Medicare Part D-ifferences in 2020

Updated on: November 1, 2019

Originally posted on: October 3, 2019
The Roadmap for Medicare staff specialize in all topics related to Medicare Part D, choosing a Medicare plan, and making smart health decisions in retirement.

Open Enrollment is the time to choose a prescription drug plan that fits your current medication needs and budget. Even if you think your plan is working well for you, it’s always a good idea to make sure you’re getting the best value for your dollars.

To help, we’ve put together a list of the changes you’ll see in next year’s Part D plans. These changes, established by the agency that regulates Medicare (The Centers for Medicare & Medicaid Services, or CMS) will impact how and when you reach the four stages of coverage.

Need more information to understand the four stages of a Part D plan and how they work? Read this helpful article.

Deductible Stage: In 2020, you may need to pay more before your plan kicks in
The deductible is the amount you pay before your plan starts to share the cost of your medications. In 2020, the standard initial deductible will increase by $20 to $435.

As in previous years, you may also find Part D plans will offer deductibles that may be as low as $0. While these plans may be a good option for some, you should always make sure that the overall cost of the plan works well for you and your budget. More on the total cost of a Medicare Part D plan is available here.

Initial Coverage Stage: In 2020, your plan may cover more of the cost before you reach the “Donut Hole”
Once you meet the deductible amount set by your plan, you enter the Initial Coverage stage. In this stage, you will be responsible for a copayment (copay) or coinsurance. Your plan will cover the difference between what you pay and the retail price of the drug. How much you pay each time you fill your prescription depends on the drug tier in which your plan places the medication you are purchasing.

You and your plan will continue to share this cost until you and your plan have together paid an amount set by CMS every year. In 2020, that amount increased to $4,020, from $3,820 in 2019. Once this amount is met, you enter what’s known as the Coverage Gap, commonly referred to as the “Donut Hole.”

Coverage Gap Stage: In 2020, the “Donut Hole” will be harder to reach and easier to get out of
Once you enter this stage, you will need to pay more in out-of-pocket expenses. You will remain in this stage until your Total Out-Of-Pocket, also known as TrOOP, reaches $6,350.

In 2020, the Total Out-Of-Pocket cost was increased by 25%, to $6,350, from $5,100 in 2019. Want to know more about how to determine your TrOOP and how it will impact your budget? Read this helpful article.

To make it easier for people to afford their medications while in the Coverage Gap in 2020, CMS has required all plans to make available a discount for generic medications. Through this discount, your copay will never exceed 25% of the total cost of covered medications.

Coverage Gap Medication Discount Examples

  • Brand-name medication: If your medication has a retail cost of $100, the drug manufacturer pays $70, you pay $25, and your plan pays $5.
    • Out of the $100 cost, $95 will count towards meeting your TrOOP.
  • Generic medication: If your medication costs $100, you will pay $25.
    • Out of the $100 cost, the $25 you pay will count towards meeting your TrOOP.

Catastrophic Stage: In 2020, you will have a set minimum in your cost-sharing payments
Once you reach this stage, you will pay a minimal copayment or coinsurance for any generic medication or any brand-name drug.

In 2020, that amount is $3.60 for generic drugs or for brand drugs that are offered by two or more manufacturers that have a retail price lower than $72. If the price is higher, you will only pay 5% of the total cost. For other brand-name drugs, you will pay $8.95 if the retail price is under $179, and 5% of the cost for any medication that’s higher than that price.

Don’t forget to compare plans during Open Enrollment to choose the one that’s best for you!

If you are currently enrolled in a Part D plan, check your Annual Notice of Changes (ANOC). The ANOC, mailed to you by your current plan, will detail how these and other changes will impact your plan’s cost next year. With this information, you can determine if you are still in the plan that’s best for you.

Additionally, be sure to use the Medicare Part D Compare Plan Tool that is available here to help you gather and compare the coverage information from the plans offered in your area.

Don’t let Open Enrollment pass you by. Compare plans now to find the best one that best fits your needs and budget; this may save you money for next year!