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Changes in Medicare Out-of-Pocket Costs for Insulin are Coming in 2021

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Experts typically warn pre-retirees and retirees about the rising cost of health care in retirement. But every once in awhile, something to the contrary happens. Case in point: Earlier this year, the Centers for Medicare and Medicaid Services (CMS) announced it will allow Medicare Part D prescription drug plans to cover insulins with a $35 monthly co-payment throughout the plan year.

And that’s good news for the one in every three Medicare beneficiaries who have diabetes, and the more than 3.3 million Medicare beneficiaries who use one or more of the common forms of insulin, according to Jae Oh, author of Maximize Your Medicare.

According to the American Diabetes Association (ADA), starting in 2021, Medicare enrollees with diabetes will pay $35 per each 30-day supply of a covered insulin prescription until they reach the catastrophic coverage phase, during which they will pay 5% co-insurance. In addition, the ADA says insulins covered by participating plans will not be subject to the deductible or donut hole phases of Part D coverage.

In May, the CMS announced that over 1,750 standalone Medicare Part D prescription drug plans and Medicare Advantage plans with prescription drug coverage have applied to offer lower insulin costs through the Part D Senior Savings Model for the 2021 plan year.

Based on CMS’s estimates, beneficiaries who use insulin and join a plan participating in the model could see average out-of-pocket savings of $446, or 66 percent, for their insulins, funded in part by manufacturers paying an estimated additional $250 million of discounts over the five years of the model.

According to Oh, this change follows a national trend where states have imposed caps on the cost of insulin.

What’s more, he says this change will require Medicare beneficiaries who use one or more of the common forms of insulin will have to review and possibly change their Medicare Part D or Medicare Advantage plan. “While the discount will exist in certain locations, it will create other pricing combinations on other drugs that are not insulin,” Oh said. “So you'll want to be very, very careful for 2021.”

According to the CMS, beneficiaries will be able to find a Part D plan participating in the Part D Senior Savings Model in the 2021 plan year through the Medicare Plan Finder on during the annual open enrollment period, which begins on October 15, 2020 and ends December 7, 2020.

In a press release, the CMS said it will enhance the Medicare Plan Finder to include a filter to identify plans that will offer capped out-of-pocket costs for insulin in the model so beneficiaries can easily find those plans during open enrollment in the fall.

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