DonutHole: Planner Blog
It’s a new year and a new decade! This is my favorite time of year for planning, especially with all of the beautiful planners and calendars out there. I still love a good old-fashioned paper planner for so many reasons. We live in a busy fast paced world and there are so many things to keep track of. Calendars are great for planning for things in the future like appointments, remembering birthdays, family commitments and paying bills. They are also a good tool to use for meal planning and tracking goals. I like to use planners for budgeting and to track expenses throughout the year so I can see where I can make improvements or cut out unnecessary costs.
One area I really focus on helping my clients with is planning and preparing for is their annual prescription drug costs. It is very important to know where you stand each year especially with the dreaded donut hole, officially known as the coverage gap. In 2020, you will pay 25% of the cost of generic and brand name medications in the coverage gap. If you are on Tier 3, 4 or 5 drugs (think inhalers, insulin or brand name blood thinners) your monthly prescription costs could be very high, and especially tough for those on fixed incomes.
There are four stages to Medicare prescription plans that can make an impact on your finances and affect your bottom line. It is extremely important you understand these phases so you can be better prepared. Please Review the four stages below to learn how costs other than your monthly premium may change.
The Annual Deductible Stage
Most PDP plans have an annual deductible for Tiers 3-5 prescriptions. You begin in the Annual Deductible stage when you fill your first prescription of the calendar year. During this stage, you pay the full cost of your drugs until the amount of your deductible has been reached. Then you move to the Initial Coverage stage.
The Initial Coverage Stage
During this stage cost sharing begins, which means you pay a copayment or coinsurance for prescription drugs until you reach your plan's initial coverage limit.
The Medicare Coverage Gap Stage
When you enter the Medicare Part D Coverage Gap stage, you have reached the Coverage Gap. This stage begins after your total drug costs have reached $4,020 in 2020. You exit the Coverage Gap stage when your total out-of-pocket costs (except for premiums) have reached $6,350 in 2020. Out-of-pocket costs include your annual deductible, as well as your copayments or coinsurance.
** Some members, such as those who are part of the Extra Help program, do not enter the Coverage Gap.
The Catastrophic Coverage Stage
You enter this stage after your out-of-pocket costs have reached $6,350 in 2020. During this stage, you usually pay a low copayment or coinsurance for prescription drugs.
I feel it is important for you to know there are many key factors when choosing your Medicare Prescription Drug Plan (PDP). There is no “one-size-fits all” plan and sometimes the most expensive plan is not always the best. Your medication list is specific to you and should be treated as such. I find that is the most important variable when helping someone choose the most appropriate coverage to fit their overall needs. And really, the main objective is to find the best plan to cover medications at the lowest price. That is why I spend the time to do an analysis for every person I help.
KEY FACTORS WHEN CHOOSING A PDP PLAN:
current medication list
cost
zip code
formularies & drug tiers
preferred or standard network pharmacies
My last tip to you would be to re-evaluate annually. Prices, formularies, deductibles and even the very existence of your plan can change drastically. During the standard enrollment period—October 15 to December 7 is a good time to do this. And a great way to prepare annually is to grab a planner or use your current system and start writing down what you are spending on your medications monthly at the pharmacy to see where you can make improvements or adjustments for the following year.
If you would like more information or a free PDP analysis click here to contact me