The Medicare Part D plans are complicated, but simple shopping methods can save applicants thousands of dollars every year. 

Why did we Need a Medicare Part D Plan?

These plans include participants who signed up for Medicare Part D coverage because prescription drugs have always been one of the most troubling expenses for recipients. (Nearly $1 of every $5 in Medicare funds is spent on outpatient prescription drug costs, primarily through Part D coverage.) 

Before Medicare added an optional prescription drug benefit— many Medicare members had to choose between paying their utility bills, grocery shopping, and filling their prescriptions. Today, the situation is much better – particularly for seniors who carefully select a Part D program covering their medications – with wise shoppers potentially saving thousands of dollars per year.

These prescription drug benefits are available to Medicare beneficiaries through private Part D plans established in 2003 as part of the Medicare drug benefit program. Senior citizens and people with disabilities have many options as it’s based on competition among individual plans. Even better news, by being an active shopper each year, you can discover the perfect coverage for your needs while saving plenty of money.

Here are seven ground rules to follow when dealing with Medicare Part D plans:

1) Be Aware of Your Shopping Window

You have time until October 15 to December 7 to shop for a new plan or modify your Medicare Advantage policy for the following year. (If you’re enlisted in the MA plan, you have another shopping window from January 1 to March 31, 2022, to switch to a different Medicare Advantage program— including one with integrated Part D coverage — or turn to Original Medicare and join in a stand-alone Part D program).

Because most applicants cannot change their plans outside of this enrollment period, it is beneficial to be prepared. Some Medicare beneficiaries can safely proceed with their current program without incurring additional costs from one year to another. In reality, some will join for various reasons (like having their best choice for Medicare plan benefits and physicians tied to their Part D health services, as explained below).

Nevertheless, for many Medicare members and their caretakers, shopping around for different and better alternatives will help them save money while ensuring they can continue to benefit from the Medicare program’s promise of accessible and affordable health insurance for Americans in need.

When shopping in the fall, remember that adjustments will take effect in January, giving you the option to change your decision more than once during the annual open enrollment window. Suppose you’re registered in a Medicare Advantage plan. In that case, you’ll get another opportunity to change your mind during the open enrollment period for Medicare Advantage, which lasts from January 1 to March 31, while only one plan change is allowed during that time frame.

2) Examine Your Medicare Advantage Plan

If you purchased a Medicare Advantage plan, you must typically get your drug benefits from the program rather than a separate Part D provider. 

Suppose you are among the growing number of Medicare recipients who receive their medical and hospital benefits (Medicare Part A & Part B) through a different Medicare Advantage program. In that case, the same supplier probably provides your Part D coverage (9 out of 10 Medicare Advantage policies include the integrated Part D health coverage in 2020). That means when you switch your Part D plan, your hospital and health services also change.

You must consider changing Medicare Advantage coverages if your plan Part D formulary for the coming year would limit your ability to continue receiving your current prescriptions. Just make sure to take a replacement Medicare plan that will cover your existing healthcare doctors as well as your medications. (The same plan comparison strategy is used to preview Medicare Advantage plans, including prescription benefits, as well as separate Part D plans.) 

Unless you’re very comfortable using a laptop and other web resources, the best way to choose a Part D plan is to call your health insurance agency. And ask the representative to spend time walking you through the process of using the company’s online Plan Finder tool to discover a new plan. It will be easier to have a representative at Medicare (or a Medicare broker in your state) help you through the process than doing it alone, mainly because the online devices themselves might not be the most user-friendly. (The online tool was revamped in 2019, resulting in specific improvements and even some areas of concern for privacy, security, and ease of use. The national government provides SEPs to applicants who contact them and clarify that they chose the wrong program for 2020 coverage due to “inaccurate information” presented by the overhauled plan finder tool during the fall 2019 enrollment period). 

You can also get help from a state insurance broker to simplify the task. The broker you choose for other insurance products may also work with Medicare programs or will be able to refer you to the one who does.

3) Examine Your Formularies and Drug Prices

Plans change their directories of covered drugs (formularies) and the prices of the medicines every year. Because prescribed medications are expensive, programs must change their benefits and require you to pay more (or less) for the same medication year after year.

Another thing to remember is that Medicare Part D plans may expect you to obtain approval from the health plan before using your current medications in January of the following year. This is known as pre-certification or prior authorization.

If you cannot find the program that covers all of your prescriptions, you might be able to cooperate with your physician to get your current plan (which has changed your current drugs to require pre-approval) to cover the medication anyway. It’s crucial to save any reports from your Part D provider if it has approved insurance for one of your medicines this year – as evidence to support your case and help speed up the process.

If you take numerous medications, you may find that some of them are covered by specific plans, but not all of them. In that case, consider enrolling in the program that best supports the most expensive medicines you take and paying attention to how much each prescription would cost without health insurance.

As an additional assurance, your Medicare prescription drug supplier is required to provide participants with a 90-day supply of their current medications when the program benefits change annually– under certain conditions. Because there are legal implications to this policy, known as a “transition fill,” you must ensure you understand your insurer’s rules – while also guaranteeing the plan fulfills its obligations to assist you as a Medicare beneficiary.

4) It is Worthwhile to Shop Around

Even if there are no significant coverage modifications, new and different offerings may arrive in your area, so it is still worthwhile to shop around for new health programs. 

Medicare Part D plan is the private sector’s first foray into a portion of Medicare in which shareholders own all benefits. To make the Part D plan more appealing to Washington spending analysts – who must sign off before legislators can create something like a prescription drug benefit – the researchers designed a “donut hole” (also called coverage gap) in which you had to pay your drug costs yourself. 

The Affordable Care Act (ACA) closed the Part D donut hole in 2020 (it closed a year earlier, in 2019, for branded drugs, thanks to the bipartisan budget law of 2018). But the donut hole is still relevant in calculating your drug costs to determine if you are hitting your catastrophic coverage limit for the year.

And while there is no longer a “donut hole” in the amount that beneficiaries with conventional plans pay for their medications after reaching their initial coverage limit. The out-of-pocket expenses for your medications will vary from one Part D to another, depending on insurance design. Shopping around every year is the best way to ensure you’re receiving the right coverage for your needs.

5) Part D Premiums aren’t the Only Thing to Consider

Part D premiums aren’t the complete picture, but they’re a significant part of it. Part D benefits change from year to year, so it is essential to examine your costs under each plan carefully. Some programs provide generic drugs with no copays; if this applies to your medications, you could save a good amount of money over the year.

Furthermore, some Part D plans go well beyond the federal government’s mandated minimum level of prescription drug benefits for insurers. In 2020, the minimum coverage levels included a $435 deductible and out-of-pocket costs that do not exceed 25% of the cost of the brand-name and generic drugs. However, some Part D coverages have lower or no deductibles, and some offer lower out-of-pocket costs after the deductible is met.

As enticing as that sounds, expanded Part D plans may not be the best option because their higher premiums may outweigh the savings offered by the lower deductibles and copays the enhanced plan advertised. This is why it is critical to consider your costs over the entire year, including premiums, co-insurance, and copays, before deciding on a Part D plan for next year.

It is suggested to rely on plan information shared with you by your insurance company to decide on a health plan. If the information (such as whether the program covers a specific medication) turns out to be inaccurate. You can use your company’s online tool (rather than a third party’s tool), which helps you hold Medicare Advantage and the Part D plan accountable – and modify plans during the benefit year. 

6) Do You have a Low Income? You might be Eligible for Better Benefits

Low-income participants, including those who have both Medicaid and Medicare plans, may receive different health benefits. This is important.

You probably get Extra Help (also known as the “Low-Income Subsidy” or “LIS”) with your Part D plan if your copays in 2020 were not more than $3.60 for generic versions and $8.95 for branded drugs. Cost-sharing for a small group of enrollees, who earn between 135 and 150 percent of the poverty line, is a fixed percentage rather than a copay. But it is still lower than those who do not receive a Part D subsidy.

More information on programs that can help you save money on your Medicare prescription drug costs and apply for government programs that can assist if you are in need can be found here. It is worth noting that, in addition to having better coverage with lower copays, Extra Help Part D beneficiaries can switch plans once a month – even outside of open enrollment. 

That doesn’t mean you should not be proactive about selecting a plan that includes your prescriptions during the annual open enrollment period for the Medicare program each fall. However, it indicates you have some options if something comes up mid-year and you need to switch plans again.

7) The Quality of the Medicare Part D Plans is in the Stars

Consider Star Ratings when choosing a health plan. Although your primary concern should be whether your prescriptions are covered, the federal government’s Star Ratings program demonstrates how well a Part D or Medicare Advantage plan performs in various ways that impact you.

Good star ratings, especially four stars and higher, indicate that a plan has shown quality customer service and a track record of paying close attention to your many medical care needs (such as routine health assessments and screening tests). By that same token, you must avoid plans with fewer than four stars ratings. These plans frequently mistreat their members, provide poor customer service, and slow process member appeals and claims, delaying or even preventing coverage to needed healthcare services.

In other Words, be a Savvy One!

The best way to pick a Medicare Part D plan is to think carefully about your needs and be a savvy shopper. You can seek assistance from a family member, neighbor, friend, or an advocate available through your Social Services office.