How to Pick a Part D Plan During Medicare's Annual Election Period

Robert Powell, CFP®

First of a three-part series

Medicare’s annual election period runs from Oct. 15 through December 7.

And during that time, Medicare beneficiaries have the opportunity you join a Medicare prescription drug plan, switch from one Medicare drug plan to another Medicare drug plan, or drop your Medicare prescription drug coverage completely.

So, what do you need to consider?

“I describe part D as kind of like a soup with many different ingredients,” says Jae Oh, author of Maximize Your Medicare.

And those ingredients include:

  • premium, the monthly amount that you pay,
  • your copay schedule,
  • the formulary, or approved drug list, and
  • The pharmacies you prefer.

And those ingredients are always changing, says Oh.

Check out Medicare 2021 Preview: Prescriptions.

For Medicare beneficiaries who depend on insulin, there are big changes to review, as well.

According to Medicare.gov, starting January 1, 2021, you may be able to get Medicare drug coverage that offers broad access to many types of insulin for no more than $35 for a 30-day supply.

Emphasis on the word “may.” “Only a subset of plans are actually providing the $35 a month cap on insulin costs,” says Oh, who also noted the $35 cap on your copay for insulin also extends through the coverage gap, which is otherwise known as the donut hole.

“So it's very important for those persons on insulin, and with diabetes being an epidemic in the United States, that you choose a plan that also includes these savings, and it's not every plan.”

Oh also said Medicare beneficiaries need to know about the donut hole, or what he refers to as the co-insurance gap.

According to Medicare.gov, most Medicare drug plans have a coverage gap or donut hole. This means there's a temporary limit on what the drug plan will cover for drugs.

And once you are into this coverage gap, what happens is this, says Oh. You get a 75% discount leaving you with a 25% copay as the responsibility.

But you have to be careful, says Oh. That 25% is multiplied by X and that X for a particular drug can vary from plan to plan. “So, as a result, you just because you're going into the donor hole doesn't mean that your copays are always going to be the same, even though you're getting a 75% discount,” he says.

So, how best to determine which Medicare Part D plan is best for you?

1. Start with Medicare’s Plan Finder tool. “It is a good starting point,” says Oh. “But please understand that you do need to take a deeper dive into the actual results of whatever (Medicare’s Plan Finder) displays,” he said. Check out How to Use Medicare.gov.

2. Your local State Health Insurance Assistance Program (SHIP) will provide you in-depth, one-on-one insurance counseling and assistance with Medicare. Of course, in the age of COVID, it’s unclear volunteer centers are going to be up and running actively, says Oh.

3. Contact a professional, such as Oh, for a consultation. Here’s a link to request a consultation with Oh.

Also read: 

Part Two: How to pick a Medicare Advantage plan 

Part Three: How to pick a Medigap plan 

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