Does everyone get the same coverage?
No. Each plan must offer a minimum level of coverage specified in law. But some offer better benefits, lower costs and different overall designs than the one Congress originally envisaged.
Also, you may get more coverage and pay less out of pocket if your income is limited and you qualify for Extra Help, or you are in a state pharmacy assistance program, or you have employer or union coverage that supplements Medicare.
Do drug plans vary much?
Yes. There are big differences in premiums and deductibles, in the range of drugs that plans cover, the copays they charge and the pharmacies they use. In particular, copays vary enormously among different plans, even for the same drug. To determine exact costs and benefits, it is important to carefully compare plans in your area (see Choosing a Part D Drug Plan).
Why don’t the plans match the “norm” of the standard drug benefit designed by Congress?
Congress established a “minimum” benefit that plans had to meet or exceed. But many plans offer better deals to attract enrollees.
One source of confusion is that Congress specified that enrollees would pay 25 percent of the cost of drugs in the initial coverage period in a year. Many plans instead charge flat copays for each prescription — for example, $7, $35 or $70 depending on the drug — and sometimes these are higher or lower than 25 percent of the cost of the drugs.
Medicare officials say plans must prove that they provide the same value “on average” as the standard benefit. That average is based on the expected costs of everybody enrolled in the plan, not on individual costs. So, they say, some people will pay more and some less than the 25 percent.
How many plan choices do I have?
Dozens of different drug plans are available to you wherever you live. They include stand-alone drug plans (state-wide plans and some nationally available plans), which you would use if you're enrolled in the traditional Medicare program; and regional and local Medicare Advantage plans that combine medical and drug coverage in their benefit packages.
What will I pay for my drugs?
You could pay a different price for the same drug according to the phase of coverage that you’re in at any point during the year.
• Deductible: If your plan has a deductible, you pay full price for your drugs until the deductible amount is met and coverage kicks in. “Full price” means the price your plan has negotiated with each drug’s manufacturer. This price may be less that you would pay retail at the pharmacy.
• Initial coverage period: Your share of each prescription is either a flat copayment (for example, $20) or a percentage of the drug’s cost (for example, 25 percent). Most plans have three or four levels (known as “tiers”) of copays, rising in price from the least expensive generic drugs through “preferred” brand-name drugs to “nonpreferred” brands and finally to specialty or high-cost drugs.
• Coverage gap (“doughnut hole”): In 2015 you pay 45 percent of your plan’s price for brand-name and biologic drugs in the gap and 65 percent for generics. Fifty percent of the discount for brand drugs is provided by their manufacturers; the rest of the discount for brand drugs and the 35 percent discount on generics is provided by the federal government. If your plan provides any coverage in the gap, these discounts are applied to your remaining costs.
• Catastrophic level of coverage: Your share of each prescription is about no more than 5 percent of the cost of the drug. You would also pay a different price if you receive Extra Help or have additional coverage from elsewhere (such as retiree drug benefits or assistance from a state pharmacy assistance program).
Why does the same plan charge different copays for different drugs?
Most plans arrange their charges in “tiers.” Typically, Tier 1 is the copay for low-cost generics, Tier 2 for medium-cost “preferred” brand-name drugs, Tier 3 for higher-cost “non-preferred” brand names, and Tier 4 for very expensive or rare drugs. But some plans use more than four tiers and some use only one, charging the same percentage price for all drugs. All plans charge a percentage of the cost (typically 25 or 33 percent) for the most expensive drugs in the highest tier.
Why does one plan charge a lot more for the same drug than another plan?
Each plan negotiates the price of each drug with its manufacturer. If a plan gets a good discount on one brand-name drug but not on a competing drug used to treat the same condition, the plan charges a lower copay for the former (“preferred”) drug and a higher copay for the latter (non-preferred).
Since different plans may place the same drug in different tiers of charges varying by as much as $50 or more between tiers, it is important to compare copays (as well as premiums and deductibles) when choosing a plan.
What if I can’t afford the costs?
A special part of the Medicare drug program, known simply as Extra Help, provides continuous drug coverage at low cost for people with limited incomes and savings (see Extra Help Paying for Drugs). Some state pharmacy assistance programs offer similar or better help.