Tips for Lowering Your Out-of-Pocket Drug Costs

Last Updated : 12/12/20195 min read

The first way to lower your out-of-pocket prescription drug costs may be to get a Medicare Part D prescription drug plan. If you don’t have a prescription drug plan, you may be paying 100% of your prescription drug costs out-of-pocket. Medicare Part A and Part B generally do not cover prescription drugs you take at home.

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You can either get a Medicare Advantage prescription drug plan or a stand-alone Part D Prescription Drug Plan. Both of these plans could include out-of-pocket costs such as premiums, deductibles, copayments, and coinsurance. While prescription drug costs can easily overwhelm you or your budget, there are several ways to lower your Medicare prescription drug costs.

Evaluate your prescription drug coverage every year

Let’s say you already have a Medicare prescription drug plan. Are you sure you have the plan that will save you the most money? It’s worth checking and comparing plans every year.

An eHealth study found that more than nine out of ten Medicare beneficiaries could have saved $611, on average, just by switching plans.

Plan Optimization for Prescription Savings

Here are the average annual savings eHealth reported using survey results in 2018. Note that this chart includes Medicare Advantage prescription drug (MAPD) plans, stand-alone Medicare Part D prescription drug plans (Part D plans), and overall average savings.

Average Annual Savings

According to federal guidelines, stand-alone Medicare Part D Prescription Drug Plans and Medicare Advantage plans with prescription drug coverage can change every year.

For example, they can add or remove prescription drugs from the formulary (list of covered prescription drugs), increase copayments and coinsurance, or move prescription drugs from lower-priced tiers to higher-priced tiers.

Be aware that just because you are paying (for example) $10 for a prescription drug right now doesn’t mean it will still be $10—or even still covered by your plan—the following year. That’s why it’s important to compare Medicare plans during the Annual Election to make sure you are in a plan with the lowest overall cost based on the medications you take. This period is October 15-December 7 every year.

When shopping for a plan, remember to consider the monthly premium and annual deductible as well as the copayments or coinsurance for all your medications. Keep in mind that a plan with low monthly premiums may end up costing you more in the long run if you have to pay higher copayments for your medications.

Ask your doctor to prescribe generic drugs

While there are some instances in which brand-name prescription drugs may be medically necessary, in most cases lower-cost generic prescription drugs may do just as well to treat your condition. According to the Food and Drug Administration (FDA), generic prescription drugs are the same as brand name prescription drugs in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Unfortunately, some doctors do not consider the prices of medications when they write prescriptions. Do not be afraid to talk with your doctor or your pharmacist to find out whether there is a generic prescription drug that could also be right for you. Some Medicare Part D plans offer copayments as low as $0 when you use generic prescription drugs. Asking your doctor to prescribe generics could make a big difference to your budget.

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Consider using a mail-order pharmacy for long-term medications

If your plan offers a mail-order pharmacy in its network, you should compare the costs of using mail order with using a retail pharmacy. Not only is mail-order convenient if you’re taking medications on a long-term basis, but mail-order pharmacies may cost significantly less than a retail pharmacy. Most plans that provide a mail-order pharmacy also offer free standard shipping for this service.

Review your eligibility for Medicare’s Extra Help program

Medicare sometimes offers financial support to Medicare beneficiaries with low income and limited resources. If you qualify for Medicare’s Extra Help program, Medicare may pay up to the full cost of your out-of-pocket prescription drug costs, based on a sliding scale. The National Council on Aging has an online tool that can help determine your eligibility for Extra Help and other programs, and will also assist you with the application. Find out more by going to the Social Security website, ssa.gov .

Consider joining a plan that offers additional coverage in the gap

If you spend a lot on covered prescription drugs, you might reach the Medicare Part D out-of-pocket threshold. Then you enter a phase commonly called the coverage gap, or donut hole. After reaching this threshold, you may be responsible for paying a larger share of your prescription drug costs. In the coverage gap in 2020, you pay no more than 25% of the plan’s cost for covered brand-name prescription drugs and generic prescription drugs. Some plans, however, offer additional coverage in the gap, which could help you save money if you take many medications on a regular basis. Types of additional coverage can include:

  • Lower copayments for generic prescription drugs than with the standard Medicare benefit
  • Full coverage in the gap (non-Medicare plans, such as some employer-sponsored plans, do not have a coverage gap stage)

Keep in mind that if you select a plan that provides extra coverage in the gap, you may have to pay a higher monthly premium for this added benefit. If your annual medication costs are not high enough to reach the gap, or you don’t follow the plan rules to get this extra coverage—such as using generics or a mail-order pharmacy—you may end up paying hundreds of dollars more in premiums for this feature than you get back in prescription drug benefits.

You can view plans in your area by clicking the “Compare Plans” button.

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