Why is there such a difference in premium costs among plans?

Coinsurance vs. Copayment:

After meeting your deductible (if any), you may need to pay coinsurance or a copayment as your share of the cost of a covered prescription drug. Coinsurance is a percentage of the cost of a medication. A copayment is typically a fixed amount.

A Medicare Part D prescription drug plan’s premium is the set cost a person pays each month. The premium is based on a number of factors that may include the size of the plan’s formulary (list of covered drugs), restrictions on how those drugs are covered, as well as extra features of the plan, such as lower copayments or $0/low-cost deductibles. Plans with low premiums might come with higher out-of-pocket costs — including higher deductibles, a smaller list of covered drugs, as well as restrictions on how those drugs are covered. Low-premium plans are also more likely to require members to pay coinsurance — a percentage of the cost of a medication — so out-of-pocket costs can vary widely depending on the medications you take. When determining the overall cost of a plan, along with the premium, you need to also consider deductibles and copayments/coinsurance.  Learn more about Medicare Part D plan premiums.

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Posted on: August 1, 2014
Vice President of Medicare Solutions

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