The saying, “You get what you pay for” is quite true. After all, you wouldn’t buy a cell phone at the Dollar Tree, right? This is how most people approach their Part D plan:
If I don’t pay at least x dollars per month for my Part D plan, then it’s probably not any good.
Before I dissect this idea, let me start with the basics.
Part D is the part of Medicare that pays for prescription medications. It’s administered by private insurance companies and is technically “not required”, but it really is - if you don’t have one and don’t have other creditable Part D coverage, you will be penalized if and when you DO sign up for a Part D plan. The penalty is paid monthly and lasts the rest of your life.
While Part D is included with many Medicare Advantage plans, it is not always. When exploring a Medicare Advantage plan, you should ask if yours would include Part D. If it DOES include Part D, the rest of this blog is still important to understand, but you’ll also have to weigh the medical component of the plan WITH the prescription component. If you instead opted for a Medicare Supplement Insurance plan and/or Original Medicare, prescription coverage is not included.
Prescription coverage provided by the VA and TRICARE is considered “creditable coverage”, so you will not be penalized for not signing up for a separate Part D plan.
The cost structure for Part D plans may contain:
a. Monthly premium
b. Annual deductible up to $505 (in 2023)
c. Copay/coinsurance for each medication, determined by the “Tier”, or category that each medication is placed into. Tiers 1-2 are generally generic medications that are low cost. Tiers 3-5 are generally brand name or specialty medications that are higher cost to you.
Some Part D plans have no deductible. Some have a deductible for certain Tiers. Some have a deductible for ALL Tiers. This is an important distinction when comparing plans.
Now, back to our question at hand: Is an inexpensive Part D plan a good idea? The answer is it depends. Let’s say for example that you’re looking at a plan with a low monthly premium. Let’s also say that you only take ONE prescription. Maybe it’s even a generic one, (like lisinopril or atorvastatin.) The plan you’re looking at covers it as a Tier 1 with a $0 copay and does not charge the deductible for Tier 1 medications. This low-premium plan MAY be a great option for you.
Yeah, but what if I need another medication down the road?
A low-premium plan will likely still cover many medications that you could potentially be prescribed in the future. You may have to meet the plan’s deductible for that medication - but you probably would have had to do that anyway if you were on a higher cost plan. If, by chance, you are prescribed a medication that your plan does not cover, you could ask your doctor for an alternative covered medication. In many cases, there are other medications available that “do the same thing.” If, by chance, an alternative treatment is not available, you have a few options:
Pay out of pocket for the medication (sometimes not viable)
Work with your insurance broker to see if a Special Enrollment Period is available to get you into a different Part D plan mid-year.
Wait for Annual Enrollment Period (Oct 15 - Dec 7) to find a new plan that will cover what you need.
Selecting the right Part D plan is important, but don’t rule out the “cheap” options just because they’re cheap. It might be the best option for you, especially if you’re pretty healthy and on a budget. However, it’s always best to narrow it down to 1-3 plans and compare to see what you feel the most comfortable with. Remember that you are not married to any plan, as Annual Enrollment always gives you the chance to change.