Your costs begin with your monthly premium. Them, depending on the plan, you will have to pay a deductible before you start receiving any benefit. Once you have paid your deductible, you will still pay a portion of your prescription. This is known as co-insurance. You will receive the benefit until you reach the initial coverage limit. At this point in time, you must pay the total cost of the prescription. You will not receive any benefit again until you hit the catastrophic coverage limit. This coverage gap is sometimes referred to as the “donut hole”.
To understand your total cost of your Medicare Part D there are six things to consider:
1. The Premium
When you view the plans sold in your state, you will notice that the premiums vary widely. The amount you pay for the premium is the starting point of your analysis. Lower premiums usually translate to higher costs elsewhere in the coverage.
2. The Deductible
A lower premium plan most likely has a higher deductible. You pay all of your medication costs until your deductible is met. Choose a plan with a deductible amount that you can safely afford to pay for that year.
3. Co-Insurance
Once your benefit starts, you may be paying co-insurance. Co-insurance also varies by plan and by medication. If you are already taking medication regularly, determine how many times you will be filling the prescription during the year and how much your coinsurance or co-pay will be on an annual basis.
5. Coverage Limit
Your plan will pay up to a coverage limit. Then you are responsible for the total cost of your medication until you reach an total out of pocket limit for the year. The amounts that are included in your out of pocket limit include the deductible and all of the co-pays you paid until the coverage limit.
6. The Formulary
The formulary is the list of drugs covered by the plan. If you are already taking medication, make sure that your prescription is on the formulary. If it is not a preferred medication for your condition, you will pay more.
If you need more information about costs, check with your state or contact private insurance carrier for more detailed info.