Are you frustrated by the cost of prescription medications – even with Medicare coverage? You’re not alone. Fortunately, there are some methods and strategies to help minimize your out-of-pocket expenses.
Read on to learn several proven strategies that can help you substantially reduce your cost of medications and avoid falling into the dreaded Medicare “donut hole.”
What Is The Medicare Donut Hole?
The term donut hole is a metaphoric reference to the coverage gap in drug costs for Medicare recipients.
Understanding what costs are applied during the different stages of the yearly Medicare cycle of drug coverage is paramount in lowering out-of-pocket costs. Medicare drug plans mask the true cost of medications behind copays.
The four stages of this yearly cycle are:
- Stage 1: Yearly deductible: You pay this amount (maximum of $480 in 2022) before your plan starts to pay.
- Stage 2: Initial coverage: You pay copays or coinsurance for covered prescription drugs until you and your plan spend $4,430 (in 2022).
- Stage 3: Coverage gap (donut hole): Once in the donut hole, standard copays are no longer relative, and you become responsible for 25% of the retail cost of drugs whether they are generic or brand name.
- Stage 4: Catastrophic coverage: When true out-of-pocket (TrOOP costs) reach $7,050 (in 2022), you pay a minimal copay or coinsurance for covered prescription drugs until the end of the year.
For example: If your drug costs $425 per month at negotiated retail prices, it can land you in the donut hole after the 10th month of the year. The donut hole for 2022 begins at $4,430. Ten months of a $425 retail drug adds up to $4,250, so you’ll enter the donut hole in November, and the drug will cost more than $100 per month. Medicare drug stages reset yearly on January 1.
How To Avoid The Donut Hole
Take these steps to slow or avoid your approach to the donut hole each year.
- Switch a brand name for a lower cost generic drug: Your doctors and pharmacists can give you information on which brand name drugs are available as generics, which can offer substantial savings. Always check with your prescribing doctor before switching prescription medications.
- Samples: At every appointment and with every doctor, ask for samples of any drugs you have been prescribed. Many drug manufacturers provide doctors with a limited quantity of drugs to promote their products. The doctor decides how much of the drug to give to their patients while supplies last. These samples are not counted toward your initial coverage limit and can create substantial savings.
- Medicare’s Plan Finder tool: This handy tool can help you find accurate information on the cost of drugs and determine which plan and pharmacy are the most cost-effective for you. After filling in some confidential personal information, the site will direct you to an important page of resources. Here you will find information on prescription drug assistance programs, pharmaceutical company discounts, community-based programs, and nonprofit and retail drug discount cards available in your area.
- Qualify for Part D Low-Income Subsidy (LIS) also known as Extra Help: Extra Help is a federal program that helps pay for some of your out-of-pocket costs for Medicare prescription drug coverage. If your annual income is up to $19,320 in 2022 ($26,130 for couples) and your assets are below specified limits, you may be eligible for Extra Help. Those enrolled in a State Medicare Savings Program (MSP), Medicare and Medicaid, or are on Supplemental Security Income (SSI) automatically qualify for Extra Help.
- Use two pharmacies: Using two pharmacies may seem inconvenient, but this strategy can be extremely cost-effective. Many pharmacies, including those located in grocery stores, offer certain generic drugs for a low cash price, usually $4 or $5 per prescription. If you pay this cash price, your Medicare coverage doesn’t come into play, and your prescription is not added to calculations that take you closer to the donut hole.
Purchase your generic drugs and pay the cash price at a pharmacy that does not have your insurance information. Purchase your brand name drugs at another pharmacy and pay the insurance copay. This strategy will reduce your out-of-pocket costs in Stage 2, and often keep you from falling in the Stage 3 donut hole.
It’s key to use a pharmacy that does not have your insurance information. If a pharmacy has your insurance information, the accounting department may apply your insurance coverage on record to acquire reimbursement – even for cash purchases. This will add the retail drug cost to the total used in calculating your Stage 2 $4,430 limit, placing you in the donut hole and nullifying this important strategy.
- Use prescription assistance programs (PAPs): These programs have helped millions of people slash their drug expenses. They are free to use and work with your existing prescriptions to produce substantial savings. Several have an app for your phone or tablet that will enable you to use them on the go. Some popular APs include:
- Use preferred pharmacies: Most Prescription Drug Plans (PDPs) have preferred pharmacies where you’ll receive a lower price for using their services. Also, check out the mail order program offered by your plan as it’s often the least expensive option.
- Use in-pharmacy coupons: For some of the more expensive drugs, your pharmacist will often have a coupon program that will give you a lower price than your insurance copay.