Medicare Part D beneficiaries can change prescription drug plans during the annual open enrollment period. When reviewing plan options, focus on the factors that determine your total cost and access to medications.
Look at premiums. Monthly premiums vary greatly by location and by plan, so a plan that was cheapest previously may no longer be the best value. Higher-income beneficiaries may pay an additional amount that is added to their Social Security premium.
Look at additional costs. Beyond the premium, compare deductibles, coinsurance, copayments and how much you must pay before coverage begins. Use Medicare plan comparison tools to estimate out-of-pocket costs for the medications you take.
Look at the formulary. A plan’s formulary is the list of covered drugs, usually arranged in tiers with different cost-sharing. Formularies change from year to year, so confirm that the specific drugs you need remain covered and note any tier changes that affect cost.
Look at red tape. Many plans use utilization management such as prior authorization, step therapy or quantity limits. These requirements can affect how easily you obtain a drug and whether a claim is paid.
Look at gap (coverage gap) rules. Some Part D designs include a coverage gap after plan and beneficiary spending reach certain thresholds, and cost-sharing shifts again after the catastrophic threshold is met. Legislation has reduced gap costs in recent years; for more on how law changes affect coverage, see Patient Protection and Affordable Care Act Overview.
Lookout for late enrollment penalties. Ideally, enroll in Part D when first eligible or keep creditable employer drug coverage, because a penalty can apply if you go without credible coverage for an extended period. For general information about Medicare enrollment rules and how coverage periods work, see Understanding Medicare and Medicaid.
Your choices may be limited. Plan availability changes over time as carriers consolidate or exit markets, so the number of plans offered in any area can shrink and beneficiaries in discontinued plans may be reassigned if they do not choose a new plan.
Compare plans carefully each year by reviewing premiums, total expected out-of-pocket costs, the formulary, and any utilization rules that apply to your prescriptions. If you want personalized help, consider talk to an agent.
Frequently Asked Questions
When can I switch Part D plans?
You can switch plans during Medicare’s annual open enrollment period unless you qualify for a special enrollment period due to certain life events.
How do I compare total costs between plans?
Compare the premium, deductible, copays/coinsurance, and the formulary’s tier placement for the drugs you take to estimate total annual costs.
What does prior authorization mean?
Prior authorization means the plan requires the prescriber to justify medical necessity before it will cover a medication.
Will I face a late enrollment penalty for Part D?
A penalty can apply if you go without credible drug coverage for a significant period; the penalty is added to your monthly premium when you eventually enroll.