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Medicare Prescription Drug Plans vs. $0 Premium Medicare Advantage Prescription Drug Plans

October 6, 2016

Stand-alone Medicare Part D Prescription Drug Plans and Medicare Advantage Prescription Drug plans are two different ways to get your Medicare Part D coverage. Both types of plans are offered by private insurance companies approved by Medicare.

Medicare Advantage plans are a type of Medicare health plan that offers at least the same level of coverage as Original Medicare, Part A and Part B (with the exception of hospice care, which continues to be covered by Part A). Many Medicare Advantage plans also include extra benefits beyond Original Medicare, such as routine vision, dental, or prescription drug benefits. Not every Medicare Advantage plan provides drug coverage, but the ones that do are called Medicare Advantage Prescription Drug (MA-PD) plans.

Some Medicare Advantage plans have premiums as low as $0. Remember that even if the Medicare Advantage plan has a $0 premium, you must continue to pay your Medicare Part B premium.

If you’re covered by Original Medicare, however, you must obtain your Medicare Part D coverage through a stand-alone Medicare Part D Prescription Drug Plan (also known as a PDP). You can’t enroll in a stand-alone Medicare Part D Prescription Drug Plan if you’re already enrolled in Medicare Advantage Prescription Drug Plan.

Whether a stand-alone Medicare Part D Prescription Drug Plan or a $0 premium Medicare Advantage Prescription Drug plan is better for you will depend on your budget, health and prescription drug needs, and the level of coverage you’re looking for. Keep in mind that not all plans are sold in every location. Costs and the prescription drugs covered by the plan will vary. 

Comparing benefits

As mentioned, Medicare Advantage Prescription Drug plans include your health (Medicare Part C) and drug (Medicare Part D) benefits all in one plan. If you like the simplicity of having all your benefits under a single plan, a Medicare Advantage Prescription Drug plan may be a good fit for you. You’d only have to interact with a single insurance company to file claims and make premium payments.

On the other hand, stand-alone Medicare Part D Prescription Drug Plans only include drug benefits. You’d still get your health coverage through Original Medicare. You may prefer this if you don’t want or need more comprehensive benefits than Original Medicare. 

Comparing costs

Many people assume that a $0 Medicare Advantage plan is less expensive than a stand-alone Medicare Part D Prescription Drug Plan. This isn’t necessarily true. Premium costs are just one factor you should consider when evaluating a plan.

Both Medicare Advantage Prescription Drug plans and stand-alone Medicare Part D Prescription Drug Plans come with other costs aside from the monthly premium, such as copayments, coinsurance, and deductibles. Make sure to look at all cost-sharing expenses for the plan you’re considering to get a more accurate picture of what you’ll pay.

Whether you enroll in a Medicare Advantage Prescription Drug plan or a stand-alone Medicare Part D Prescription Drug Plan, make sure all the prescription drugs you take are included in the plan’s formulary (the list of drugs covered by the plan). Also, keep in mind that even if all of your medications are covered, plans can charge very different costs for the same drugs. For example, plans usually place drugs into different tiers, with copayment costs depending on the tier. If most of your prescription drugs fall into a high tier, you will have higher out-of-pocket costs. The formulary may change at any time. You will receive notice from your plan when necessary.

Because each plan prices the drugs in its formulary differently, it is somewhat difficult to determine which plan is less expensive than the other. The plan that’s more cost-effective for you will depend on the prescription drugs you take, what tier they appear in, and plan availability where you reside.