Prescription drug coverage is an important component of Medicare coverage. Whether your clients want a Medicare Advantage plan or a free-standing Part D plan, there are several factors to consider that will help them choose the best plan.
Since every insurer’s drug formulary is unique, you will need to see how each plan covers your clients’ medications. When you meet with clients, ask them to bring a list of their medications and dosages, including the type of delivery (such as pill, capsule, liquid, etc.), as formularies sometimes distinguish between different modes of delivery. Bear in mind, it is not uncommon for clients to tell agents that they are taking a brand-name medication when they are actually taking a generic version of a drug. For this reason, it’s important they make note of the exact medication name that appears on their prescription. You should also ask clients to bring a list of their preferred pharmacies.
When reviewing an insurer’s formulary, in addition to checking if it covers each of a client’s medications and what tier the medications fall on, look for the following information:
- Special Requirements – Are there preauthorizations, step edits, or quantity limits?
- Mail Order Requirements – Some clients like mail order whereas others prefer to pick their medications up at the pharmacy. Does the plan provide options that match the client’s preferences?
You will also want to check the following:
- Pharmacy Network – Are the client’s preferred pharmacies in the plan’s network? Is there a national pharmacy network that allows a client who travels the option to fill prescriptions while out of town?
- Total Out-of-Pocket Costs – In addition to the premium, is there a deductible, how do copays and coinsurance add up for the client’s list of medications, and how will the Part D coverage gap affect the client?
Explaining the Part D Coverage Gap for 2024
The Inflation Reduction Act of 2022 includes several provisions to lower prescription drug costs for Medicare beneficiaries over the next few years. In 2024, changes to the Part D coverage gap will require Part D plans and drug manufacturers to pay a greater share of the costs. This eliminates the 5% coinsurance for those reaching the catastrophic coverage phase. Although many of your clients may have heard of the “donut hole,” they may not fully understand how it works.
There are three distinct phases of the coverage gap:
Initial Coverage Phase
The individual is responsible for any deductible (if applicable to the plan and medications), copays, and coinsurance. This is based on which tier the medications fall on.
Beneficiaries will stay in the initial coverage phase until the cost of their drugs totals $5,030 (an increase from $4,660 in 2023). At this point, beneficiaries will enter the coverage gap.
Coverage Gap or Donut Hole
In the coverage gap, beneficiaries are responsible for 25% of the cost of covered medications at the pharmacy (the discount is automatically taken at the point of sale) until their out-of-pocket costs reach $8,000 (an increase from $7,400 in 2023). At this point, they enter the catastrophic coverage phase.
Catastrophic Coverage Phase
Once their year-to-date out-of-pocket costs reach $8,000, beneficiaries will have $0 cost for the rest of the calendar year. Previously, beneficiaries in this phase had to pay 5% of the cost of the drug.
In 2025, the Inflation Reduction Act will cap all out-of-pocket drug expenses for Medicare beneficiaries at $2,000, effectively eliminating the donut hole.
Other Important Information to Share
- Copays for covered insulin remain at $35, regardless of whether beneficiaries have met their deductible. The donut hole will not impact insulin costs.
- When beneficiaries change plans mid-year, the donut hole calculations move with them – they do not start all over again.
- Part B medications are not part of the donut hole calculation. These medications count toward the out-of-pocket maximums on medical plans.
Help Paying for Prescription Costs
Some of your clients who struggle to pay for their medications may qualify for Extra Help/LIS. In 2024, LIS will expand to give full LIS subsidies to those whose income is at 135% to 150% of the federal poverty line and who meet resource requirements. Currently, only beneficiaries whose income is below 135% of the poverty line qualify for full benefits. Beneficiaries may also receive assistance from the Texas Rx Assistance Program, which is open to all residents in the state of Texas.
Your clients will appreciate the time you take to educate them on prescription drug coverage and finding the right Medicare plan to fit their needs. When they know you are looking out for their best interests, you build their trust and develop long-term relationships.
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