This week’s question from Laurie
I’m turning 65 soon. I read all your columns and feel pretty confident I understand most of the differences between the two types of Medicare plans, Supplements and Advantage. However, I’m confused about Part D prescription coverage with Supplements vs that provided by Advantage Plan HMOs or PPOs as well as how they might differ among Medicare Advantage (MAPD) plans or companies. The more I investigate this, the more complicated it looks, with the obvious danger being the top tier drugs and what they cost in the various coverage stages. It seems like these are a real potential sinkhole, especially for anyone with a cancer diagnosis, but I’m perplexed as to how to evaluate them and wonder whether there are significant differences among plans?
Answer
Prescription Coverage on Medicare
Neither original Medicare nor a Supplement provides prescription coverage, which as Laurie stated, is known as Part D. Therefore, those who choose a Supplement, aka Medigap, need to purchase what is known as a Stand-Alone Part D plan. It’s a separate policy with a separate premium and insurance card. The costs for the most popular Part D plans in 2022 are $7 to around $23 in addition to the Supplement premium. Stand Alone Part D plans have a big deductible on Tiers 3, 4, and 5 drugs, $480 in 2022, which is going to be increased to $505 in 2023. Tier 1 co-pays range from $0 to $4, Tier 2s generally from $4 to $8, while Tier 3 co-pays are in the $45 range. One concern for Stand Alone Part D is Tier 4 medications can be costly, as much as 50% of the retail, which could result in a large out of pocket expense. Tier 5s, which are known as specialty drugs, are billed at 25% with virtually every plan and company. It’s much harder to evaluate and choose Stand Alone Part D plans for the average person. We do that for new clients and every single one of our active Part D clients each AEP, to ensure they’re always on the plan that saves them the most money and eliminate the stress and confusion that trying to research them on their own can cause.
Part D is included with Advantage Plans and there’s no separate card needed at the pharmacy. Those on MAPD plans have the convenience of paying only a single premium and having just one card for both medical and prescription coverage. There’s also no deductible on any Tier drug. Almost all plans offer $0 co-pays on Tier 1 medications while Tier 2s can range from $0 to over $10. I must say the plans with Tier 2 co-pays that high are not competitive on generic prescriptions or premiums which are almost 300% or more than the most popular plans among our clients. In addition, a 5-day hospital stay is almost $1,000 higher and the amount of ancillary benefits offered by the more expensive plans I’m referring are almost nil.
Sorry about veering of course for a minute, but I’m always trying to help seniors save money and I estimate there are upwards of 50,000 people on these overpriced, uncompetitive plans. It never ceases to amaze me how many remain on them year after year when others are available with the same company that are less expensive, have lower copays, and provide more dental and OTC benefits.
Drug CoPays
Getting back to drug copays on MAPD plans, Tier 3s are also in the $45 range with all plans and companies. Tier 4 average co-pays are $100 instead of a percentage of the retail. Like Stand Along Part D plans, Tier 5s are also billed at 25%. Two of the three most popular MAPD companies in Western PA have the same drug coverage on all their plans. The other has four entities under their umbrella and those drug plans can be slightly, although not significantly, different. Generally, there’s not nearly as much time that needs to be spent researching drug coverage with MAPD plans and seldom are there any changes that negatively impact the member year to year.
Laurie is correct that the higher Tiers, especially specialty drugs, can be financially burdensome. And that’s on both Stand Alone Part D and MAPD plans. Laurie used the term sinkhole, a clever way of describing what is known as the Donut Hole, which both plans have. Let me explain how that works. In 2022, once someone with Part D coverage receives $4,350 worth of retail medication, he or she goes from paying the regular co-pay to being charged 25% of the retail cost on all Tiers. $4,350 may sound like a lot, but with the average brand name drug around $600 per month and the new non-insulin injections at $1,000, that $4,350 can be exhausted in short order. Co-pays on Tier 3s, which most of the drugs I’m referring to are, would go from $45 for a 30-day supply to $150 and $250. There’s no relief until about $2,500 has been spent on medications for the year at which time the price drops to 5% of the retail cost. This is known as the Catastrophic phase.
Laurie’s fear is cancer medications and for good reason. Any infused chemo is a medical benefit covered in full by Original Medicare and a Supplement, but only at 80% for those on Advantage Plans, something that often goes undisclosed by other agents. Oral chemo, increasingly more common, is a Part D benefit and almost always a Tier 5 drug. We’ve had clients taking them that had a retail cost as much as $15,000 for a 30-day supply! A drug this expensive would cost $750 per month even in the Catastrophic phase. If someone were to need it for the entire year, they would be out of pocket $10,000 and it wouldn’t matter if drug coverage was through a Stand Alone or MAPD plan.
There are programs and foundations that can supply relief in these situations, and we have a member of our team, Tony Diroma, who has the title of Prescription Drug Case Worker. Any client who finds themselves in the Donut Hole or is taking ridiculously expensive medications can work with him one and one. Tony’s job, which he is very good at, is to find available help and get applications completed. We offer this service to active clients at no cost.
Thank you!
If you have any questions or concerns regarding this column topic, or would like to make an appointment for a no-cost consultation, please feel free to give us a call – we would be happy to help. I’d like to remind everyone that I do a live call-in talk show called Medicare A to Z every 1st and 3rd Monday of the month on WMBS Uniontown, 590AM and 101.1FM, from 1 to 3 PM. You can listen in on their website, wmbs590.com.
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