Your Medicare prescription drug plan categorizes your medications into tiers that have varying costs. Each drug plan can divide its tiers in different ways. Thus, each drug tier costs a different amount. For example, a Medicare drug plan may have the following coverage and costs:
- 1st tier preferred generic drugs with the lowest copays
- 2nd tier non-preferred generic drugs with higher copays
- 3rd tier preferred brand name drugs
- 4th tier non-preferred brand name drugs
- 5th tier specialty drugs
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You can determine whether your prescriptions are generic or brand name by looking at your plan’s drug formulary.
Drug Formulary Costs
According to GoodRx, your medication formulary “is a list of generic and brand name prescription drugs covered by your health plan.” When you use the drugs in your formulary, you will pay less for prescriptions. Furthermore, Medicare.gov says, “if you use a drug that isn’t on your plan’s drug list, you’ll have to pay full price instead of a copayment or coinsurance.” (unless you qualify for a formulary exception).
In most cases, tier 1 and 2 generic drugs will cost less than tier 3 and Specialty tiers. The price you pay for both generic and brand name prescriptions will change depending on your coverage stage. You can learn more about the four stages of drug coverage and costs in 2021.
Medicare Part D Costs for Tier 1 and 2
In the MedicareBob video, Robert Bache says, “most drug plans cover tier-1 medications for $1 or $2, and tier-2 drugs for $3 to $5.” Furthermore, the price you pay for tier-1 and tier-2 prescriptions does not apply towards the Part D deductible. Depending on your Part D drug plan, it can divide tiers in different ways.
Medicare Part D Costs for Tiers 3, 4, and 5
Part D drug plans have their own formularies. Depending on your plan, you may pay the full prescription cost in tiers 3, 4, and 5. Some drug plans have a deductible and some don’t. However, no Medicare drug plan may have a deductible larger than $445 in 2021.
Once you have spent $4,130 in 2021, you enter the Donut Hole. Then you pay 25% on all drugs tiers until you spend $6,550. After paying $6,550, you are out of the Donut Hole. Finally, you have reached Catastrophic Coverage and you only pay a small coinsurance or copayment amount for covered drugs until the end of the year.
Senior Healthcare Direct can help you choose a drug plan that saves you the most money per year.
Choosing a Cost-Effective Drug Plan
When you provide a list of your prescriptions, Senior Healthcare Direct can shop all available drug plans to find you the most cost-effective. Find out which drug plan will save you the most amount of money based on your prescriptions. Fill out the Part D Drug Finder form.