Many people who turn 65 mistakenly believe that signing up for Medicare secures them access to prescription drug coverage. Prescription coverage is offered to everyone with Medicare, but you must enroll in it additionally. Don’t make the costly mistake of assuming coverage is automatic.

The American Public Health Association (APHA) reports that adults 65 and older comprise 12% of the U.S. population but account for 34% of all prescription drug use. In 2019, on average, retirees spent $6,833 in out-of-pocket (OOP) healthcare expenditures. 

Even if you don’t need prescription coverage when you first enroll in Medicare, it is essential to plan for the future. Most seniors will need coverage at some point during retirement. If you remain uncovered and suddenly need prescription medication, the out-of-pocket costs can quickly become a financial burden. If you delay signing up until you need it, your insurance premium is likely to be much higher than if you had signed up when first eligible.

Everyone should carry continuous and creditable prescription coverage to avoid late enrollment penalty charges. Medicare Part D is optional, but if you don’t sign up, you will need to find another plan, or you may face a late enrollment penalty. Those penalties are imposed on your Medicare Part D premium if you do not have drug coverage through Medicare or another private health plan for more than 63 consecutive days. 

Medicare members have two options for prescription medication plans, a stand-alone Medicare Part D plan or a Medicare Advantage plan.  

Tips and considerations when choosing a Medicare Part D plan

Medicare Part D is an optional stand-alone prescription medication plan. You must be enrolled in Original Medicare (Part A or Part B) to be able to enroll in Part D. 

However, there is no one best prescription plan for seniors on Medicare. It is important to review all plans that you qualify for and make an informed decision based on your individual healthcare needs. Note that it can be a mistake to look at only the costs of those plans. It is important to weigh several factors when choosing the right Part D plan. 

1. Make a list of all of the prescription medications you are taking. 

Write down the following:

• Drug name and note if it is a generic or brand name;
• Dosage;
• Quantity (The number of days your supply is for 30-days, 60-days, 90-days);
• Frequency (How often do you take the medication, like once a day, twice a day);

2. Go online to Medicare.gov and visit the Medicare Plan Finder tool

Medicare’s Plan Finder shows you the Medicare Part D plans available in your area and provides details on which plans cover the prescription medications you take. 

Alternatively, you can use Hella Health’s Personal Shopper which will suggest Part D plans based on your unique needs and preferences.

3. Use the list of prescription medications you created with the plan finder

This will help you to find plans that cover your prescriptions and review the costs. Costs include your monthly premium (what you pay to have Part D plan coverage) and any additional out-of-pocket costs for your medications.

4. Review Pharmacy options

Out-of-pocket costs can vary by pharmacy, so it is a good idea to shop around and review the prices for your prescriptions at different pharmacies. You don’t have to use one particular pharmacy, sometimes switching to another may lower your cost. 

Another option to consider is mail-ordering prescriptions. All Medicare plans include an option for Medicare beneficiaries to consider having their prescription medications mailed to them. Often this is less expensive and can save on your out-of-pocket costs.

Consider the following questions when you are reviewing your pharmacy options:

• What service area does my plan cover?
• Can I use the pharmacy I usually use to fill my prescriptions?
• How much will I pay if I use an out-of-network pharmacy?
• Are my prescriptions available by mail order?
• What is the cost difference if I fill my prescription through mail-order instead of in person at a pharmacy?

5. Review the plan’s formulary

When you are searching for the best Medicare prescription plan, make sure that you determine before signing up whether your prescriptions are on the plan’s formulary (covered drug list). 

Consider the following questions when you review plan formularies: 

• Does the plan’s formulary include the prescription drugs I need?
• Does the plan have any coverage limitations, such as step therapy or prior authorizations?
• Does the plan cover an alternative drug if the one I take is not covered? (ask your physician)
• How much are the monthly premiums?
• How much is the yearly deductible?

6. Review Part D drug plan coverage rules

Medicare prescription drug plans may have several coverage rules. (Not all Part D plans have these rules and restrictions). Some of the coverage rules or restrictions you typically see with higher pricing tiers in a drug plan are:

• Prior authorization: Some plans require you and/or your provider to contact them before you can fill certain prescriptions, and, in some cases, your prescriber may need to explain certain drugs are medically necessary to be covered by the plan. 

• Quantity and dosage limits: Some plans will not cover a medication if the dose or treatment period falls outside what they consider to be the treatment range for a specific condition. If your physician believes the quantity or treatment period is appropriate for your condition, you or your physician can contact the plan and ask for an exception.

• Step therapy: Step therapy is a type of prior authorization. Some plans will require you to try a less expensive drug listed on the plan’s formulary before they will cover a more expensive drug. If your physician believes the more expensive drug is more effective, they can request an exception. 

7. Compare generic and brand-name drug costs

There are often significant differences between the cost of generic and brand-name medications. If you take brand-name drugs, you may ask your physician if a generic version is available. If there is no generic medication equivalent, you can ask your doctor if you could take a different medication that would offer the same therapeutic benefit.

8. Review total costs

It is important to consider the plan’s total costs, which include the premium and out-of-pocket costs you will pay each year. It is important to consider that plans with lower premiums may be more expensive at the end of the year because they charge higher medication co-pay amounts.

Consider the following questions when reviewing a plan’s total costs: 

• How much will I pay for each drug I need in copayments or coinsurance?
• How much will the brand-name medications cost me? How much will the generic medications cost me?
• How much will I pay for medication during the coverage gap?
• If I cannot afford my medication due to high coinsurance, is there an equivalent drug I can take that would cost me less? (ask your healthcare provider)

9. Review Medicare Star Ratings

Medicare has a Star Rating System that evaluates the performance of different Medicare Part D plans. Plans are rated from one to five stars, with five representing the highest rating and one the lowest. Medicare also assigns one star as a rating that summarizes the plan’s overall performance. The four categories that Medicare rates plans are:

• Drug plan customer service;
• Member complaints, problems getting services, and choosing to leave the plan;
• Member experience with the drug plan;
• Drug pricing and patient safety.

Medicare will flag low-performing plans with less than three stars for three years. These are plans you may want to consider avoiding.

Other tips and considerations

Sometimes the coverage you have may be a better option. If you have certain insurance plans, such as:

• Federal Employee Health Benefits (FEHB) program;
• Veterans’ Benefits’
• TRICARE (military health benefits);
• Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA);
• Indian Health Services.

These plans are often considered creditable prescription coverage; Many times, it may be better to keep these types of coverage than move to a Part D plan.

Creditable coverage records. It is a good idea to keep any creditable prescription drug coverage information you get from your plan in a safe location. It may be needed in the future if you decide to enroll in a Medicare drug plan. Do not send creditable coverage letters or certificates to Medicare; keep them safe with your records.

Assigning a family member access. Medicare will only speak to the member about their plan. Many times family members or other representatives will assist seniors. For Medicare to talk to someone other than the beneficiary, they need the Authorization to Disclose Personal Health Information form filled out.

Hella Health Online Personal Shopper

Hella Health helps take the guesswork out of deciding what Medicare Part D plan is best for you and simplifies the process. Visit Hella Health Online Personal Shopper, created to help people get personalized recommendations regarding Medicare plans.