Medicare prescription drug plans formulary and tiers explained
Medicare prescription drug coverage is not included in original Medicare nor in Medicare supplemental insurance, but can be added by selecting insurance plans run by private insurance providers, approved by Medicare. Policies and their cost varies significantly as per plan and region, which makes it very important to know and compare all your options, before you decide on a plan. Although it is optional, persons on Medicare should seriously consider adding prescription drug benefits to their original Medicare plan. Not only may it help you curb the cost for your medication, but you may also face a late enrollment penalty, which will be added each month to your premium, if you decide to enroll at a later time.
Two Different Kinds Of Medicare Prescription Drug Plans
Medicare insurance for drugs is available in two different ways; either as a PDP (Prescription Drug Plan), also called Part D of Medicare, or a included in a Medicare Advantage Plan. The difference is that you may add a Part D plan to any kind of Medicare insurance (as long as you are not already insured for prescription medication): add Part D to your original Medicare, to your supplemental insurance (Medigap), or even to a Medicare advantage plan that does not include prescription drug benefits.
As a legal requirement, all Medicare prescription drug plans must provide a basic coverage, but many plans add additional benefits. Part D plans will cost you a monthly premium, while there may not be an additional premium if you have a Medicare advantage plan that includes drug coverage (MA-PD).
Medicare Prescription Drug Plan Formulary And Tiers
Virtually all plans are however structured at cost-sharing plans, and you will have co-payments and deductibles to meet. Furthermore, these plans typically are created using a network of pharmacies you need to use in order to be covered. The purpose of prescription drug plans is to help lessen costs and cap your bills, not to cover 100% of your medication.
All plans use a ‘formulary’, which can be described as listing of medications the plan insures. If the drugs you are using are not on a plan’s formulary, you may want to find a different insurance policy, or – if approved by your doctor – switch to medication that is covered. You cannot assume all formularies are created equal! You may find your medication included in one plan’s formulary, but not in another. Likewise you will discover a drug in different ‘tiers’, depending on the plan. Prescription medications are split into separate price levels referred to as tiers with Tier 1 being the lowest level. Generics and cheap drugs are in lower tiers; branded and expensive prescription drugs are typically in higher tiers.
Most plans have a network of participating drug stores and pharmacies you need to use to be able to receive the lowest cost-sharing. When you purchase from a provider that is not inside your plan’s network, you will have a higher co-payment. Always make sure that your local drugstore or preferred online pharmacy is in the network.
Unfortunately, there is very little consistency amid prescription drug tier designations and cost-sharing, which makes it difficult to decide upon a policy. While it is complex to compare Medicare prescription drug plans, the most important considerations when finding the best plan for you is to consider each plan’s costs, formulary, and your pharmacy choice.
