Contrary to what many retirees may think, selecting a Medicare Part D (prescription drug) plan is not a one-time decision.
With the high cost of prescription drugs, it’s important for all existing Medicare enrollees to carefully review Medicare Part D coverage annually to ensure their existing plan continues to be the best option for their needs.
Remember, There Are Two Ways for Retirees to Obtain Prescription Drug Coverage
If you have Original Medicare (provided by the federal government), which includes Part A (hospitalization) and Part B (medical coverage), you will likely have purchased a standalone Part D prescription drug plan from a private insurance company. You can change your Medicare Part D provider during the annual open enrollment period, without needing to change coverage for Medicare Parts A and B.
Alternatively, if you have Medicare Advantage, which is offered by private insurance companies, it will include a Part D prescription drug plan. Even with Medicare Advantage, you should still review your Part D coverage. In this situation, you will need to change your Medicare Advantage provider if there are better overall options for you.
The annual open-enrollment period is the only time Medicare beneficiaries can make changes to their prescription drug plan. So it’s important to use this window of time to review your plan in light of your current circumstances. Medicare open enrollment for 2023 coverage starts on October 15, 2022, and runs until December 7, 2022.
A Six-Point Medicare Part D Checklist to Guide Your Review
We created the following checklist to help you review your current Medicare Part D plan. It’s designed to help you determine if your current plan is still appropriate for your needs, or whether there are more attractive alternatives available. If you’re a first-time Medicare enrollee, you can also use this checklist to evaluate various Medicare Part D options.
- Review the approved medication coverage list. Medicare Part D plans are permitted to change the medications they cover each year. Often retirees are surprised to discover this when they’re refilling a prescription for the first time in the new calendar year and have to pay for a previously approved drug.
Action step: Carefully review your current medication list and any new medications you anticipate needing against the coverage list for the upcoming year. If you discover a gap in your coverage, consider exploring whether different Part D plan can fill this gap. You can learn about what Medicare Part D drug plans cover by clicking here.
- Understand copayments and coinsurance. Medicare Part D plans use tiered cost-sharing. This can cause some plans to change their beneficiaries’ out-of-pocket costs. Most plans will have two tiers for generic drugs, two tiers for brand-name drugs, and one tier for high-cost specialty drugs. Medications in each tier have different out-of-pocket costs.
Action step: Using the upcoming copayments and coinsurance rates, calculate whether your medications will cost more in the upcoming year and how this may impact your finances.
- Determine the impact of deductibles. Most Medicare Part D plans charge a deductible, though they vary in magnitude. We’ve observed that some plans with low deductibles can still result in higher out-of-pocket costs, depending on copays and medications that are not covered by Part D.
Action step: Be sure to factor in the amount of any deductibles when calculating the estimated total cost for your plan to ensure it fits in with your budget and medical needs.
- Explore options for preferred pharmacies. The majority of Medicare Part D plans offer lower cost-sharing requirements if prescriptions are filled at selected network pharmacies. The reduction in copayments can be meaningful.
Action step: Start by reviewing whether your current pharmacy is part of the network with the preferred cost sharing. If not, explore whether any of the preferred pharmacies are more cost effective for the medications you take. Keep in mind that the preferred list of pharmacies can also change; if the pharmacy you are using is already in the preferred network, make certain it will continue to be so in the upcoming new year.
- Check for medication restrictions. It’s quite common for some plans to require prior authorization before covering certain drugs, or require patients to try a lower-cost drug before a more expensive one. We often hear from clients that the prior authorization process can be a nuisance or that they are frustrated to have to change a drug that they felt was working for them.
Action step: Identify any restrictions in any prospective Medicare Part D plan so that you can proactively reach out to your physician for prior authorization if you want to continue with a medication that is not approved.
These approvals are typically valid for one year. So be certain to put a reminder on your calendar to renew any prior authorizations you have in place. We encourage clients to take this extra step so they are not caught paying full price for expensive prescriptions.
- Compare premium prices. Premiums often increase over time, so it’s important to review whether your current plan continues to make sense for your coverage needs. Your goal is to make certain you are not overpaying for prescription drugs for your situation when taking into account the premium, plus all of the above items in this checklist.
Action step: Estimate your total prescription drug costs by calculating your annual premiums, copays, deductibles, and any medication restrictions that could result in out-of-pocket costs. Conduct this same exercise with other plan options to ensure the plan you select meets your needs.
Pulling It All Together: Finalizing Your Medicare Part D Plan
Your financial advisor at MPPL Financial is here to help. We welcome working closely with you to review the appropriateness of your plan before the enrollment window closes.
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