The adage, “An aspirin a day keeps the doctor away” may still ring true for some, but the rising costs of prescription drugs seems incurable. Recent data shows that drug costs continue to rise faster than inflation.1
Relief is being provided
Medicare beneficiaries can breathe a little easier now that the Inflation Reduction Act is taking full effect. Starting in 2023, the covered insulin copay was capped at $35 per month. In 2024, cost sharing above the catastrophic threshold was eliminated. In 2025, no Medicare beneficiary will pay more than $2,000 in copays and deductibles for covered drugs. In addition, the government has provided greater controls on premium increases. Finally, starting in 2026, the government is negotiating lower drug prices for the most highly utilized drugs.
About 80% of all Medicare beneficiaries are enrolled in a Medicare prescription drug plan2. The changes implemented these last few years make these plans more valuable than ever. However, even more help is available if you know where to look. Consider the following ways to maximize your benefits—and your savings.
Assistance programs
Medicare’s Part D Low-Income Subsidy, also called the Extra Help Program, is designed for those with limited income. The program covers many out-of-pocket costs such as premiums, deductibles, copays, and coinsurance for those who qualify. Starting in 2024, eligible individuals benefited even more due to the expansion of the Extra Help Program.
Generic vs. brand name
If there’s a generic version of a brand-name drug, Medicare gives a price incentive to choose the generic since they usually offer the same quality and efficacy as brand-name drugs. They’re so popular that many plans, pharmacies, and doctors automatically choose the generic version unless there’s a compelling reason to justify the brand name. Still, it’s a good idea to check with your pharmacy to be sure you are receiving the generic if it’s available.
Get familiar with your formulary
A formulary is a list of all the drugs covered by a prescription drug plan. Each drug is assigned a pricing level, known as tiers. Your out-of-pocket drug costs will largely depend on which tier each drug falls into. Typically, drugs in lower tiers are least expensive; drugs in higher tiers cost more.
When considering a new drug plan, check the plan’s formulary to be sure the drugs you take are covered. There may be special requirements such as individual deductibles for a particular drug, and you can find out which other covered drugs might be available in the same category.
Choosing a pharmacy
Drug plans have provider networks, which include pharmacies that negotiate pricing with the plan. Your best pricing options will usually come from a network pharmacy. Some plan networks include preferred and standard pharmacies to offer a choice in cost-sharing. Out-of-network pharmacies are least likely to offer discounts to plan members.
If you take daily maintenance drugs for an ongoing health condition, a mail-order pharmacy may offer the lowest pricing. Most plans and pharmacy chains have relationships with established mail-order providers and can often provide a 90-day supply for added convenience.
Discount programs
For added savings, consider a prescription discount card such as GoodRx, SingleCare, and others. These cards work like coupons and can’t be used with Medicare prescription drug plans, but they may offer a less costly alternative than what’s covered by your plan.3 Before signing up for a discount card, check to see if the medications you take are covered.
Reevaluate your coverage
Medicare’s annual enrollment period (October 15 through December 7) is the time to evaluate your Medicare coverage and shop around to see if there’s a better option for you. Look for changes in pricing and the plan’s formulary. There may also be new plans to consider, and existing plans may no longer be available. If you want to change to a new plan outside annual enrollment, you would have to qualify for a special enrollment period that allows you to switch plans without waiting.
Medicare Prescription Payment Plan
Beginning in 2025, If you have high out-of-pocket drug costs, the Medicare Prescription Payment Plan (also known as M3P) may be beneficial to you. This is a program created under the Inflation Reduction Act that requires Part D prescription drug plans to provide enrollees with the option to pay out-of-pocket drug costs with monthly payments over the course of the plan year instead of all at once to the pharmacy. Program participants will pay $0 to the pharmacy for covered Part D drugs, and Part D plans will then bill you monthly for any out-of-pocket drug costs you incur while in the program. Pharmacies will be paid in full by the Part D plan.
If you face high out-of-pocket drug costs, this program can help you manage the costs by spreading them out over the course of the plan year. While this program is available to anyone with Medicare Part D, if you have high drug costs earlier in the plan year, you are more likely to benefit from the program. If you are eligible for the Low-Income Subsidy, enrollment in the Extra Help program is more advantageous than the Medicare Prescription Payment Plan. You can opt in to the program at any time during the plan year.
If you are interested in this program, please contact your prescription drug plan or your pharmacy.
When it comes to your health, Alight is on your side––with advocates who can help you navigate the costs of care and prescription drugs. You should also ask questions of your doctor and pharmacist about any medication you’re prescribed––and the best way to find savings.
Sources
1Drugmakers to raise US prices on over 250 medicines starting Jan. 1
2How Will the Prescription Drug Provisions in the Inflation Reduction Act Affect Medicare Beneficiaries?
3Am I allowed to use a Drug Discount Program instead of my Medicare Part D plan?
