Phase 1: The Prescription Drug Deductible

It’s early January which means Medicare Prescription Drug payment phases have just reset. And I hear this question:

“Dan, I just went to refill my medication and the pharmacist quoted me a co-pay almost double what I paid in December.”

Medicare Part D Prescription Drug plans reset each year on January 1. What that means is the prescription drug benefit levels start anew, for every Medicare enrollee, at Phase 1. (Some will proceed rapidly through to Phases II and III but I’ll cover how that happens in a follow-up post.)

Phase I: Deductible – the amount you pay before your prescription benefits begin.

Your Medicare Part D plan may have a deductible which can range from $0 to $405 in 2018. If your prescription plan has a deductible, be sure to ask what it applies to and how, if at all, this affects your medications.

• You’ll find there is often a relationship between the Part D plan premium and deductible. For example, plans with a $0 deductible have a higher monthly premium. Plans with lower premiums often include some prescription drug deductible.
• Plans with a deductible may differ, too. Some plans apply the deductible to all medications while other plans apply a deductible only to medications in the higher tiers 3, 4 and 5. (see below)
• Social Security’s Full Extra Help program will pay for the plan deductible.

So why was the prescription cost double what was paid in December?”

Before answering the question I asked the client to confirm the medication spelling, format and dosage; I wanted to check and be sure it was the same as I had noted the last time we reviewed the medication list. (It wasn’t, the doctor has changed two medications.)

Next, I checked the drug formulary specific to the plan the client enrolled in. I needed to confirm the drug is covered in 2018 and, if so, the Tier (1,2,3,4 or 5) assigned to it. (Wouldn’t it be great if the drug plans all assigned the same drug to the same tier level?)

I confirmed the medication was listed as covered and listed in the Tier 4 category with a $100 co-pay for a 30 day supply. That’s what this client paid in December. Ah, but the 2018 $100 deductible, while applicable only to Tiers 3, 4 or 5, kicked in this week making the total amount $200; double the December $100 co-pay.  (Once that $100 deductible is paid and out of the way it will not be charged again this year.)

Next in this Series:

Phase II: The Initial Coverage Phase
Phase III: The Coverage Gap, aka Donut Hole