Like other types of health insurance, Medicare prescription drug plans cover a portion of the costs, and you pay the rest when filling a prescription. In other words, it is a cost-sharing arrangement. People who qualify for financial assistance from the government (known as "Extra Help") pay less. It is important to keep in mind that plans are likely to increase their premiums and costs each year, so it’s a good idea to review your plan options during Open Enrollment every year (October 15 - December 7) to make sure that you are enrolled in the plan that offers the most coverage for your prescription medications.
Medicare prescription drug plans are allowed to organize the cost-sharing arrangements in different ways, as long as they do so fairly as required by law. For example, some plans have higher premiums because they offer some coverage through the “Coverage Gap”, but provide the same dollar value of benefits in the long run. You may be paying more for your drugs because you have fallen into the coverage gap, (also called the doughnut hole). The coverage gap is when the amount you pay for your prescriptions suddenly increases. In the past, most people had to pay the full cost of their drugs in the coverage gap.
Due to the Affordable Care Act, you no longer have to pay the full cost of your drugs during this period, and the gap will gradually diminish until it is complexly gone in year 2020. You can find more information about closing the Coverage Gap here.
Because everyone’s prescription drug needs differ, each person will have different out-of-pocket costs at any one point in time. Only people with very high annual prescription drug costs, such as people with MS on a disease modifying medication, can be expected to reach the Coverage Gap and possibly the Catastrophic Coverage limit each year. Some may hit the Coverage Gap in January, and others later in the year or not at all. Those who do hit the Coverage Gap can find it very financially draining, and planning their personal finances in anticipation of it each year should be an important goal. Click here for details about Medicare prescription drug cost changes.
Help is available to eligible Medicare beneficiaries who need assistance with Medicare Part D costs.