Comparing Medicare Part D Plans

Victoria Burke by Victoria Burke | Licensed since 2011

This article was updated on: 11/23/2018

Every Medicare beneficiary has access to at least one stand-alone Medicare Part D Prescription Drug Plan in 2018, according to the Centers for Medicare and Medicaid Services (CMS). This means that you, like most other Medicare beneficiaries, will have dozens of options to choose from when you’re looking for Medicare Part D Prescription Drug Coverage. Here’s how to compare Medicare Part D plans.

Comparing Medicare Part D Plan Coverage

If you’re already taking prescription drugs, it’s important to see if the Medicare Part D plan you want covers your medication. In some cases, more than one or even all of the plans available in your area will cover your prescription drug. If you’re using the eHealth plan finder tool, just click “Add Rx Drugs” and type in your prescription. Then, as you browse through plans, you can see which ones cover your prescription drugs.

Compare Medicare Part D Plans Basic Costs

As you are browsing Medicare Part D Plans, you may notice three basic cost features of every plan: the monthly premium, the deductible, and the out of pocket limit. Two plans, which we’ll call “Penelope” and “Juliet” have these costs:

  Medicare Part D Plan Penelope Medicare Part D Plan Juliet
Monthly Premium $19.70 $44.20
In-network Deductible $405 $375
Out of Pocket Limit $5,000 $5,000

 The premium is the amount you pay monthly to have the plan. Premiums can vary widely; as you see here, Medicare Part D plan Juliet has more than double the monthly premium that Medicare Part D plan Penelope has.

A second cost that most Medicare Part D plans have is the deductible, although some plans have a $0 deductible. A Medicare Part D deductible is an amount you have to pay out of pocket before the plan begins to pay. The federal maximum for the deductible is $405 in 2018. Some plans may set lower deductibles, such as Medicare Part D Plan Juliet in our example.

All Medicare Part D plans have an out of pocket limit, which is $5,000 in 2018. The out of pocket limit doesn’t include what you pay for the plan’s premium or what you pay for prescription drugs that aren’t on the plan’s covered prescription drug list (formulary).

Compare Medicare Part D Plans Standard Retail Cost Sharing

Cost-sharing is what you pay every time you fill a prescription. Medicare Part D plans typically arrange medications into tiers, with lower-cost medications on the bottom of tiers and higher-cost medications on the higher tiers. Here’s what Medicare Part D Plan Penelope and Medicare Part D Plan Juliet charge for prescriptions you fill:

  Medicare Part D Plan Penelope Medicare Part D Plan Juliet
Tier 1: Preferred Generic $15 copayment $4 copayment
Tier 2: Generic $20 copayment $10 copayment
Tier 3: Preferred Brand $47 copayment $42 copayment
Tier 4: Non-Preferred 48% coinsurance 39% coinsurance
Tier 5: Specialty Tier 25% coinsurance 25% coinsurance

You’ll see that Medicare Part D Plan Juliet charges a smaller copayment than Medicare Part D Penelope at every level except tier 5 where they charge the same coinsurance amount.

Which Medicare Part D Plan is Cheaper?

To calculate which Medicare Plan D is cheapest, you will have to also know which medications you take, which tier they are on, and how much they would cost if you haven’t met your deductible.

We won’t consider the deductible for this example. If you chose Medicare Part D Plan Juliet, you could pay $294 more a year in premiums ($530.40 compared to $236.40). However, if you take a prescription drug on tier 1 and a prescription drug on tier 2, you could save $21 a month on copayments with Medicare Part D Plan Juliet. Over the whole year you would save $252 on copayments (12 times $21). Once you’ve considered how much you spend a year on copayments, the price difference between the two plans is only $42 a year.

Comparing which medications count towards your Medicare Part D deductible

For some plans, you must reach the deductible before the plan helps you pay for any medication. For example, if you have Part D Plan Juliet and you only take one prescription, which is a Tier 3 preferred brand, you must spend $375 out of pocket before the plan begins to pay. The prescription drug you take costs $100, so you must fill it three times and pay the full $100 before your plan begins to pay. For other plans, tier 1 and tier 2 prescription drugs don’t require you to reach the deductible. For example, if you have Part D Plan Penelope and you fill a preferred generic prescription, you will always only pay $15, regardless if you’ve met the deductible or not.

Do you want to start looking for Medicare Part D plans in your area? Just enter your zip code on this page.

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