In a previous post, I took a look at Medicare Parts A & B, which cover many types of inpatient care along with what are generally defined as medically necessary services. In this post, I’ll examine Part D, which is the portion of Medicare that covers prescription drugs. Note that Part D is used with traditional Medicare as opposed to Medicare Advantage plans, which often offers prescription drug coverage as part of the plan.
Part D is a recent addition to Medicare, having been put in place during the early part of the last decade. Applying for Part D is done separately from applying for Part A & B, and the first step in doing so is using the Medicare Plan Finder to determine what plans are available in your area. This is necessary, because unlike traditional Medicare, Medicare Part D is administered by insurance companies, and as is the case with private health insurance, there are differences among plans offered.
Once you’ve input your ZIP code along with information on any prescriptions you currently take and pharmacies you use, the plan finder provides the following information:
- Prescription Drug Plans available to you (i.e., Part D)
- Medicare Health Plans available to you (i.e., Medicare Advantage Plans) with drug coverage
- Medicare Health Plans available to you without drug coverage
If you’d like to refine your search further, you can do so using a number of criteria, including plan rating, coverage options, and monthly premium among others. The site provides a good deal of information on each plan, including information that should allow you to accurately estimate your total cost, including premiums and out of pocket spending. You can also compare spending among different plans, and if you’re taking name brand medications where generics are available, the site offers to calculate the potential savings in switching to generics.
As a test case, I ran a hypothetical applicant through the system using the 30300 ZIP code, traditional Medicare, and prescriptions for the generic versions of Lipitor and Nexium filled by a local pharmacy. The site provided a wealth of information, and one of the first things I noticed was that without a drug plan – and just original Medicare – I could expect to spend $4,140 on prescriptions for the year. In contrast, were I to choose the most economical Part D coverage, my total cost for prescriptions including premiums and all out of pocket spending would drop to $356. When generics are available, the site can provide information on the cost differences between using the generic vs. the name brand.
Overall, the site is extremely useful if you’re working to draw up a budget for healthcare spending in retirement. For the hypothetical applicant above, if I chose the cheapest Part D plan, opted for traditional Medicare and stuck with generics at my local pharmacy, my total cost would be $4246 for the year. It is possible to change the Part D plan provider at specific times of the year, which might be advisable, particularly if your prescriptions change. Another variable impacting healthcare costs are medical expenses that are partially covered, or not covered at all. That’s where Medigap insurance comes in, and I’ll take a look at that in a future post