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2018 Medicare Part D Prescription Drug Cost Sharing
It's October folks! Medicare season has begun!
As of October 1st, licensed health insurance agents may begin speaking about 2018 Medicare Advantage Plans and stand-alone prescription drug plans.
If you have a relationship with a licensed health insurance agent, Medicare Specialist or Medicare Consultant, they will more than likely start contacting you about your current plan.
This is the time to discuss your concerns with your Medicare Specialist. You need to determine if all your prescription drugs are listed in the plan's 2018 formulary.
You also need to determine what your 2018 monthly costs will be for all your prescription medications.
Ask yourself......."Have my out-of-pocket prescription drugs costs remained feasible on my current plan for 2018?"
If so..... that's great! If not, it may be time to take a look at a new stand-alone-prescription drug plan.
If you're on a Medicare Advantage Drug Plan, you will need to determine if your physicians are still in your plan's network and if your medical out-of-pocket costs are reasonable before you make any decisions.
It is important to remember........
Medicare Specialists cannot take an enrollment application from you .......BEFORE October 15th!
That is a Medicare Regulation!
If a Medicare licensed agent tries to take a signed application from you PRIOR to October 15th.......
FIND A NEW AGENT!
As a reminder........ NO ONE from Medicare will be knocking on your door or CALL you on the phone.
Medicare will send you mail from the Social Security Administration ONLY!
Any post cards or any letters with a return address from anywhere else on this Earth other than the Social Security Administration........ is not from MEDICARE!
It is most likely a solicitation from an Insurance Agent trying to get your business. Throw it out!
Ok......let's take a look at the 2018 changes to Part D Prescription Drug Plans.
Annual Deductible
The 2018 Maximum PDP Annual Deductible is $405.00.
That's an increase of $5.00 from $400.00 in 2017.
Starting January 1st of 2018....... if you are on a Medicare Advantage Prescription Drug Plan or Stand-Alone-Prescription Drug Plan...... that has a annual deductible, you will fit in one of two categories:
1. You will need to pay your annual deductible right away prior to your plan's benefits kicking-in.
As of January 1, 2018, when you hand in a prescription for a listed drug on your plan's formulary, you will be expected to pay the full cost of that drug or the listed annual prescription deductible, whichever is less.
For example, your stand-alone prescription drug plan has an annual prescription deductible of $405 on all tiers.
You hand in your first prescription for lisinopril, which is listed as a Tier 1 on your plan's formulary. The listed co-pay for a Tier 1 drug on your plan is $2.00.
The total cost for a 30 day supply of lisinopril at your preferred pharmacy is $100.00. Since you have a $405.00 deductible, the cost for the 30 day supply of lisinopril at $100.00 would be a lower out-of-pocket cost than the full $405.00 deductible. Therefore, you pay the $100.00 and deduct that amount from the $405.00 annual deductible, leaving you with a balance of $305.00.
You will pay $100.00 for February, March and April for your lisinopril and in May you will pay the remaining balance of your deductible, which is $5.00. Then, your prescription drug benefits will kick in and you will also pay your $2.00 co-pay.
Beginning in June, you will pay a $2.00 co-pay for your lisinopril for the remainder of the year.
OR
2. You will pay the annual deductible if and when you "trigger" the deductible.
As an example, You would trigger the annual deductible if you requested a prescription for a drug that was a Tier 3, Tier 4 or Tier 5 on your Medicare Advantage Drug Plan or Stand-Alone Prescription Drug Plan.
If you requested a drug that was a Tier 1 or Tier 2 on that same plan, you would NOT "trigger" the annual deductible. Therefore, you would just pay the listed co-pay or co-insurance for that Tier 1 or Tier 2 prescription drug on your plan.
So.....as we used lisinopril in the above example, in this case you would just pay your $2.00 co-pay for the 30 day supply of lisinopril starting right away in January.
This is because lisinopril is listed as a Tier 1 drug on your plan's formulary. You wouldn't pay an annual deductible, since you haven't requested a prescription that was a Tier 3, Tier 4 or Tier 5 drug.
You will continue to pay a $2.00 co-pay for your lisinopril for the remainder of 2018.
The next portion of cost-sharing under prescription drug plans is called the Initial Coverage Period (ICP)
During this portion of cost-sharing, the total amount spent during the Initial Coverage Period (ICP) is $3,750.00.
The costs of covered drugs are shared - 25% by the beneficiary and 75% by the plan.
If you do not have an annual deductible for prescription coverage, the maximum a beneficiary would spend out of pocket during the ICP is $937.50. The plan would pay the remaining balance, which is $2,812.50 ($3,750.00 - $2,812.50 = $937.50)
You pay your co-pays and/or co-insurance, which is placed towards the $937.50. The plan pays the remaining balance of the Medicare negotiated price for the prescription, which is applied towards the $2,812.50.
Once the total amount of your prescription drug costs (from your out of pocket costs and the plan's contributions) reach $3,750.00, you move into the next phase of cost-sharing.
The next phase of Part D cost-sharing is called, The Coverage Gap, or commonly known as the "Donut Hole."
During this phase, you will pay more for your prescription drugs.
You will pay 35% for Brand name drugs and 44% for Generic drugs.
Let's use Lisinopril again to look at the costs during the Donut Hole.
We stated a 30 day supply of Lisinopril from a preferred pharmacy is $100.00. Lisinopril is a generic drug, listed as a Tier 1 on your plan. In the Donut Hole, you are required to pay 44% of the Medicare negotiated price for Generics. In this example, you would pay $44.00 for a 30 day supply of Lisinopril in the Donut Hole.
You are also paying a "Dispensing Fee," (about $1-$3 per drug) while in the Donut Hole.
If you have a Brand prescription drug that is listed on a Tier 3, Tier 4 or Tier 5 on your plan, you will pay 35% of the Medicare negotiated price, while in the Donut Hole.
Only True out-of-pocket (TrOOP) costs are counted toward the cost-sharing amount in the Donut Hole.
TrOOP costs are -
1. The drug costs paid by the beneficiary
2. A 50% discount on Brand-Name drugs that is provided by the drug manufacturer.
Payments made by the "plan" during the Donut Hole on Brand Name drugs DO NOT count toward TrOOP.
If you DO have an annual deductible for your prescription drug coverage, the amount you pay out-of-pocket for your deductible is applied towards the ICP of $3,750.00.
The maximum amount you would pay out-of-pocket during the Donut Hole portion of cost-sharing is $3,758.75
If the total cost-sharing amount reaches $3,758.75 in the Donut Hole phase, you will then move into the final phase of cost-sharing for 2018, which is called the "Catastrophic Stage."
In the Catastrophic Stage, you will pay reduced co-pays and or co-insurance.
You will pay either:
A 5% co-insurance or a $3.35 co-pay for Generic drugs or a $8.35 co-pay for Brand drugs.
You will pay whichever amount is greater.
Let's use our example of Lisinopril one more time. With a total cost of Lisinopril being $100.00, a 5% co-insurance would be $5.00.
With $5.00 being greater than $3.35 for Generic drugs, you would pay $5.00 for the 30 day supply of Lisinopril.
You will remain in the "Catastrophic Phase" until January 1, 2019, when the slate is wiped clean and we start all over again.
I hope that answers your questions regarding changes to Prescription Drug Costs for 2018.
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