How to Choose a Medicare Prescription Drug Plan

People turning 65 choose a Medicare prescription drug plan to cover prescription medication cost while they are covered by Medicare. These plans, also known as Medicare Part D, are separate from the Medicare Part B benefits, and are provided by health insurance companies. Seniors can change their Medicare prescription drug plan once a year after the initial enrollment, every year between November 15 and December 31. Since your prescription drugs and the costs and coverage provided by your Part D plan may change from year to year, reviewing your Part D options annually may save you money.

Agent or No Agent

If you have a health insurance agent for long term care or Medicare Supplement coverage, your agent can help you choose the best Medicare prescription drug plan for your situation and apply for the new plan. You can also purchase a Part D plan directly from the insurance provider or renew your existing coverage without an agent. Your premiums and other costs for Medicare prescription drug coverage are the same whether you purchase your Part D plan through an agent or directly from the company.

List Your Drugs

Whether you choose your Medicare prescription drug plan with the help of an agent or using the resources at Medicare.gov, you will first need to list all the drugs you take. Drug plan formularies treat generics and brand names differently; if you take a generic, list the generic name, not the brand name. The list also needs to include the daily dosage you take of each prescription drug. Some plans require you to get your prescription drugs by mail order or at specific pharmacies to get the best prices, so you will need to note your pharmacy preferences, too

Compare Plans

Once you have all your drugs listed, you can compare the costs of Part D plans available in your area. If you are dealing with an agent to choose a Medicare prescription drug plan, the agent can take your drug list and find the best plans. If you’re working on your own, you can search for plans through the Medicare.gov website to get cost information for plans. When comparing plans, add up the premiums, deductibles, and drug costs for the year.

Cost Considerations: Premium and Deductible

The premium is the monthly cost of your Part D plan. Some Medicare prescription drug plans have $0, or very low, premiums. These plans often feature a deductible instead, which you pay out of pocket before drug coverage begins. Part D plan providers may also add a deductible to a plan to minimize premium increases.

When deciding between Medicare prescription drug plans, compare each plan’s total yearly costs, including both the annual premiums and the deductibles. A plan with a zero-dollar premium and a $500 annual deductible requires you to pay more out of pocket before receiving benefits than a plan with a $37.50 monthly premium, which totals only $450 annually.

Drug Costs

Drug costs and coverage are usually the deciding factor when choosing a Medicare prescription drug plan. A plan with higher premiums or deductibles, but with more generous drug coverage and lower copays on the drugs you take, may cost less overall.

Medicare.gov or your agent can estimate the anticipated cost of your prescription drugs for the year in different plans based on the drugs you currently take. Unlike other types of supplemental Medicare coverage that have uniform benefits no matter what company provides the insurance, each Part D plan has its own drug formulary that lists the covered drugs and your copays for each. The plan with the best benefits for your set of drugs may not be the best deal for your spouse or friends.

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