalty if you choose to join later. You will have to pay this penalty as long as you have a Medicare drug plan. If you reach the point where you have spent $4,350 (in 2009) out-of-pocket for drug costs during the year, the plan will pay most of your remaining drug costs. This protection could start even sooner in some plans.