Tips for Lowering Your Out-of-Pocket Drug Costs

Steven Mott by Steven Mott | Licensed since 2012

This article was updated on: 09/15/2018

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The first way to lower your out-of-pocket prescription drug costs may be to get a Medicare 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, as Medicare Part A and Part B generally do not cover prescription drugs you take at home. 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 drug coverage every year

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 drugs from the formulary (list of covered drugs), increase copayments and coinsurance, or move drugs from lower-priced tiers to higher-priced tiers. Your plan must inform you if necessary when formulary changes are made so you generally don’t have to worry about the list of covered drugs changing without you knowledge. Be aware that just because you are paying $10 for a 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 Period (also called Medicare Open Enrollment) 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 your 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 drugs may be medically necessary, in most cases lower-cost generic 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. That’s why it’s up to you so speak up when your doctor gives you a new prescription. Do not be afraid to talk with your doctor or your pharmacist to find out whether there is a generic drug that could also be right for you. Some Medicare Part D plans offer copayments as low as $0 when you use generic drugs, so asking your doctor to prescribe generics could make a big difference to your budget.

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 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 assist you with the application. Find out more by going to and entering your zip code.

Use tools such as the AARP’s donut hole calculator

The AARP has developed an interactive tool that can help you figure out how close you are to the reaching the coverage gap in Medicare Part D known as “the donut hole.” Once you and your plan have spent $3,750 on covered prescription drugs in 2018, you’re in the coverage gap.  The tool will also help you identify equivalent but less expensive alternatives to the drugs you already take. If lower-cost and therapeutically-similar drugs are identified, the tool will generate a letter to take to your doctor that asks about the pros and cons of making a switch. Visit for details.

Consider joining a plan that offers additional coverage in the gap

During the coverage gap stage of your Part D benefit, you are responsible for paying a larger share of your prescription drug costs. In the coverage gap in 2018, you pay no more than 35% of the plan’s cost for covered brand-name prescription drugs and 44% of the price for generic 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 drugs than with the standard Medicare benefit
  • Full coverage in the gap (a few 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 drug benefits.

If you’d like more information about Medicare Prescription Drug Plans, I’m happy to answer your questions. To request personalized information via email or schedule a return telephone call, click the appropriate link at the bottom of the page. You can also view plans in your area by clicking the “Compare Plans” button.

You must continue to pay your Medicare Part B premium.

The formulary, pharmacy network, and/or provider network may change at any time. You will receive notice when necessary.

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

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