If you're one of the millions of Americans with Medicare Part D or Medicare Advantage coverage, or if you're signing up for one of these plans for the first time, then you're probably wondering: How do I lower my drug costs when Medicare falls short? Here are six tips that can save you a pile of money on your medicine when you're on Medicare.
Tip No. 1: Eliminate the deductible
Every year, Medicare Part D members can switch their plan, and if you find that you're paying more than you want to pay for drugs on your existing plan, it may be time to switch to a plan that provides better coverage.
For example, the standard Part D deductible is $400, but some plans provide coverage from dollar No. 1. You may pay a little more per month for the additional coverage, but that's not always the case. Some plans with no deductible cost roughly the same per month as a standard plan. At a minimum, eliminating your deductible can help you avoid the up-front cash crunch caused by paying a deductible before your coverage kicks in.
Tip No. 2: Mind the gap
Once the total retail price of the drugs you buy reaches $3,700, you're typically responsible for 100% of your drug costs up to a cap of $7,425 in 2017. This $3,725 gap in coverage is called the "donut hole."
Fortunately, some plans offer additional donut hole coverage that can save you money. For example, you may be able to find a plan that allows you to pay the same copay as you would prior to entering the donut hole. This coverage will increase your monthly premium, but it can lower your total spending if you find yourself in the donut hole every year.
A word of caution, though: Every plan covers individual drugs differently, and oftentimes, donut hole coverage doesn't include expensive brand-name drugs. Therefore, review the lists of covered drugs carefully and contact the insurer to confirm your medicine is covered.
Tip No. 3: Embrace your inner bargain-hunter
It can pay off to ask your doctor about generic alternatives to your existing medications, because generic drugs are cheaper than brand-name drugs, and the FDA only approves generic drugs after they've proven to be equivalent to the brand-name drugs you're already taking.
Generic drugs offer lower copays, and they're more likely to be included in the donut hole coverage I recommend in tip No. 2. Furthermore, generic drugs' lower retail price can help you delay, or potentially avoid, exceeding the $3,700 annual threshold that puts you in the donut hole in the first place.
Tip No. 4: Preferential treatment
Insurers negotiate with drugmakers for the cheapest price, and the cheapest drugs are included in each insurer's preferred drug list. You can save a lot of money by picking a plan whose "preferred" drugs include the ones you need -- especially when you use the plan's preferred pharmacy to fill your prescription.
For example, CVS Health's SilverScript Plus' California plan offers $0 copays for preferred generic drugs filled by its preferred pharmacy, which, unsurprisingly, is CVS. If you use a nonpreferred pharmacy to fill a preferred drug on this plan, it will cost you $10. Meanwhile, filling a prescription for a preferred brand-name drug at a preferred pharmacy can cost as little as $67.50 -- less than half what it would cost to fill the same prescription at a non-preferred pharmacy.
Tip No. 5: Think long-term
If you take the same medicine all year long, filling 90-day prescriptions instead of 30-day prescriptions will also save you money.
For example, the copay for a preferred generic drug filled by AARP's MedicareRx Preferred plan in Ramsey County, Minnesota, is $0 for a 90-day supply when it's filled by AARP's preferred mail-order pharmacy, OptumRx. The copay for a 90-day supply of a preferred brand-name drug that's filled by OptumRx is $90, which is a 21% discount to the cost of filling a 30-day supply at a nonpreferred pharmacy.
Tip No. 6: Investigating more options
If you've taken advantage of these tips and your medicine is still costing too much, then you may still have some ways to cut those expenses even further.
Many drug companies offer discount savings programs for patients in the donut hole, and you can see if such a program exists for the medicine you take by going to Medicare's pharmaceutical assistance program website.
You may also qualify for a pharmaceutical assistance program through Medicare, Social Security, and/or your state of residence. If you qualify for Medicare and Social Security's program, you could pay no more than $3.30 for each generic drug or $8.25 for each brand-name covered drug in 2017. If you don't qualify, many states also offer programs that may help. For instance, New York's EPIC program can reduce drug costs for couples with annual household income of up to $100,000.
Oh, and one more thing
It's important to discuss your financial situation candidly with your doctor, because they may recommend changes to your treatment plan that can reduce your out-of-pocket costs. They know how expensive drugs have become, and they're in the best position to help you figure out your options.
Overall, even if you're in good health, don't skimp on your coverage. It's better to over-prepare financially by buying the best coverage you can afford than to get caught flat-footed when an unexpected illness or injury strikes.
Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool recommends CVS Health and UnitedHealth Group. The Motley Fool has a disclosure policy.