Every medicare eligible recipient needs to find the best prescription drug plan and review whether it is still the best at the end of every year. Unless you have coverage under a type of plan called a Medicare Advantage Plan that includes Part D drug coverage, you must sign up separately for drug coverage.

When you enroll in Medicare Part B you should also sign up for Medicare Part D. It is important to sign up immediately, even if you do not regularly take any prescription drugs at that time, because you will be charged an extra penalty on future premiums for delaying.

The amount of the premium penalty can change yearly. For 2018, it is possible that you could have a late-enrollment penalty reaching as high as an additional $48.70 per month that must be paid in addition to your 2018 Medicare Part D or Medicare Advantage plan premium.

Only individuals who have what is called "creditable" coverage provided elsewhere, such as from a company plan, can avoid this penalty. If you think this may apply to you, it is a good idea to contact your plan administrator to make sure you have a plan that meets the minimum requirements.

How much you will pay annually is an important criterion in choosing the best plan. The average nationwide monthly premium for 2017 is $34, although plan costs vary depending on the plan you choose and where you live. You will generally only want to choose a plan with low premiums if it also has the lowest overall cost per year, including the costs for the drugs you take. If you choose a plan that has a higher monthly premium, it will usually have more liberal payouts, so that any additional costs that are incurred when claiming plan benefits will be lower.

If your income is above certain limits (2018: $85,000 single/$170,000 married), you will pay an additional premium. If you’re a higher-income beneficiary with Medicare prescription drug coverage, you’ll pay monthly premiums plus an additional amount, which is based on what you report to the IRS.

Because individual plan premiums vary, the law specifies that the amount is determined using a base premium. If you’re a higher-income beneficiary, the amount is deducted from your monthly Social Security payments regardless of how you usually pay your monthly prescription plan premiums. If the amount is greater than your monthly payment from Social Security, or you don’t get monthly payments, you’ll get a separate bill from another federal agency, such as the Centers for Medicare & Medicaid Services or the Railroad Retirement Board.

Here are the finalized 2018 Medicare Part D Prescription Drug Plan Parameters:

Initial Deductible-
will be increased by $5 to $405 in 2018.
Initial Coverage Limit (ICL)-
will increase from $3,700 in 2017 to $3,750 in 2018.
Out-of-Pocket Threshold (or TrOOP)-
will increase from $4,950 in 2017 to $5,000 in 2018.
Coverage Gap (donut hole)-
begins once you reach your Medicare Part D plan’s initial coverage limit ($3,750 in 2018) and ends when you spend a total of $5,000 out of pocket in 2018.
In 2018, Part D enrollees will receive a 65% Donut Hole discount on the total cost of their brand-name drugs purchased while in the donut hole. The discount includes, 50% discount paid by the brand-name drug manufacturer and will apply to getting you out of the donut hole (or TrOOP), however the additional 15% paid by your Medicare Part D plan will not count toward your TrOOP.
For example: If you reach the donut hole and purchase a brand-name medication with a retail cost of $100, you will pay $35 for the medication, and receive $85 credit toward meeting your 2018 total out-of-pocket spending limit.
Medicare Part D beneficiaries who reach the Donut Hole will also pay a maximum of 44% co-pay on generic drugs purchased while in the coverage gap (a 56% discount).
For example: If you reach the 2018 Donut Hole, and your generic medication has a retail cost of $100, you will pay $44. The $44 that you spend will count toward your TrOOP or Donut Hole exit point.
Minimum Cost-sharing in the Catastrophic Coverage Portion of the Benefit-
will increase to greater of 5% or $3.35 for generic or preferred drug that is a multi-source drug and the greater of 5% or $8.35 for all other drugs in 2018.
Maximum Co-payments below the Out-of-Pocket Threshold for certain Low Income Full Subsidy Eligible Enrollees-
will increase to $3.35 for generic or preferred drug that is a multi-source drug and $8.35 for all other drugs in 2018.

Steps for Choosing a Good Part D Prescription Drug Plan:

Selecting the best plan can potentially save thousands of dollars over the course of just one year of coverage. There are some insurance advisers that are willing to help you select the best plan for your own individual needs. Getting advice from such an adviser is the best approach for many. But if you want to spend some time on your own to review what is available, you should start your search at www.medicare.gov/part-d.

You will then use the "plan finder" on Medicare's website and follow the steps to provide the information that will help you determine how available plans for next year compare with your present plan.

Compare Annual Drug Costs-

It is very important to enter any drugs, whether prescribed or not, so that it can be checked to see whether a particular plan covers it and how much of the cost will be paid.

After entering all of the necessary information, the results will show the available plans in your area that will be sorted and listed in order of annual cost to you. You can then click on an individual plan name and get more details about that plan choice.

The information will enable you to compare plans to see what "tier" of coverage your drugs are in and how much they cost at any pharmacies you choose. Some plans will provide lower costs if you are willing to shop at specific "preferred" pharmacies.

Compare the Coverage Rules-

When comparing pharmacies, there may be some extra rules concerning specific drugs. Those rules will be shown under three titles:

· Prior Authorization- Each plan will list those drugs that will only be approved by prescription from your doctor under certain specific medical circumstances.

· Quantity Limits- Here you can see where each plan may differ in the amount of a specific medication you can get when making a purchase.

· Step Therapy- Here you will find whether the plan will require you to use other alternative drugs first.

Star Ratings-

Every plan listed will have a star-rating, with 5 stars being the best. These ratings are based on factors such as customer service, how promptly claims and any appeals are handled, and how many people have complained about the plan.

In Summary-

Taking the time during the open enrollment period (that begins on October 15th and ends on December 7th) to review your Medicare Part D prescription drug coverage is necessary and will usually be a very worthwhile effort, even it it just ends up reassuring you that you do have the very best coverage for your own needs.

Greg Tinaglia

Last Updated: 09/28/2017