Several components of a Medicare Part D prescription drug plan (PDP) impact what your total cost will be:
- Monthly premium: The plan’s monthly fee. It is a fixed amount, and premiums may vary by plan and the Part D region in which you live.
- Deductible: The amount you are required to spend out of pocket on your medication before your plan’s coverage begins.
- Initial Coverage: In this stage of your Part D plan, your medications are covered and you pay a share of the cost as a copayment or coinsurance.
- Coverage Gap: The third stage of a standard Part D plan begins after you and your plan together have spent a certain amount for covered drugs. Once you enter this stage you will pay a higher share for your covered drugs until you reach a certain amount. Your deductible, coinsurance and copayments all count towards getting you out of the Gap.
- Catastrophic Coverage: Once you get out of the Gap, you automatically get “catastrophic coverage.” In this last stage of a Part D plan you pay a small copayment or coinsurance for covered medications for the rest of the calendar year.
You should consider all aspects of a plan before enrolling. Sometimes a low monthly premium is associated with high deductibles, high copayments (fixed out-of-pocket costs), or coinsurance (a percentage of the cost of a medication). However, plans with higher premiums may offer added benefits like $0 deductibles, preferred pharmacy networks, lower copayments, and/or discounts for using a home delivery pharmacy.
The size of a plan’s drug formulary (the list of covered drugs) contributes to a plan’s cost. A plan with a smaller, limited formulary is likely to have a lower premium. However, that also means that you could end up paying a great deal of money if you need a medication that is not on their drug list.
Lastly, the level of customer service provided is also reflected in a plan’s cost. Plans that offer specialized Medicare advisors may cost more, but those plans provide you with access to a higher level of specialized service.