Welcome to Medicare: Let the Games Begin

It’s a media blitz. Open enrollment for Medicare began October 15th. If you’re new to this process, or even if you’ve been a participant, each year brings something novel. Where to start? Good question. Today, let’s talk about prescriptions: Part D plans.

Part D plans come in many flavors. You can enroll in a plan separately or it may be a part of your Medicare Advantage Plan (aka Part C). Without getting into the pros and cons of traditional Medicare versus Medicare Advantage, individuals need to take a close look at their prescriptions. It’s difficult to know what you might need in 2024, but investigating what drugs you currently take is a good place to start.

If you’ve been participating in employer sponsored health care, this will probably be new. Most prescription plans have a formulary and tiers, so you may be familiar with the various levels of drug coverage based on the drug. Part D has tiers, too, but they are not necessarily the same as an employer sponsored prescription drug plan. In addition to this, many Part D plans have deductibles. In 2024, once you and your plan spend $5,030 (this means the cost of the drug to the plan), you’ll pay no more than 25% of the cost of prescription drugs after that until your out-of-pocket spending reaches $8,000. These limits apply to all drug plans. At this point, you will have “catastrophic coverage” and you will pay no more than 5% copayment for drugs for the remainder of the year.  There are premiums, as you would expect for any drug plan. Part D (and Medicare Advantage) has an additional kicker: IRMAA. If your income is above a certain limit, $97,000 for individuals, $194,000 for joint filers in 2023, there will be an additional premium (2024 limits haven’t been released yet). If you’re still working and covered by your employer’s drug plan or another third party, much of this will be moot. Not IRMAA; that applies to anyone who meets the income limits regardless of where they get their drug coverage.

Is this way too much to digest? Probably. Especially if this is your first time enrolling in your own drug coverage. If you are currently taking one of those well publicized drugs and are covered by an employer sponsored health plan, you may be eligible to receive them for a minimal cost, often as low as $10. Not so with any Medicare drug plan. Yes, insulin is capped at $35 per month. While insulin gets a lot of important attention, that is just the tip of the iceberg. If a drug isn’t covered or is in a higher tier, your doctor can always ask for an exception. However, given the spending limits referenced above, even if the drug is approved, the cost can be prohibitive.

In no way does this begin to touch everything that must be considered when you’re comparing Medicare drug plans. It’s difficult to imagine how expensive this can become until your doctor prescribes a drug for you that’s not on the formulary and you’re a Medicare participant. Some progress has been made in the quest for Medicare to negotiate its own prices: the first ten drugs, which are widely prescribed, will be eligible for price negotiation in 2026. The Center for Medicare and Medicaid Services (CMS) has said that thirty-five drugs will be added to the list soon. Other legislation is pending. In the meantime, stay healthy.