Ever wonder how your Medicare Advantage Drug plan really works? Here is an easy way to understand how your Medicare Advantage Drug plan works:
DEDUCTIBLE: First you will have to pay your deductible for any Tiers which require a deductible to be met. This means you pay 100% of your prescription drugs until you each your deductible (your deductible can be as low as $0 and will not exceed $415 for the 2019 plan year).
This deductible is a onetime payment for the year you are currently in, and will become due again when the new year begins and you have drugs in a tier where a deductible must be met. A lot of plans waive the deductible for Tiers 1 & 2. Make sure to review your plan for your specific deductible amount and for what Tiers you must pay your deductible for (usually Tiers 3-5).
INITIAL BENEFIT LIMIT: You pay 25% of the drug costs and the insurance pays the other 75%, until the total spent between the two of you, INCLUDING DEDUCTIBLE PAID, reaches your initial coverage limit of $3,820.
COVERAGE GAP (aka "donut hole"): The Brand Name drugs during this stage are discounted by the manufacturer at 70% which leaves you owing 25% for Brand Name drugs and the insurance owing 5%. For Generic drugs you will owe 37% and the insurance company will owe 63%. Once the total paid by you and the insurance company reaches $5,100, INCLUDING the $3,820 from above Deductible & Initial Benefit Limit (difference of $1,280) you will move to the Catastrophic Coverage.
CATASTROPHIC COVERAGE: Once your total reaches $5,100 your plan pays most of the costs...you pay whichever of these is greater: 5% co-insurance or $3.40 co-pay for Generic drugs. You pay whichever of these is greater: 5% co-insurance or $8.50 co-pay for Brand Name drugs. You will remain on Catastrophic Coverage for the remainder of the calendar year, once you reach this point in your drug plan.
THINGS TO KEEP IN MIND:
1) Keep in mind that each Medicare Advantage plan has different deductibles, co-insurance and co-payments so make sure to "look around" for the plan that works best f you.
2) Keep in mind that if you use a "Preferred" pharmacy, if offered, you will pay a lower cost for your drugs than using their "Standard" pharmacy list.
3) Keep in mind that if you purchase a 3 month supply via mail order, some company's offer 3 months of drugs for the cost of 2.
4) Keep in mind that if you don't choose a Part D plan with Original Medicare, or a Medicare Advantage plan which includes a RX plan you may have to pay a penalty for every month you could have enrolled in a plan with Drug coverage, but didn't. There are a few exceptions such as having creditable drug coverage through your active work insurance (not COBRA).
You should now be able to understand Medicare Advantage drug plans a whole lot better!