Can I save money by switching Prescription Drug Plans?

Mike Olmos by Mike Olmos | Licensed since 2010
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This article was updated on: 09/10/2018

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Although Medicare prescription drug coverage is voluntary, the Centers for Medicare & Medicaid Services (CMS) reports that as of 2017, over 57 million Americans were enrolled in Medicare. Of those, about 27%, or about 15 million, were not enrolled in a Medicare Prescription Drug Plan. This coverage under Medicare Part D, whether as a stand-alone plan to complement coverage under Original Medicare, or as part of a Medicare Advantage Prescription Drug plan, is for those who want help covering their out-of-pocket medication costs. Of course, getting coverage as soon as you are eligible also might help you avoid late-enrollment penalties later on, as well.

A study by eHealth Insurance Services found that beneficiaries who switched to the Medicare Advantage Prescription Drug plan with the lowest total costs could have saved an average of $807 in 2017, and that those who switched to the stand-alone Medicare Part D Prescription Drug Plan with the lowest total costs could have saved an average of $541 in 2017.

Medicare Prescription Drug Plans are offered by private insurance companies contracted with Medicare to provide medication benefits. Plans might change certain coverage details from one year to the next. In other words, the plan you enrolled in last year might not be your best option this year if the terms have changed. Also, a plan’s formulary (list of covered drugs) may change at any time. When required by law, you will receive notice from your plan of changes to the formulary.

Can I save money if I change Medicare plan options?

Every state has two or more Medicare Part D Prescription Drug Plans, according to the Centers for Medicare & Medicaid Services (CMS), so it’s possible that you may save money if you change Medicare plans. Understanding the true costs of your Medicare Prescription Drug Plans goes beyond your monthly plan premium. When you are thinking about switching between Medicare Prescription Drug Plans, you may want to look at all of your out-of-pocket costs, including:

  • Monthly premium. This is the most recognizable of your plan’s costs, and you’ll pay this in addition to your Part B premium, no matter what type of coverage you choose (a stand-alone Medicare Part D Prescription Drug Plan or a Medicare Advantage Prescription Drug plan).
  • Yearly deductible. This is what you’ll pay before your plan benefits kick in. Some plans have no deductible at all; in 2018, the maximum allowable deductible is $405.
  • Copayments or coinsurance. This is what you pay after your plan covers its share of your medication. In some cases, this is a set amount, such as $10, while others charge a straight percentage of the medication’s cost.
  • The coverage gap (donut hole). After you and your plan spend a certain amount on prescription drugs each year, there’s a temporary limit on what your plan will pay. Not everyone reaches this limit, but if your prescription drug costs tend to run high, check to see if your plan offers extra savings when you’re in the coverage gap.

All of these benefits and expenses work together to determine the actual cost of Medicare Prescription Drug Plans. For example, a plan with a higher monthly premium may actually be cheaper in the long run than a plan with a lower premium if the copayments are lower on medications you take often, or if the plan waives the deductible on certain generic prescription drugs.

When you compare Medicare Prescription Drug Plans to change Medicare plans, also keep these questions in mind:

  • Does the plan’s formulary, or list of covered medications, include those you take on a regular basis? Keep in mind that a plan’s formulary can change at any time but the plan must notify you in writing when the formulary changes.
  • Do you have to use a network pharmacy? If so, is there one that’s convenient for you to use?
  • Can you save even more money using a mail order pharmacy option?

You might want to get in the habit of comparing your plan options each year before open enrollment, because you might be able to save money if you change Medicare Prescription Drug Plans. A 2017 analysis by eHealth Insurance Services showed that about 92% of people enrolled in stand-alone Medicare Prescription Drug Plans could have saved money by enrolling in different Medicare Prescription Drug Plans.

If you need help finding Medicare Prescription Drug Plans that may work for you, I’m here to answer your questions. You can schedule a phone call or request information in a personalized email by clicking one of the links below. To compare plans in your area, click the “Compare Plans” button on this page.

Limitations, copayments, and restrictions may apply.

Benefits, premiums and/or copayments/co-insurance may change on January 1 of each year.

The pharmacy network may change at any time. You will receive notice when necessary.

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