By Robert Remin
If you are in (or about to be in) the Medicare-eligible market and will not continue receiving your health insurance from your job, you will need a Medicare Part D, also known as a prescription-drug plan. As mentioned in my previous article, if you choose a Supplement or Medigap policy, you will have to decide on the appropriate Part D plan. These plans have an additional monthly premium ranging from less than $20 to about $100, depending on the carrier. More than likely, you will also have monthly drug costs depending on your coverage and health.
Many people assume that their Part D plan has to be from the same carrier as their Supplement/Medigap plan. However, this is not the case; most often, a plan from a different carrier is most appropriate.
Here comes the real fun part. Even if you are not taking any prescription drugs, you still must have a Part D drug plan when you become Medicare eligible. Otherwise you will pay a per-month penalty when you finally do enroll in Part D. The monthly penalty is actually not that high (about 35 cents per month for 2018 or $4.20 for the year). However, if you go several years without Part D coverage, you might be paying an additional monthly premium of $15 to $20 for no reason.
Keep in mind that there are some exceptions. For instance, if you have something called creditable coverage for drugs from work, or another source such as VA or Tricare, there is no Part D penalty when you enroll.
For those who choose an Advantage Plan instead of a Supplement or Medigap policy, Part D is automatically included, whether or not the Advantage plan has a monthly premium.
All prescription drugs are divided into what is called formulary (a list of drugs, both brand and generic, by each carrier) and tiers, numbered 1 through 5. Usually, the lower the tier, the lower the cost.
However, here comes even more fun. Just to make it more complicated, every carrier has its own formulary and tiers. So, a Tier 1 or 2 drug with Carrier A with a very low monthly cost could be a Tier 3 with Carrier B and cost several times more. Also, within the same tiers, prices can vary immensely depending on the carrier. For example, I have seen one carrier have a drug in Tier 1 or 2 with zero cost and another carrier have the same exact drug cost $800 or $1,000.
In addition, carriers can change the tiers and costs of drugs during the plan year. This can cause a large increase or decrease in monthly and yearly drug expenditures for you.
Capping Drug Costs
Some of you might have heard of something with Part D called the “Doughnut Hole” and Catastrophic Coverage for those who have several thousand dollars of drug costs per year. Certain states–New York is one of them–have some specific solutions for Doughnut Hole and Catastrophic Coverage. Please consult your Medicare adviser or state for details.
As with your Medicare Part C plans, there is no magic formula to control or cap drug costs. Proper research by an independent, unbiased resource is always my recommendation, as they have the skill and expertise to offer you solutions for your unique situation.
Robert Remin is an independent agent licensed and certified with all the Medicare carriers in the New York Metro area. As an unbiased resource, his only goal is to match you to the most appropriate plan. For any questions or a cost free consultation, contact him at 914-629-1753 or RobertReminInsurance@gmail.com, or visit RobertReminInsurance.com. He is also available for speaking engagements at synagogues or other organizations to educate Medicare-eligible populations.