Drug coverage is where Medicare plans differ most from one another, and it is also where small details have the biggest effect on what you pay. If you want to compare Part D plans AEP is the time to do it: the Annual Enrollment Period runs October 15 through December 7, and a new drug plan you choose then starts January 1.
This article is educational only. Medicare.gov and 1-800-MEDICARE (TTY 1-877-486-2048) are the official sources for plan and coverage information.
This guide explains the three things that matter most when you compare drug coverage, formularies, tiers and pharmacies, and how to check each one against your own prescriptions. It applies to stand-alone Part D plans and to the drug coverage built into many Medicare Advantage plans.
Start With an Accurate Medication List
Every comparison depends on this list, so make it precise. For each prescription, write down:
- The exact drug name, and whether you take the brand or the generic
- The strength and form, such as tablet, capsule, injection or inhaler
- How many you take and how often you refill, monthly or every 90 days
- The pharmacy you use, or whether you use mail order
Include medications you take only some of the year, such as a seasonal inhaler. A plan that looks great for your daily pills can look different once the occasional prescription is added.
Part 1: The Formulary
A formulary is the plan’s list of covered drugs. Every Part D plan has one, and they are not identical. A drug covered by one plan might not be covered by another, or might be covered only in a certain form or strength.
When you check a formulary, look for each of your medications by name and strength. If a drug is not on the list, find out whether there is a covered alternative your doctor would be comfortable with, or whether the plan has an exception process. Do not assume a drug is covered because it was covered by this year’s plan; formularies can change from year to year, and your Annual Notice of Change will flag changes if you are staying put.
Part 2: Drug Tiers
Plans sort covered drugs into tiers. Lower tiers usually include many generics and carry lower cost-sharing. Higher tiers often include brand-name and specialty drugs with higher cost-sharing. The names and number of tiers vary by plan.
Two things are worth knowing about tiers:
- The same drug can sit on different tiers in different plans. That is one of the main reasons two plans with similar premiums can produce very different yearly costs.
- Tiers determine whether you pay a copay or coinsurance. A copay is a set amount. Coinsurance is a percentage of the drug’s cost, which can vary through the year and is often used on higher tiers.
Look at the tier for each of your drugs in each plan, and note whether the plan’s deductible applies to that tier.
Part 3: Restrictions on Coverage
Even when a drug is on the formulary, the plan may attach rules to it. Watch for:
- Prior authorization: your doctor must get the plan’s approval before it covers the drug
- Step therapy: the plan wants you to try a different drug first
- Quantity limits: the plan covers only a certain amount within a period
These rules are common and not a reason by themselves to avoid a plan. But if you already take a medication under one of these rules, it helps to know whether a new plan would ask your doctor to go through the process again.
Part 4: Pharmacies
Many plans have a network of pharmacies, and some have preferred pharmacies within that network. Filling the same prescription at a preferred pharmacy can cost less than at a standard network pharmacy. Out-of-network pharmacies generally are not covered except in limited situations.
Check how each plan treats the pharmacy you actually use. If you have relied on the same local pharmacy for years, that relationship may matter to you more than a modest price difference. Mail order is another option in many plans and can be convenient for maintenance drugs, so compare that price too if it fits your routine.
Putting It Together: Price a Full Year
Once you know where each drug sits in each plan, estimate what a full year would cost:
- Twelve months of plan premiums
- The deductible, if your drugs fall under it
- Your copays or coinsurance for each refill through the year
The Medicare Plan Finder on Medicare.gov does this math when you enter your drugs and pharmacy, and it is worth using even if you also work with an agent. Part D also now includes a yearly limit on what you pay out of pocket for covered drugs, and Medicare.gov lists the current details. That limit can matter a great deal for people on expensive medications.
If You Are in a Medicare Advantage Plan
Most Medicare Advantage plans include drug coverage, so the same checks apply, but you are comparing the medical and drug sides together. A plan with a strong formulary for your drugs might not include a doctor you need, and the reverse can happen too. Check both before you decide.
If You Get Extra Help
If you qualify for Extra Help with Part D costs, your costs and enrollment options may differ from what is described here. Medicare.gov and 1-800-MEDICARE can explain how Extra Help applies to you.
A Quick Checklist for Each Plan
Before you settle on a drug plan, confirm for each of your medications:
- Is it on the formulary, at your strength and form?
- What tier is it on, and is that a copay or coinsurance?
- Does it need prior authorization, step therapy or have a quantity limit?
- What does it cost at your pharmacy, and at a preferred pharmacy or by mail?
If you would like a general overview of how drug coverage fits with the rest of your choices, our page on Medicare plans in Florida is a good companion to this guide.
Frequently Asked Questions
When can I change my Part D drug plan?
During the Annual Enrollment Period, October 15 through December 7. A new plan you choose then takes effect January 1. Other enrollment periods may apply in specific situations, and Medicare.gov can explain them.
What is a Part D formulary?
It is the plan’s list of covered drugs. Each plan has its own formulary, and a drug covered by one plan may not be covered by another, or may be covered only in certain strengths or forms.
Why does the same drug cost different amounts in different plans?
Plans place drugs on different tiers, use copays or coinsurance differently, apply deductibles differently and have different preferred pharmacies. Those differences add up over a year even when premiums look similar.
Does my choice of pharmacy really change what I pay?
It can. Many plans have preferred pharmacies where cost-sharing is lower, and mail order may be priced differently from a retail counter. Enter your actual pharmacy when you compare plans.
What should I do if a drug I take is not on a plan’s formulary?
Ask your doctor whether a covered alternative would work for you, and ask the plan about its exception process. If neither fits, that plan may not be the right choice for your medications.
Want Help Running Your Drug List?
If you would like a licensed agent to compare your medications across the drug plans we offer, call Maher Insurance Group at (866) 220-2834, or complete our short online questionnaire and we will follow up at a convenient time.
Maher Insurance Group is a licensed independent insurance brokerage and is not affiliated with or endorsed by the U.S. government or the federal Medicare program. We do not offer every plan available in your area. Any information we provide is limited to the plans we do offer. Contact Medicare.gov or 1-800-MEDICARE for information on all of your options.
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