Medicare Part D: What to Look for When Evaluating & Comparing Plan Options

A Prescription Drug Plan (PDP) determines how much you’ll have to pay for prescription drugs year to year.

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Reviewing Your PDP Each Year Could Reveal Savings Opportunities

Each year during the “Annual Election Period,” which begins on October 15th and closes on December 7th, Medicare beneficiaries who are enrolled in a Prescription Drug Plan (PDP) can change plans without underwriting and begin the new coverage on the following January 1st. If you are currently taking prescription medications, taking some time to review your options could provide healthcare savings.

This year, there are 886 PDPs nationwide and an average of 19-29 plans available in each region (with the Pennsylvania/West Virginia region enjoying the highest average)[1]. The costs and benefits of a PDP can, and often do, change each year.

Likewise, your prescriptions can also change. In addition, the cost of the same medication can vary widely between plans. All of this can generate big differences between plans for the same set of medications, thereby making the “best” PDP for you a moving target.

Compare Prescription Drug Plan Options with Medicare Plan Finder

However, there is an easy way to evaluate your options using the ‘Find a Plan’ tool with Medicare.gov’s Medicare Plan Finder[2]. This link will take you to a different website.

By entering your zip code and current prescriptions (name, dosage, frequency taken), it is possible to compare each plan on a side-by-side basis if you have a general understanding of the important features of PDPs and how to use the tool.

Ultimately, you want to determine the total annual cost for each Prescription Drug Plan based on your list of medications and the pharmacy used. Probably the most misleading details are the monthly premium and annual deductible. While both have an impact, often times it is the corresponding copays/coinsurance amounts charged for the medications and the particular pharmacy used that ultimately determine the total cost for the year.

For example, one PDP may have a higher premium compared to another PDP, yet have lesser copays for your medications. Similarly, one PDP may list a $360 annual deductible, but it does not apply to all medications. When looking at the total for the full 12-month plan period, the true cost can be compared on a side-by-side basis.

By using the Plan Finder tool on Medicare.gov, it is possible to make this comparison though it takes a few steps as the tool is not set up to automatically identify the best plan in terms of cost from of all available options.

After you have entered your list of medications, you can select up to 2 pharmacies at a time and view the cost of all available plans at those pharmacies.

The following “Your Plan Results’ page will then show the PDP options available in your area by total cost.

After noting the top plans based on the 2 pharmacies chosen, go back to the ‘Select Your Pharmacies’ page and choose 2 different pharmacies and repeat this process until you have reviewed all of the pharmacies to which you would be willing to travel.

Going a step further, from the Plan Results page you can select up to 3 PDPs to compare in closer detail. The ‘Plan Comparison’ page provides a month-by-month detail in cost, which can be helpful for budgeting and avoiding any surprises at the pharmacy, since the cost may not be level over the year due to the different coverage periods (ie: the “Donut Hole”).

The Plan Finder tool incorporates the different coverage levels when calculating the total cost, which greatly simplifies the process of plan comparison.

If you determine that there is a better PDP for you, it is also possible to enroll in the new plan directly from this section of the Medicare.gov website by clicking on the “Enroll” button under the Plan name. This online process is very simple and by enrolling in a new PDP, you will automatically be dis-enrolled from your current PDP as of the effective date of the new plan. Therefore, you would not need to contact the old PDP to cancel coverage.

You can also elect to have the premium deducted from your Social Security benefits or choose to pay via check or automatically from your bank account.

While spending any time shopping for a PDP is probably as appealing as a trip to the dentist, it can be a relatively painless process if you know what to look for and how to navigate the many options.

Choosing or keeping a cost inefficient Prescription Drug Plan, or going to an out-of-network pharmacy could be costing you hundreds of dollars a year for the same medications. With this in mind and the increasing cost of healthcare, finding the right PDP for you could end up providing a great return on your investment of time.
[1] Medicare Part D: A First Look at Plan Offerings in 2016, Henry J. Kaiser Family Foundation Issue Brief October 2015.

[2] https://www.medicare.gov/find-a-plan/questions/home.aspx

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