By Scott Goodell (Goodell Health Solutions)

One of the biggest concerns for seniors on Medicare is the cost of prescription drugs.

Why? Because prescription drugs can be a major out-of-pocket expense…especially as you get older. And seniors on Medicare are more likely to be on medications.

Medicare drug coverage can seem overwhelming and confusing. It can be hard to find the most cost-effective coverage for your situation.

Let’s review the basics of Medicare drug coverage, how your options are different for traditional Medicare or Medicare Advantage, and how to pick the coverage that works best for you.

Medicare Prescription Basics

All Medicare drug plans (even Medicare Advantage plans) rank drugs by “tier”:

• Tier 1: Preferred generic (least expensive)
• Tier 2: Non-preferred generic
• Tier 3: Preferred brand name
• Tier 4: Non-preferred brand name
• Tier 5: Specialty drugs (most expensive)

Your co-payments and monthly premium will depend on which tier (or tiers) your prescriptions fall into. Tier 1 drugs may have zero copayment depending on your coverage.

You may also have to pay a deductible before your drug coverage kicks in.

Part D vs. Medicare Advantage

Traditional Medicare (parts A&B) doesn’t cover prescription drugs…not even if you also have a Medicare Supplement plan. This means you’ll also need a separate Medicare part D drug plan.

There are lots of different Medicare part D plans to choose from. Most have a monthly premium, copayments, and a deductible. These costs can vary between different plans.

Medicare Advantage plans usually combine drug coverage with what’s covered by part A and B (and sometimes other things as well). Your drug copayments may vary based on drug tier and you may also have a deductible.

What Happened to the “Donut Hole”?

Here’s some good news:

Prescription drug coverage used to have a coverage gap (a.k.a. the “donut hole”).

This meant once your annual drug costs exceeded a certain amount, you would pay 25% of your total drug costs until your out-of-pocket drug expenses reached the catastrophic coverage limit. After that, your part D or Medicare Advantage coverage would cover most or all of your drug costs.

But, starting in 2025, that all changed.

(And, for once, it’s a good change!)

Medicare now caps annual out-of-pocket drug expenses at $2000. You won’t pay any additional drug copayments above that amount.

So…How to Choose?

If you choose traditional Medicare, you also need to pick a part D plan. The best plan for you will depend on which prescriptions you have (if any).

Benefits of part D coverage include:

• You have access to a wide range of prescriptions (although the cost may vary according to tier)
• You’re free to shop for a part D plan that fits your needs

The drawbacks?

• Part D represents an additional policy to manage and (usually) premium to pay
• Costs can vary by location or plan

On the other hand, Medicare Advantage plans lump together hospital, medical, and prescription coverage (and sometimes other things too) in a single policy. They basically work like a PPO or HMO plan.

Medicare Advantage prescription coverage offers some benefits:

• One policy for all of your Medicare coverage
• Usually, no additional premium beyond part B
• Plans may offer additional benefits

But it can also have some drawbacks:

• You may be restricted to network pharmacies
• Copayments and deductibles can add to your out-of-pocket cost
• Different plans may cover medications differently

You should also know that some Medicare Advantage plans don’t include drug coverage. If your plan is one of these, you can’t sign up for a Medicare part D plan.

How to Choose the Best Drug Plan…For You

Prescription drugs can be a major expense if you’re on Medicare. Picking the best plan for your specific needs can involve a lot of research.

Here are some tips to get you started:

1. Make a list of prescriptions you currently have
2. Check each plan (part D or Medicare Advantage) to check coverage and copayments (Medicare.gov is a good resource)
3. Consider the total costs (premium, deductible, copayments)
4. Think about whether factors like flexibility or cost are important to you

Prescription coverage is a critical part of Medicare planning. At Goodell Health Services, I’m here to help you find the policy that fits your health care needs and your budget.

Need help finding the right Medicare prescription coverage? Call me at (832) 773-7981, email me at scott.goodell@ghstx.com, or use my contact form.

Scott Goodell
Goodell Healthcare Solutions

Disclaimer:
The information provided by Goodell Health Solutions is for general informational purposes only and should not be considered legal, financial, or medical advice. We are licensed Medicare insurance agents, and our role is to help you understand your Medicare options.