Medicare Part D Gotchas!

We’ve all become used to the unfamiliar details we have to learn in order to make choices about insurance coverage. If you’ve gotten used to choosing between employer plans in the past … well, they made it easier by limiting your choices. When it comes to Medicare Part D enrollment, the field is wide open!

Medicare Part D is the plan the provides your prescription drug coverage. If you intend to use a Medicare Advantage plan (Medicare Part C) that includes drug coverage, you don’t choose a Medicare Part D plan.

There’s some vocabulary you ought to know that goes along with your prescription drug insurance coverage.

  1. Formulary–the list of drugs that your insurance plan covers.
  2. Tiered formulary–division of drugs into groups (called levels or tiers) which determine the price you’ll pay for the drug. Generally, the lower the tier number, the less you’ll have to pay for the drug, i.e. the lower your copay.

You purchase the Part D plan from a commercial provider. That’s right, you don’t pay Medicare for it. Each of these companies prepares its own formulary and negotiates its own pricing agreement with the various drug manufacturers. Each company also determines the grouping of prescription drugs into tiers. That’s why your agent will ask what prescription drugs you take. Usually generic drugs fall into the lower tiers and have lower co-pays and brand name drugs fall into the upper tiers and have higher co-pays.

Some companies require that you meet a deductible before they cover medications. Sometimes the deductible applies only to medications in higher tiers. Sometimes the deductible applies to each medication you take that falls into an upper tier. It can become very complicated. It can also become very expensive if you take a number of medications and choose badly.

As part of your decision, it’s worth considering any healthcare issues you plan to take care of in the upcoming year. For instance, if you plan to have cataract surgery or a knee replacement or manage your cholesterol with medication, check on the pricing of any needed medications for the companies you’re considering.

Next, the plan you choose determines the pharmacy where you can fill your prescriptions. Each insurance company negotiates agreements with a few pharmacies. If you don’t live close to or you’re not a member of the pharmacies allowed, choose a different company for your Medicare Part D plan. If you plan to travel, choose a plan that includes pharmacies along your route or at your destination.

You can only enroll in one Medicare Part D plan, so choose the one that gives you the best pricing and the most convenience when it comes to filling your prescriptions.

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To see the documentation for Medicare Part D, click here.

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