Medicare Part D Prescription Drug Plans Coverage Changes in 2020 are available. Many beneficiaries are in the process of figuring out how this will impact them.
Prescription drug expenses can be a drain on the recipient’s monthly income. Drugs that are essential to keeping you healthy, functioning, and active can be prohibitively expensive.
Part D prescription coverage is designed to help alleviate some of the financial challenges beneficiaries face when paying for medication. Part D changes for 2020 address these issues.
Medicare Part D Premiums Declined
The average basic premium for Part D plans saw a decrease in 2019. Lowering drug premiums continues to be a priority for CMS.
CMS reports the premiums to go from $33.59 in 2019 to $30 next year.
Medicare Part D Premiums Continue to Decline in 2020
Premiums have declined over the last three years by about 13.5%. In 2017, monthly costs were about $34.70, and in 2020 about $30. Lower prices save beneficiaries approximately $1.9 billion in premium costs over time.
Lower premiums have made the program more accessible; there has been an increase of about 12.2 percent since 2017.
Since the premiums average is decreasing, the late enrollment penalties will decrease. Beneficiaries that were without creditable prescriptions drug coverage for at least 63 days won’t have an increase in their costs.
The late enrollment penalty is in addition to the monthly premium amount on your drug plan.
Medicare Part D Prescription Drug Plans Coverage Changes for 2020
CMS works hard to make positive changes to the program. They have implemented prohibiting “gag clauses”; so, now pharmacists can tell patients about lower costing ways to obtain medications. Also, CMS requires an Explanation of Benefits to be sent to beneficiaries monthly; this information would include drug prices.
Additionally, CMS has reduced the maximum amount that low-income beneficiaries pay for innovative medications or “biosimilars.” Medicare has increased competition among plans by requiring Part D plans to have a meaningful difference from each other; this makes more plan options for beneficiaries.
CMS usually releases the information on plans by mid to late September.
Standard Initial Deductible for Part D in 2020
Coverage changes include a slight increase in the initial deductible for prescriptions. The 2019 amount of $415 will go up to $435, a jump of $20.
The initial deductible goes towards your out of pocket threshold (TrOOP), or when you leave the Donut Hole and move into Catastrophic Coverage.
You pay deductibles before coverage begins. The deductible amount in 2020 is $435, but that doesn’t affect when you enter the Donut Hole portion of the Part D coverage (after expenses of $4,020).
It does impact when you leave the Donut Hole and go to Catastrophic Care coverage.
2020 Medicare Part D Prescription Drug Plans Initial Coverage Limit
The proposed changes to the initial coverage limit, or ICL, in 2020 is said to increase to $4,020, up from $3,820 from 2019. The initial coverage limit sets the donut hole entry point.
You’ll be able to spend a little more on your medications before reaching the donut hole in 2020.
Total Out of Pocket Threshold (TrOOP) for Medicare Part D in 2020
Catastrophic coverage begins after Part D enrollee reaches the TrOOP threshold of $6,350 during one calendar year. The TrOOP is the amount a beneficiary must spend to exit the donut hole and enter into the Part D Catastrophic phase.
Proposed changes to Part D coverage will impact the Donut Hole, otherwise known as the coverage gap. The coverage gap is the amount between when recipients reach their threshold of coverage and when they begin to receive Catastrophic Coverage.
The Donut Hole Brand Name Drug Discount will Increase
Part D enrollees paid 30% of the cost in 2019. Now, for 2020, beneficiaries will only pay 25% of brand name drug costs.
Brand-name drug manufacturers cover 50% of the costs in the coverage gap; in 2019, plans cover 20% of the price, and in 2020, the policies include 25% of the costs.
The drug plans must cover an extra 5% in 2020 that they didn’t cover in 2019. These savings will trickle down to recipients.
Companies making brand-name medications are required to sign agreements to participate in the Coverage Gap Discount Program. Even though there is a discount, the entire cost of the drug will count towards the catastrophic coverage phase.
The Donut Hole Generic Drug Discount will Increase
If you reach the Donut Hole or coverage gap period, the generic drug discount will increase from 63% in 2019 to 75% in 2020. Your costs for generic drugs while in the donut hole will be 25% of the retail price of the drugs.
In 2019, the drug plan covered 63%, and beneficiaries included 37% of the cost of drugs in the donut hole. Then, for 2020, the plans must pay 75% instead of the previous 63%. Beneficiaries will only pay 25% of cost instead of 37%.
Example of Part D Expenses that will Enter the Donut Hole
If a Part D enrollee has $800 per month in brand-name prescription medications to purchase, that will amount to $2,666.83 annually. We’re basing this on $9,719.38 in total annual purchases.
This total includes five months of initial prescription plan coverage, six months of Donut Hole coverage, and one month of Catastrophic Coverage. The average monthly cost will be $229.42, or 25% of the total cost of annual prescriptions.
Compare Medicare Part D Plans for 2020
If you’re unsure about drug expenses in 2020 and would like an estimate of how much you’ll spend, you can use this Part D plan finder.
You can also join our Facebook Community to see what other beneficiaries are doing regarding their Part D drug plans this year.