By the time we get to retirement age, many of us are taking a few prescription drugs. If we have something chronic, such as diabetes, it may be even more than just a few. The natural place to turn is to Medicare Part D to help cover the costs. But, as we often find in life, it may not be that simple.
Choosing a Part D plan
Medicare Parts A (for hospital costs) and B (for medical costs) are easy; you just sign up with the government to get the insurance and both the costs and the coverage are the same for everyone in the same income categories.
Part D is not like Parts A and B; it’s more complicated. With Part D, you need to choose an insurance company and then you need to choose one of the plans offered by that company. This is not necessarily an easy task; each insurance company has its own “formulary” (a set of tiers of medications with different coverage amounts for each tier), so you’ll want to choose carefully. Although the average Part D premium in 2018 is the relatively low amount of $34 a month, costs can be much higher depending on where you live and the specific coverage you choose.
Another key difference between A/B and D is that while you can get supplemental coverage to make virtually all hospital and medical expenses disappear completely, you cannot do the same with prescription drugs. No matter how “good” your Part D insurance policy is, you may well find yourself having to pay the drugstore every time you pick up a prescription, especially for certain (common) drugs, such as insulin. You won’t be paying the full price, to be sure, but your out-of-pocket cost can be shockingly high nonetheless.
The donut hole
Potentially even more shocking, especially if you don’t expect it, is the infamous “donut hole.” This applies to those of us who have Part D coverage and high prescription drug costs: at the point during the calendar year when our costs reach $3,750, we then need to start paying 35 percent of the cost of brand-name drugs and 44 percent of generics until our out-of-pocket spending reaches $5,000. At that point, coverage starts up again. Whoever thought up this brilliant idea – which I’m sure was meant to be a joke until someone took it seriously – should get the award for Worst Idea Ever.
The donut hole was scheduled to go away in 2020, but thanks to the tax reform act passed late last year, it will be going away a year earlier. Good riddance!
The very strict insurance rules
Another limitation is that Part D coverage typically kicks in only at certain intervals. For example, if you accidentally drop some of your pills into the sink or your dosage changes or you are going away on vacation, you may need a refill sooner than you were expecting. With Part D, you will very likely have to wait for coverage until the date when the refill is “allowable.”
Forgoing Part D
You don’t have to have Medicare Part D coverage; it’s completely optional. If you take only generic drugs, for example, you may actually save money by not paying the Part D premium. (Know, however, that if you decide to sign up for it at a later date, you will pay a penalty depending on how long you waited from the time you became eligible.)
Another important consideration is that (just to confuse things) Medicare Part B, which you most likely have anyway, covers 100 percent of certain prescriptions, such as test strips for blood glucose meters for those with diabetes.
If you do decide to forgo Part D and choose to be uninsured, you will want to do some homework to compare prescription drug prices across pharmacies. I was very surprised to learn that these prices can vary hugely! Unfortunately, online drug-cost-comparison websites such as GoodRx are not always accurate or up-to-date, so you really have to call around to get the right information. But the effort can be well worth it. For example, just last week, a 90-day supply of pantoprazole, a common drug prescribed for acid reflux, was over $100 at Walmart and under $50 at Costco.
(Note that while you may need more accurate price information than you can get from GoodRx, you may be able to get a coupon from them that will lower whatever price you do find from a phone call to the store. Just yesterday, I saved over $15 at Walmart for four scopolamine patches for seasickness with a GoodRx coupon!)
In addition, many pharmacies now, such as those at Publix supermarkets (a popular chain in the southeast), CVS, Walgreens, Walmart, and others also have special pricing programs for some generic drugs. For example, Publix gives metformin away for free and some of their other medications are only $2.50 a month. Three months of levothyroxine is $10.00 at Walmart and three months of estradiol is $11.46 at Costco. Lists of these special prices are available online on each store’s website.
Other sources of better pricing include across-the-board discounts from both AARP and AAA.
The right approach for you
This is all very complicated, made even more so by Medicare Advantage (aka Part C) plans which do include some prescription drug coverage, “extra help” from Medicare itself and/or state-based Medicaid programs, and arrangements with many drug companies that can lower the costs of their products for those under a certain income level.
One of the surprises for us was that our post-retirement drug costs were both simple and rock-bottom during the year we spent in Africa in 2009. All we needed were our American prescription bottles to show to the local pharmacist in the small town of Rundu, Namibia. We couldn’t believe how low the prices were, with no insurance at all.
When we returned, it took my husband and me about a month of research and discussion with our doctors to finally arrive at the right combination of cost and coverage options for both of us – and we don’t know anyone who has the same combination. We are also aware that as our medication needs change, the approach we’re using now will probably also change.
You’ll need some patience to find out for sure, but it’s entirely possible that you could be having an easier time and paying less for your medications. Try it.
I'm Linda Fleit. My husband and I were lucky enough to retire when we were 61, about nine years ago. We love being retired and want to share all that we've learned over the years about this wonderful stage of life.