Question from Pat:
Can you tell us what the changes are going to be in 2024 for those who have original Medicare parts A&B, a Supplement, and a prescription plan? I have read that the co-pays for Tier 3 drugs we’re paying currently will be billed based on a percentage of the drug’s retail price in 2024? Is that true?
Answer
It’s true and not good news. It’s also one of the more significant developments in Medicare since I got into the business in 2008, and unfortunately, it’s going to be very costly for those who take Tier 3 drugs, which are also known as Preferred Brand. Just a few examples of some common Tier 3 drugs are Eliquis, Ozempic, Trulicity, Trelegy, Advair, Jardiance, Januvia, Xarelto, and Restasis. There are plenty of others as well.
Let me explain. In 2023, people with Stand Alone Part D have paid a flat co-pay of $42 to $47 for a 30-say supply on Tier 3 drugs. Most also had to meet a $505 deductible as well. In 2024, there will no longer be flat co-pays for those same medications. Instead, the costs will be 18% to 25% of the retail. Let’s use Ozempic, a commonly prescribed diabetes medication, as an example of how the new pricing on Preferred Brand meds will work. It retails for around $1,000 for a 30-day supply. In 2024, instead of paying $42 to $47 for Ozempic, the monthly cost will be $180 to $250. It’s almost like being in the Donut Hole all year long! And for many, if not most, a deductible of $545 will still need to be met first. Taking that into consideration, the total annual cost for Ozempic or another similarly priced Tier 3 in 2024 is going to be $2,400 to $3,000 for those on Supplements and Stand-Alone Part D plans, $500 to $1,500 more than it was in 2023. Because Advantage Plans don’t have a prescription deductible and the average co-pay will be $40 for Tier 3 drugs instead of the percentage from day one, the annual cost of Ozempic will be in the $1,700 area in 2024, significantly less than those who remain on Supplements. If the co-pay is only $40 and there’s no deductible, why would someone end up paying $1,700? Because of the Donut Hole. You see, on all Advantage plans, once one receives $5,030 worth of retail prescription drugs, which will take just 5 months with an expensive medication such as Ozempic, they too will be forced to pay 25%.
We’re expecting more people than ever to consider leaving a Supplement and transition to an Advantage Plan. Between lower costs on Tier 3 drugs in 2024, the savings in premiums which I estimate are $1,200 per year or more on average, the true dollar value of the extra benefits such as comprehensive dental, no cost routine vision and hearing exams, allowances for glasses and hearing aids, a free gym membership, Over the Counter (OTC) benefits, debit cards to help pay for groceries and medical co-pays, it’s going to be the right move for many.
But not all. Please don’t make the decision until you sit down and have this discussion with me or another of our licensed and experienced agents. It is so important people learn what to expect with the change, how much Supplements and Advantage Plans differ, and some of the very real risks of making the move to an HMO or PPO. You likely won’t get the full, unbiased comparison with any other agent or agency because the incentive to move people is great due to the extremely generous commissions paid on Advantage Plans and the fact that there is no commission at all if the person who has the Supplement decides to retain it. If that is what’s best, we will encourage you to do that. I’m a 100% believer in the important role Advantage Plans have come to play for those on Medicare. They’re vital to so many, especially those on fixed incomes and others who would struggle or simply not be able to afford a Supplement. They’ve also supplied literally tens of thousands of dollars in premium savings for those who remain just relatively healthy over a five-to-10-year period. However, I also have come to witness how many people on Medicare have been encouraged to choose an HMO or PPO who shouldn’t have. Far too often they were misled or even lied to when they were told that Advantage Plans work exactly like Supplements, only cost less and come with extra benefits. I predict The Health Insurance Store is going to do more applications for Advantage Plans between October 1st and December 7th than any other Annual Election Period (AEP) in the 16 years we’ve been in business. However, that by no means makes it best for you as an individual.
Those who indeed want to consider moving from Supplement to Advantage Plan are encouraged to make an appointment for AEP, which only lasts 53 days. We’re anticipating a very busy Medicare season so feel free to make an appointment prior to October 15th. We want to fit everyone in and allow people ample time to make an important and possibly permanent decision. Because remember, once you leave a Supplement, you may never be able to enroll in one again due to medical underwriting and companies’ ability to deny coverage based on current and previous health conditions.
If you have questions or would like to set up a time for a no cost consultation in one of our offices, over the phone, or via a virtual internet meeting, give us a call. Feel free to email me personally as well. Aaron@getyourbestplan.com.
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If you would like to make an appointment for a no cost consultation to go over Medicare options, individual ACA marketplace plans, you’re an employer and would like a second opinion on your group policy, or are interested in life insurance, give us a call or email me personally at aaron@getyourbestplan.com. And keep the great column questions coming! Also, I am now licensed in over 20 states and able to help people choose and enroll in Advantage, Supplement, and Part D plans throughout the country.
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