Medicare Part D Costs: Prescription Drugs

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2018 Medicare Part D Costs: Prescription Drugs

Here are the highlights for the CMS defined Standard Benefit Plan changes from 2017 to 2018. The chart below shows the Standard Benefit design changes for plan years 2014, 2015, 2016, 2017 and 2018. This “Standard Benefit Plan” is the minimum allowable plan to be offered.

  • Initial Deductible:
    will be increased by $5 to $405 in 2018.
  • Initial Coverage Limit:
    will increase from $3,700 in 2017 to $3,750 in 2018.
  • Out-of-Pocket Threshold:
    will increase from $4,950 in 2017 to $5,000 in 2018.
  • Coverage Gap (donut hole):
    begins once you reach your Medicare Part D costs plan’s initial coverage limit ($3,750 in 2018) and ends when you spend a total of $5,000 in 2018.
    In 2018, Part D enrollees will receive a 65% discount on the total cost of their brand-name drugs purchased while in the donut hole. The 50% discount paid by the brand-name drug manufacturer will apply to getting out of the donut hole, however the additional 15% paid by your Medicare Part D plans will not count toward your TrOOP.
    For example: if you reach the donut hole and purchase a brand-name medication with a retail cost of $100, you will pay $35 for the medication, and receive $85 credit toward meeting your 2018 total out-of-pocket spending limit.
    Enrollees will pay a maximum of 44% co-pay on generic drugs purchased while in the coverage gap (a 46% discount).
    For example: If you reach the 2018 Donut Hole, and your generic medication has a retail cost of $100, you will pay $44. The $44 that you spend will count toward your TrOOP.
  • Minimum Cost-sharing in the Catastrophic Coverage Portion of the Benefit**:
    will increase to greater of 5% or $3.35 for generic or preferred drug that is a multi-source drug and the greater of 5% or $8.35 for all other drugs in 2018.
  • Maximum Co-payments below the Out-of-Pocket Threshold for certain Low Income Full Subsidy Eligible Enrollees:
    will increase to $3.35 for generic or preferred drug that is a multi-source drug and $8.35 for all other drugs in 2018.

Chart Comparing 2014 through 2018 Standard Benefit Model Plan Features

Medicare Part D Benefit Parameters for Defined Standard Benefit
2014 through 2018 Comparison
Part D Standard Benefit Design Parameters: 2018 2017 2016 2015 2014
Deductible – (after the Deductible is met, Beneficiary pays 25% of covered costs up to total prescription costs meeting the Initial Coverage Limit. $405 $400 $360 $320 $310
Initial Coverage Limit – Coverage Gap (Donut Hole) begins at this point. (The Beneficiary pays 100% of their prescription costs up to the Out-of-Pocket Threshold) $3,750 $3,700 $3,310 $2,960 $2,850
Out-of-Pocket Threshold – This is the Total Out-of-Pocket Costs including the Donut Hole. $5,000 $4,950 $4,850 $4,700 $4,550
Total Covered Part D Drug Out-of-Pocket Spending including the Coverage Gap – for Persons Qualifying For LIS – and are not eligible for the donut hole discount.
Catastrophic Coverage starts after this point.See note (1) below.
$7,508.75 (1) $7,425.00 (1) $7,062.50 (1) $6,680.00 (1) $6,455.00 (1)
Total Estimated Covered medicare Part D costs Drug Out-of-Pocket Spending including the Coverage Gap Discount (NON-LIS) See note (2). $8,417.60

plus a 65% brand discount

$8,071.16

plus a 60% brand discount

$7,515.22

plus a 55% brand discount

$7,061.76

plus a 55% brand discount

$6,690.77

plus a 52.50% brand discount

Average NON-LIS percentage brand and generic drug purchases made during the coverage gap used to estimate the Total Covered Part D OOP threshold for NON-LIS beneficiaries (see above). Brand: 89.18%
Generic: 10.82%
Brand: 87.9%
Generic: 12.1%
Brand: 84.6%
Generic: 15.4%
Brand: 85.9%
Generic: 14.1%
Brand: 86.2%
Generic: 13.2%
Catastrophic Coverage Benefit:
   Generic/Preferred
Multi-Source Drug
(3)
$3.35 (3) $3.30 (3) $2.95 (3) $2.65 (3) $2.55 (3)
    Other Drugs (3) $8.35 (3) $8.25 (3) $7.40 (3) $6.60 (3) $6.35 (3)
Part D Full Benefit Dual Eligible (FBDE) Parameters: 2018 2017 2016 2015 2014
   Deductible $0.00 $0.00 $0.00 $0.00 $0.00
   Copayments for
Institutionalized
Beneficiaries
$0.00 $0.00 $0.00 $0.00 $0.00
Maximum Copayments for Non-Institutionalized Beneficiaries
    Up to or at 100% FPL:
        Up to Out-of-Pocket Threshold
      Generic/Preferred
Multi-Source Drug
$1.20 $1.20 $1.20 $1.20 $1.20
      Other $3.70 $3.70 $3.60 $3.60 $3.60
     Above Out-of-Pocket
Threshold
$0.00 $0.00 $0.00 $0.00 $0.00
    Over 100% FPL:
        Up to Out-of-Pocket Threshold
      Generic/Preferred
Multi-Source Drug
$3.35 $3.30 $2.95 $2.65 $2.55
      Other $8.35 $8.25 $7.40 $6.60 $6.35
     Above Out-of-Pocket
Threshold
$0.00 $0.00 $0.00 $0.00 $0.00
Part D Full Subsidy – Non Full Benefit Dual Eligible Full Subsidy Parameters: 2018 2017 2016 2015 2014
Eligible for QMB/SLMB/QI, SSI or applied and income at or below 135% FPL and resources < $8,890 (individuals) or < $14,090 (couples) (4)
   Deductible $0.00 $0.00 $0.00 $0.00 $0.00
    Maximum Copayments up to Out-of-Pocket Threshold
      Generic/Preferred
Multi-Source Drug
$3.35 $3.30 $2.95 $2.65 $2.55
      Other $8.35 $8.25 $7.40 $6.60 $6.35
   Maximum Copay above
Out-of-Pocket
Threshold
$0.00 $0.00 $0.00 $0.00 $0.00
Partial Subsidy Parameters: 2016 2015 2016 2015 2014
Applied and income below 150% FPL and resources between $8,890-$13,820 (individuals) or $14,090-$27,600 (couples) (category code 4) (4)
   Deductible $83.00 $82.00 $74.00 $66.00 $63.00
   Coinsurance up to
Out-of-Pocket
Threshold
15% 15% 15% 15% 15%
    Maximum Copayments above Out-of-Pocket Threshold
      Generic/Preferred
Multi-Source Drug
$3.35 $3.30 $2.95 $2.65 $2.55
      Other $8.35 $8.25 $7.40 $6.60 $6.35
Retiree Drug Subsidy Amounts: 2018 2017 2016 2015 2014
      Cost Threshold $405 $400 $360 $320 $310
      Cost Limit $8,350 $8,250 $7,400 $6,600 $6,350
(1) Total Covered medicare Part D costs Spending at Out-of-Pocket Threshold for Non-Applicable Beneficiaries – Beneficiaries who ARE entitled to an income-related subsidy under section 1860D-14(a) (LIS)
(2) Total Covered medicare Part D costs Spending at Out-of-Pocket Threshold for Applicable Beneficiaries – Beneficiaries who are NOT entitled to an income-related subsidy under section 1860D-14(a) (NON-LIS) and do receive the coverage gap discount. For 2016, the weighted gap coinsurance factor is 89.234%. This is based on the 2016 PDEs (89.18% Brands & 10.82% Generics)
(3) The Catastrophic Coverage is the greater of 5% or the values shown in the chart above. In 2018, beneficiaries will be charged $3.35 for those generic or preferred multisource drugs with a retail price under $67 and 5% for those with a retail price greater than $67. As to Brand drugs, beneficiaries would pay $8.5 for those drugs with a retail price under $167 and 5% for those with a retail price over $167.
(4) The actual amount of resources allowable may be updated for contract year 2018.

 

 

 

Medicare prescription drug costs vary by policy, based on the list of covered drugs, also known as the plan’s formulary. Medicare policies that cover prescription drugs usually put covered drugs into cost tiers, with individual cost sharing for the medications on each tier.

Medicare Drug Costs

Medications that fall on the higher tiers attract higher coinsurance costs and co-payments compared to those on the lower tiers. Private insurers set their own premiums, so it pays to compare plans in your area to make sure that you’re choosing the right plan for your prescription drug needs

Keep in mind, Medicare prescription drug policies and Medicare Advantage drug plans vary in terms of the particular medications they cover as well as the costs the beneficiary pays. This is despite the prescription drugs being the same.

Medicare drug costs depend on:

  • The medications you take, and how frequently you take them
  • Whether the pharmacy you go to is within the network of your plan
  • Whether your medications are on your Part D’s formulary
  • Whether you have chosen the stand-alone Part D Medicare Prescription Drug policy or the Medicare Advantage Drug Plan
  • Whether you receive extra help paying your Part D Medicare costs

One major cost that you should consider is the monthly premium. Stand-alone Part D policies and Medicare Advantage Drug policies have a monthly premium. Other than the monthly premiums, you may have to pay an annual deductible and a co-payment/coinsurance.

Medicare Part D Formulary

As mentioned above, each drug policy has its formulary. As a beneficiary, it’s good to check your plan’s formulary to confirm if your drugs are covered. Call our advisors for more information on this! Below are a few examples of what prescriptions are & are not covered.

Covered Prescriptions:

  • Certain vaccines
  • Insulin and all the equipment associated with insulin injection (needles, gauze, syringes, and alcohol swabs)
  • Barbiturates
  • Benzodiazepines
  • Prenatal vitamins

Not Covered Prescriptions:

  • Drugs for cosmetic purposes
  • Medicines for anorexia, weight gain or weight loss
  • Drugs meant to relieve colds and coughs
  • Medications for erectile dysfunction
  • Individual outpatient drugs
  • Over-the-counter medications
  • Minerals or vitamin drugs except those noted in the formulary
  • Fertility drugs

The same formulary drug tier definitions are used on 95% of stand alone Medicare PDPs and 76% of MAPDs. Medicare plans use these tiers to organize covered prescriptions into cost-sharing groups. Even though these drug plans use the same 5-Tier formulary, each PDP insurance plan individually determines which medications will be placed into what tier groups.

  1. Preferred Generic
  2. Generic
  3. Preferred Brand
  4. Non-Preferred Drug
  5. Specialty Tier

Can My Prescription be Moved to a Lower Cost Tier Group

If one ore more of your prescriptions have been moved to a formulary tier that is more expensive, you may be able to contact your plan carrier and ask them to move your prescription to a lower cost tier.

My Medications Co-Payment is Higher than Retail Cost, Will I Pay More if I Use My Medicare PDP

No, between you’re plans co-pay and retail drug cost, you’ll always pay the lessor of the two. If the plans co-pay for your medication is $39 but the negotiated retail cost is $15, you’ll only have to pay the retail cost.

What is the Coverage Gap

Also called the Medicare donut hole, the coverage gap is a short-term limit on what your prescription plan will pay for the covered prescription medications. Every Medicare policy that covers prescription drugs has one, but not everyone enters it.

The probability of you reaching the gap will depend on the particular drugs you take, their costs, dosages, and whether they are generic or brand-name drugs.

You’ll enter the donut hole when you and your plan have spent a specified amount on the covered prescription medications, including the deductible in case your plan has one.

While in the gap, you’ll be responsible for most of the expenses resulting from your prescription drugs until you reach a certain out-of-pocket amount, then catastrophic plan coverage starts, and you’ll be out of the gap.

For more information on the Medicare donut hole click here, or call our team for advice on how to avoid it or how to get out!

What Happens if I Cannot Afford my Prescription Medications

Medicare provides a program known as Extra Help or Low-income Subsidy, to qualified individuals with low incomes. If you’re a member of Medicare and meet the requirements of the program, you may qualify for the “Extra Help.”Those who qualify will get help paying for their Medicare Part D expenses which may include cost sharing, deductibles, and premiums.

You can qualify for the Extra Help if:

  • You acquire Supplemental Security Income benefits
  • You qualify for Medicare and receive full coverage from a government Medicaid program
  • You’re a member of a Medicare Savings Program