Shopping around for a Medicare Part D drug plan every fall isn’t nearly as much fun as shopping for the swankiest hotel for your next vacation. But the savings you can pocket by switching to a more cost-effective Part D plan might pay for that trip.
An analysis by the Kaiser Family Foundation, a health care research organization, found that monthly Part D premiums can vary by more than 500% within the same area for plans that offer the same benefits. Why spend $125 a month if you can get the same coverage for $25?
Plus, your out-of-pocket costs for any given drug can vary by thousands of dollars a year based solely on the plan you pick—and if you’re like most enrollees, you’ll have more than two dozen drug plans to choose from.
“Shopping around for the right Medicare Part D plan is one of the best money saving strategies,” says Mary Johnson, Medicare policy analyst at The Senior Citizens League (TSCL). Yet in an TSCL survey, 80% of Part D enrollees say they don’t bother.
Even if you skip Part D because you have a Medicare Advantage plan that includes drug coverage, you shouldn’t be complacent. That coverage can vary year by year as well.
Open enrollment, which runs from October 15 to December 7, is your annual opportunity to cut your drug costs. Take it.
Where to start your research
Reviewing how your current prescription drug plan will change next year is crucial. Plans can revise the copayment and coinsurance rates, or even stop covering a particular drug, so a medication that was inexpensive this year might be less so in 2019.
All of that is laid out in the annual notice of changes (ANOC) that landed in your mailbox back in September. Already tossed it? Ask for another copy, or log into your online account to get the information.
Next pay a visit to Medicare’s Find a Plan tool, which will give you a rundown of the most cost-effective plans offered in your region (including your current plan), based on the specific drugs you take.
This free tool will factor in all your costs: your premium, any deductible you face (about 30% of plans waive the deductible, which is $415 in 2019), and your estimated out-of-pocket drug costs.
Spouses should shop separately, notes Johnson. “It’s rare for a plan that is right for one of you, based on the drugs you take, to be the best plan for someone else taking different drugs.”
Why you have to dig into the details
Premiums and deductibles are important, but the coverage details for the specific drugs you take can have the biggest impact on what you’ll spend. First, make sure the drugs you take are still covered by your current plan or any other ones you’re considering.
Next you need to look at the pricing “tiers,” which determine how high your copay will be. That includes checking whether your current plan has moved one of your drugs to a tier that makes you pick up more of the cost.
It’s common for Medicare Part D plans to have two tiers for generic drugs, two tiers for brand-name drugs, and a fifth for specialty drugs. A Tier 1 drug has a lower out-of-pocket cost than a Tier 2 drug and so on. In 2011 more than 70% of generic drugs were Tier 1, but by 2015 that was down to less than 20%, according to the health care research firm Avalere.
Johnson recently took a spin through 2019 plans available in the Charlottesville, Va. area, and here’s what she found.
The monthly out-of-pocket cost for the diabetes drug Novolog Flexpen was as little as $37 when the drug was covered, and more than $2,000 when the coverage was poor. The cost for the popular pain med Lyrica ranged from $37 to $278. And asthma drug Advair Diskus cost a low of $37 or a high of $1,880.
Don’t sweat the donut hole (as much)
The changing cost of the infamous Medicare Part D donut hole might also change the calculus of what is best plan for you in 2019.
As anyone who takes expensive meds knows, once your total drug costs exceed a base level for the year, you hit a period of reduced coverage, commonly known as the donut hole.
In 2019 the donut hole starts at $3,820—that’s the total of what you spend out-of-pocket and the amount your plan covers. Only when your total out-of-pocket costs reach $5,100 do you qualify for catastrophic coverage.
But in a bit of good news, if you fall into the donut hole in 2019, your copay will be lower than in the past. You will pay 25% of the retail cost for brand name drugs, down from 35% this year. The maximum copay for a generic drug will be 37%, compared to 56% in 2018.
“For many people, the co-pay they have in the donut hole will be less than what they pay out of the donut hole,” says Johnson.
If you haven’t comparison-shopped for years, your donut-hole costs may have changed a lot. For instance, back in 2011 you would have had to cover 93% of the price of generics and 50% of the cost of brand-name drugs in the donut hole.
How to get one-on-one help
If you want more help sorting through your Plan D options, contact your local State Health Insurance Assistance Program (SHIP). You can get free personalized help, either over the phone or, in many states, in person if you’re near a regional office.
Plus, during open enrollment there are often presentations or workshops that can help you make the smartest choice.