Prescription  Drug Plans

Your monthly premium is how much you pay per month to keep the plan active. The premium can vary greatly depending on your personal needs and preferences. But regardless of the premium, it is ideal that you understand the pricing of your medications and if those medications are covered under a given plan. Premiums can increase from year to year so be sure to read all communication from your insurance carrier to be notified of any changes.

Prescription drug plans have deductibles just like individual or employer health insurance plans. The deductibles for each plan are located in the plan's summary of benefits. But when comparing multiple plans it is best to seek out professional help from an insurance broker. There are plans available with a $0 deductible, but just because a deductible is $0 doesn't mean that it would be the best plan for you. Lower deductible oftentimes means a higher premium, keep this in mind.

Medicare Prescription drug plans usually have four different parts of coverage: (1) Deductible, (2) Initial Coverage, (3) Coverage Gap, and (4) Catastrophic Coverage. Your monthly premium does not affect these phases.

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The initial coverage phase is where most people stay throughout the year. The initial coverage phase has an initial coverage limit. The initial coverage limit is a fixed dollar amount that separates the initial coverage phase from the coverage gap. Once you surpass the limit you will move into the next phase. For 2023, the ICL is $4,660 and is based on the plan's formulary drugs retail value.

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Every plan that offers prescription drug coverage has a list of drugs that a specific plan covers this is called the formulary. The formulary is there as a guide to ensure that your medications are covered under a given plan. The formularies are usually updated on an annual basis, so it is important that you review this document annually. Any changes to the formulary will be sent to beneficiaries with a document called an annual notice of change (ANOC).