Finding the Best Prescription Drug Plan

Medicare Part D provides a prescription drug insurance benefit for Medicare enrollees to reduce their annual medication costs. Medicare enrollees may access Part D benefits by signing up for a Medicare-approved prescription drug plan or Medicare Advantage plan offered by a private insurance company.

There several critical facts to be aware of before enrolling in a prescription drug plan:

Our PlanPrescriber tool can assist you in making an informed choice that reflects your preferences regarding issues such as monthly premium, drug restrictions, and gap coverage. This tool enables you to compare plans to find the lowest cost. After you review the comparison based on your drug needs, you can decide which plan is best for you.

Monthly premiums vary by plan. Many insurance companies offer multiple prescription drug plans where plans with greater benefits (e.g. gap coverage or more covered drugs) have higher monthly premiums. Monthly premiums may change on a yearly basis. While a prescription drug plan may not have an annual deductible higher than $275 in 2008, a plan has the freedom to lower or eliminate the deductible amount.

After the deductible is paid, 75% of drug costs up to $2,510 in a year are covered by the prescription drug plan. If this amount is exceeded, the enrollee will pay 100% of the drug costs. This absence of benefits is often referred to as the “donut hole” or “gap.” This will continue until either a new calendar year begins or the enrollee’s out-of-pocket expenses for drugs exceed $4,050 within the year. In this latter scenario, the government has a program called “catastrophic coverage” to assist Medicare enrollees with excessive drug costs.

Medicare specifies the minimum requirements that a prescription drug plan has to satisfy but allows plans to further customize those plans. Medicare requires that all approved prescription drug plans cover at least two drugs within every drug class (however plans have the ability to define drug classes differently from each other). A plan may choose to have more than two drugs covered within a drug class. Plans can change the drugs they cover in their formulary at any time. If a drug is to be removed from a plan's formulary, the plan must first notify enrollees in advance of this action.

Plans have the right to impose certain restrictions on medications. These restrictions are sometimes referred to as cost utilization measures. For example, a plan may limit the maximum number of pills that are covered for a given drug within a monthly prescription. A plan may also require the enrollee to request “prior authorization” before they will cover a prescribed drug. A plan may also require an enrollee to try one or more less expensive drugs (and establish that they are not sufficiently effective) before approving an expensive drug. This last restriction is known as “step therapy”.

Instead of enrolling in a prescription drug plan, a Medicare beneficiary may also access drug coverage by signing up for a Medicare Advantage plan that includes prescription drug coverage alongside medical services. Medicare Advantage plans provide Medicare Part A and Part B services through a network of doctors, care givers, and facilities. A Medicare Advantage plan may require you to use in-network resources except in certain defined scenarios (typically medical emergencies).