Prescription Drug Plans
How Prescription Drug Plans Work
Prescription drugs for many are vital in maintaining or improving health, but they can be prohibitively expensive, especially for those with a chronic illness – which is why having coverage is so important. There are two ways to get Medicare Prescription Drug coverage. You can join Medicare Part D or you can join a Medicare Advantage Plan that offers drug coverage. Whatever plan you choose, Medicare drug coverage can help you pay for brand-name and/or generic drugs at pharmacies convenient for you.
Medicare Part D prescription drug coverage is available from private insurance companies to those also eligible for Original Medicare and who permanently reside in the service area of a Medicare Prescription Drug Plan. There are different types of plans available from the various insurers with premiums and out-of-pocket expenses varying accordingly.
Medicare Part D Coverage Typically Works as Follows:
- If the plan has a deductible, you pay the full amount of your prescription drug purchases until the deductible is met.
- After the deductible is satisfied, you will pay a share of the costs according to the terms of your plan. Your share, which you typically pay to the pharmacy at the time of pickup, could be a flat amount (copayment) or a percentage of the total amount (coinsurance).
- Once you have paid a certain annual maximum amount out of your own pocket for prescription drugs, you automatically get “catastrophic coverage.” This means for the rest of that particular year, you would only pay a small copayment or coinsurance amount for prescription drugs.
Of course, specific coverage varies from one plan to the next, which is why it’s important to work with specialists that can assist you in determining which to choose. Omaha Insurance Solutions can help you evaluate the plans offered by nationally recognized companies to make an informed decision about this critical component of your healthcare program.
The “Donut Hole” in Prescription Drug Plans
It’s also important to note that most Medicare drug plans have a coverage gap (also called the “donut hole”). After your Part D coverage has paid a certain amount for prescription drugs, you may have to pay all costs yourself, up to a yearly limit. Under the Affordable Care Act, the coverage gap will be reduced over several years to make prescription drugs more affordable. There will be additional savings in the coverage gap each year through 2020, when the coverage gap is closed completely. We can explain this to you in more detail as well.
Brand Name vs. Generic Drugs
All 54 million people on Medicare, including those ages 65 and older and those under age 65 with permanent disabilities, have access to the Medicare drug benefit available through private plans approved by the federal government. Individuals can get drug coverage through a stand-alone Medicare Prescription Drug plan or a Medicare Advantage Prescription Drug plan.
Medicare beneficiaries who take a generic drug instead of a brand-name medication could save hundreds of dollars in drug costs. In fact, in the last decade the generic drug industry has saved consumers and payers over $1.2 trillion in prescription drugs.
Why are brand names more expensive? Generic drugs are typically 40% of the cost of their brand counterparts. Brand-name drugs are generally more expensive because of the higher initial costs to develop, market, and sell a brand-new drug.
But not everyone is able to take generic alternative, as it may not be available or it may be medically necessary to take the brand-name drug. Speaking with a doctor about what medications would work best for your condition and if there is a generic alternative is recommended. Also, be sure to always talk with your provider before beginning a new medication or switching drugs.
If you need to take a brand-name drug, you may have to pay higher out-of-pocket costs, depending on your drug plan’s payment structure. Medicare prescription drug plans often place drugs into different payment “tiers” with different costs for each tier. Higher tiers usually have higher copayment and/or coinsurance costs, and every prescription drug plan categorizes its covered drugs differently.
Omaha Insurance Specialists can look at the plans with you and see how they treat brand names vs. generic drugs so that you have a clear understanding of what it will mean if you need to take a specific brand-name drug. The plan that’s right for you will depend on which prescription drugs you take and the cost structure involved.