By Robert Remin
No, PDP is not a drug; it stands for Prescription Drug Plan. For those of you in or about to enter the Medicare-eligible market, chances are high that you are possibly in or will choose to be in a PDP that is not the most cost-efficient for your situation.
If you are new to Medicare, it’s important to understand that you will need a separate Medicare PDP if you choose to be in a Medigap/Supplement health plan. Those are the lettered plans you have heard about, and you might not be in the most cost-efficient one of those either.
If you are in a Medicare Advantage plan, your PDP is part of the Advantage plan but you still have co-pays for the drugs themselves. To best understand your options, it’s important to be cognizant of how the carrier PDPs are designed. All drugs are divided into “tiers” and “formularies.” The tiers are numbered 1–5. The lower the tier the drug is in, the lower the cost. A formulary can be thought of as a list of drugs available.
Now, here is the catch with Medicare PDP. Each Medicare PDP carrier has its own tiers and formulary. Both in theory and in reality, per the many clients I have worked with, two carriers can have the same drug in different tiers, creating a substantial cost difference. The same applies to the formulary, as one carrier can have a drug in its formulary and another carrier may not—also creating a large cost difference.
In addition to the actual drug cost variance between the carriers, every PDP carrier charges a monthly premium, they, not the drug companies receive. Also, most have a yearly deductible for drugs that are tier 3 or higher. The monthly premiums range from approximately $13.50 to about $95 and the deductibles from $235–$435, which is the max allowed by Medicare.
The carrier with Medicare approval can move a drug to a higher or lower tier and/or add or remove a drug from their formulary — creating major cost changes. This usually happens with the tier 3–5 drugs, and there is no way to know in advance if a drug you are currently taking or might be prescribed during the year is going to have an increase or decrease in cost during the year.
Why do almost all my clients before I work with them wind up in PDP plans that are not the most cost-efficient for them? The carrier media bombardment convinces and often has brainwashed them into believing that the more they pay in premiums — regardless of drug costs — the better off they are. What they don’t realize is the most important concept with PDP is: “The Carriers Do Not Make the Drugs.”
With that in mind, why would you, as some of my clients have done, pay a $35–$95 premium per month to the carrier when you are taking tier 1–2 drugs that cost no more than $5 or so each per month when you can pay a monthly premium of approximately $13.50 for the same drugs?
To be transparent, cost efficiency with PDP — no matter what tier drugs you are taking — is determined by the combination of one’s total monthly and yearly cost between the carrier premium, actual drug costs, and the deductible. With 35–40 PDP plans in the New Jersey and New York Metro area, you can attempt the exhausting, time-consuming, and frustrating process of attempting PDP cost efficiency yourself or work with a Medicare licensed and certified professional.
Robert Remin is a licensed and certified independent agent with all Medicare carriers in NJ, NY, and CT. Robert’s goal is to provide you a customized solution for all your insurance needs (without pushing products). For questions or a cost-free consultation, call 914-629-1753 or email firstname.lastname@example.org. Visit RobertReminInsurance.com. Learn about 2021 Medicare options in Robert’s next free Zoom session, “Solving the Medicare Puzzle/Medicare Myths Exposed.” Call, text, or email for next class dates.