Forty percent of those over 65 take five or more medications a day.1 It’s a staggering number, but it underscores the necessity of prescription drug insurance coverage. That’s why almost 74 percent of people who are on Medicare — or nearly 44 million people2 — are enrolled in a prescription drug plan.
As you figure out the best plan for your needs, here’s what you need to know about prescription drug coverage.
There are two ways to get prescription drug coverage.
Tip: If you don’t enroll in prescription drug coverage when you're first eligible to enroll in Medicare, you may face penalties. Find out how to avoid penalties.
Each year everyone can change their Medicare plan during the annual enrollment period (October 15 – December 7). Read about enrollment periods.
There might be exceptions to these timelines if you qualify for extra help paying for prescription drug coverage. Learn about your options for assistance with Medicare costs.
Every Medicare prescription drug plan has a list of drugs — also known as a formulary — that it agrees to cover. When you research a plan, check your list of medications against the prescription drugs on your plan’s list. You’ll also be able to see which "tier" it’s been placed into. Generally, the lower the tier, the less you pay. For example, you will often pay less for a drug in Tier 1 than you would in Tier 4. The Medicare Plan Finder is a useful comparison tool you can use to plug in the names of prescription drugs and find plans in your area that will cover them. .
Your plan will not remove any drugs from its formulary or negatively alter a drug’s tier until the start of the new plan year, unless there’s an extenuating circumstance, such as a recall.
Your formulary will give you the information you need to know about your drug, such as name, drug tier and requirements or limits.
Medicare mandates that there be at least two drugs from every therapeutic class in a formulary. But in some instances, you may need a drug that just doesn’t make the list. If that happens, your doctor can contact the insurance company to request what’s called a “formulary exception.” Your plan will review the request to see if they'll cover it. Typically, if the drug is approved, it will be provided to you at the cost found in one of the top tiers, such as tier 4 or 5, which means you will usually be responsible for a higher percentage of the cost than if the medicine was in a lower tier.
Several factors determine how much you will pay for your prescriptions.
Your payments may vary throughout the year, depending on how much you have already spent on prescription drugs. Your cost-sharing will depend upon the benefit phase you have reached in your coverage.
Medicare prescription drug plans have a phase called the coverage gap or “donut hole.” When you reach this phase your cost-share may change based upon the type of drug(s) you are taking.
Here’s an example of how it works:
Some prescription drugs require that you adhere to special rules before your insurer will cover them. For example:
Your formulary guide will tell you which drugs require step therapy, prior authorization and quantity limits. If your medication falls into any of these categories, you may need to take action before the plan will cover the drug. Check with your doctor about your options.
If you want to get the most out of your prescription drug benefits, check with your plan to see what extras it offers.
Research your plan options thoroughly based on your prescription drug needs, costs and convenience. You don’t want to be saddled with unnecessary drug expenses, so finding the right plan for you at the right price means one less thing you’ll have to worry about.
2Centers for Medicare & Medicaid Services Office of Enterprise Data and Analytics, March 2018
Christina Joseph is a veteran editor and writer from New Jersey who still loves to read the old-fashioned newspaper. She’s raising two fruit-and-veggie loving daughters to balance all the treats Grandma sends their way. Christina’s health goal is to resume her workout routine after being sidelined by injuries.
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