By Marcia Mantell, RMA
Of all the issues older Americans run into when dealing with Medicare, none may be as shocking, frustrating, and downright egregious as choosing a Part D prescription drug plan.
After completing an in-depth analysis of the choices each person will have when selecting their Part D plan, one word summed it all up: disillusioned.
Which Part is Part D?
Medicare has four distinct, separate, unrelated components. All four are necessary to have full health insurance. Together, they are the equivalent to an employer’s group health plan when working.
When switching to Medicare, plan on locking in Medicare Part A for hospitalization, Medicare Part B for physicians, and a separate supplemental plan. Plus, Part D to help pay for your prescription drugs.
How Part D Insurance Plans Work
Private insurance companies offer Part D plans. You’ll recognize many of the insurance companies offering plans, such as Blue Cross and Humana. Others are unfamiliar names.
Using the “find plans” tool on Medicare’s website, you can explore, analyze, and choose whichever insurance plan works best for you based on the following:
- Your primary residence state, zip code, and county
- The prescription drugs you take, by exact name
- The exact dosage and quantity of each prescription
- The form the drug comes in – capsule, tablet, injectable, cream, etc.
With that information at the ready, your journey to figure out which Part D plan to choose begins. But saddle up. You may be in for a rough ride.
A look at zip code 02360, Plymouth, Massachusetts
Before getting any costs, you must select a pharmacy. The tool allows you to choose up to 5 different pharmacies or 4 pharmacies plus mail order. There is a suggestion to check multiple pharmacies to see a range of costs, but no alarm bells go off in this step. They should.
In zip code 02360 there are:
- 7 pharmacies within a 5-mile radius;
- 17 pharmacies within a 10-mile radius; and
- 150 pharmacies within a 25-mile radius.
There is no rationale for which pharmacies. A random sample allows you to comparison shop. For this analysis, these are the randomly selected pharmacies:
CVS – preferred, in-network
Stop & Shop – standard, in-network
Walgreens – Out-of-network (OON)
High Point – Out-of-network (OON)
Mail order – preferred, in-network
Topline results listed 21 Part D plan options plus 41 Medicare Advantage plans that include Part D. The individual Part D plans are sorted lowest premium plus drug costs to highest, and were surprisingly different:
- The lowest plan premium is $7.40 per month with out-of-pocket spending before insurance kicks in (the deductible) of $480.
- The highest cost plan charges $136.20 per month for the premium, but no deductible.
In other words, the out-of-pocket exposure is $569 on the low end and $1,634 on the high end. That’s just the price of entry into a Part D plan and the deductible. It doesn’t yet include pricing for specific prescription drugs.
Which prescriptions should be explored?
Since there are so many different drugs an older person might need, this analysis looked at five different scenarios and drug combinations:
Case 1 – two generic blood pressure medications
Case 2 – the same two generic blood pressure meds as Case 1 plus Dupixent
Case 3 – a pre-diabetes drug, Metformin
Case 4 – a brand vs. generic comparison
Case 5 – a basket of heavily advertised specialty drugs
I had no preconceived ideas about how much any of these drugs would cost.
In this article, you’ll see the results for Cases 1 and 3, and get several pointers for getting started exploring your own prescriptions.
Case 1 and Case 3 findings: generic drugs
In the lowest cost plan, the cover page shows each generic blood pressure medication costs $1.00 per month. The entire out-of-pocket cost for the year will be $24 for the two prescriptions plus $88.80 to be in the plan.
Since Metformin is also a generic, Case 3 showed the same results: A plan is available with a $7.40/month premium and the drug will cost $1.00 per month.
In both cases, SilverScript SmartRx (PDP) from Aetna Medicare is the lowest cost plan in 02360.
Big lesson when using the tool: Always click the “plan details” button.
Turns out, the $1.00 per month cost for each drug was only an option at CVS, the one preferred, in-network pharmacy. And in mail order (generally the lowest cost alternative). For the analysis in Plymouth, these are the costs for monthly, annual, and full retail prices:
These findings are shocking.
While these generic drugs are covered in the four pharmacies randomly selected, the cost variations are extreme. You will pay $17 for the year for BP2 or $372. That’s a cost difference over 2,000% higher at one pharmacy versus another!
The exact same drug/dosage can cost you 2x more, 11x more, 31x more, or even 41x more. All because a pharmacy is somehow classified as out-of-network.
And you won’t know that.
The information in Medicare.gov’s plan finder tool is invaluable. It’s free to use and readily available from Medicare.gov’s homepage. On the surface, the tool is easy to use. But make sure you look into the detail pages to see the real range of costs.
Five tips to help you get started:
- Create an assembly line of your prescription bottles and enter the exact information for each prescription.
- Choose different pharmacies. Look to compare preferred in-network, standard in-network, and OON for a wide range of options.
- Note that costs are only shown for the remainder of the year. You will not get a 12-month view except during the October 15th – December 7th open enrollment period.
- Married couples and partners will likely choose different Part D providers. Each person needs to find the plan that works best and is cheapest for their specific prescription drugs.
- Be patient with the process. Most folks need to sift through 20 to 50 different plans offered in their zip code.
Part 2 of this series will unveil some distressing findings once a specialty drug is added to the mix.
About the author: Marcia Mantell, RMA®
Marcia Mantell, RMA®, is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women,” and blogs at BoomerRetirementBriefs.com.