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Guide to Medicare: Drug plans could have hidden pitfalls

When seniors choose their prescription drug coverage each year, they often have one thing on their minds: saving money.

It seems simple enough — look at your Part D plan options or Medicare Advantage plan with drug coverage, and go with the lowest cost.

The problem is that there are a number of pitfalls when taking this high-level look. Choosing prescription drug coverage is a little more complicated and you need to examine the details.

Following are some of the most common pitfalls that seniors can run into related to their prescription drug coverage:

1. Plans can spread the costs around

Your drug coverage, whether a Part D or Medicare Advantage with Part D, typically provides you with 75/25 coverage. This means the plan will pay on average 75% and you pay 25%.

The pitfall is how the plan chooses to share those costs with you. For example, a plan with a $ 0 generic co-pay (meaning you don’t have to pay anything for your generic drugs) could charge a lot for brand name drugs from other tiers.

Generally, your drug plan will have five tiers of medications, and the higher the tier, the higher the cost to you.

2. Plans can restrict drug formularies

The formulary is the list of drugs that your Part D plan covers and which tier the drugs fall into. Formularies can be dramatically different — varying from plan to plan — even when they are with the same insurance carrier.

The pitfall is that you may find a really low premium for a Part D plan due to a limited formulary. It looks great on the surface. But if your doctor prescribes medications that are not on the formulary, you will have to pay the entire cost from your own pocket.

A limited drug formulary can really surprise you with added costs during the year.

3. Plans can list higher retail drug costs

When you purchase medications using your prescription drug Part D plan, your plan uses the retail costs to assess a value for that purchase. That retail cost, or value, is what they use to determine how soon you reach the donut hole.

The pitfall is that unless you research those retail costs, you can reach the donut hole faster than you anticipated.

For example, even though your prescription co-pay may be $ 20 on two different plans, Plan A may list your medication for $ 200 retail and Plan B may list it for $ 105 retail, which means you will get to the donut hole $ 95 faster with Plan A.

These are just a few of the common pitfalls that point to the importance of getting some help when researching your Part D prescription drug options.

What you see on Medicare.gov, for instance, may not be all of the information you need to make a decision, especially during Medicare annual enrollment.

The advantage of working with a Medicare specialist is better understanding the details of your plan options so you can save hundreds of dollars next year, rather than spend hundreds more than you expected.

Aaron Tidball is manager of the Allsup Medicare Advisor, oversees Allsup’s team of Medicare specialists, and educates and counsels Medicare beneficiaries, their families, employers, financial advisers and others on these benefits. He focuses on benefits coordination issues, and helping customers navigate complicated Medicare program provisions and choices during health care coverage transitions.

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