For Americans on Medicare who need expensive medications, drug costs can get steep. Unlike many private health insurance plans, Medicare Part D, which is Medicare’s prescription drug coverage, has no out-of-pocket limit on costs each year.
In fact, in 2019, nearly 1.5 million people enrolled in Medicare Part D spent more than the catastrophic coverage threshold (which is $6,550 in 2021) for their medications, according to a study from health policy nonprofit Kaiser Family Foundation.
Once you hit the catastrophic coverage threshold for prescription drug spending, you remain responsible for coinsurance or copay for your medications, no matter how much money you must spend. If your meds are pricey, this can result in a large outlay by the end of the year.
For instance, for medications used to treat cancer, hepatitis C, multiple sclerosis and rheumatoid arthritis, median yearly out-of-pocket costs in 2019 ranged from $2,622 for a hepatitis C drug to $16,551 for a leukemia drug, according to another KFF analysis.
Drugs administered by a doctor are covered under Part B, which has no out-of-pocket limit under Original Medicare. Biogen’s
new Alzheimer’s drug, Aduhelm, would fall under Plan B if approved for Medicare; it has a list price of $56,000 annually and could cost Medicare beneficiaries $11,500 per year in coinsurance.
If you’re facing high prescription costs on Medicare, there are strategies that can help you lower the tab. Here are a few things to try:
1. Know your medications
Understanding how your drugs are covered can help lower your costs. Here’s what to consider:
Use the Plan Finder: When shopping for Medicare or Medicare Advantage plans, be sure to enter your prescription drugs into the Medicare Plan Finder so you can see how plans cover them. (Medicare Advantage is an all-in-one alternative to Original Medicare, offered by private insurers, that usually includes Part D drug coverage.)
Get a Medigap plan: If you take drugs that you don’t administer yourself (those you get at a doctor’s office or an infusion center), they’ll be covered by Medicare Part B. If you have Original Medicare, you can pick up Medicare Supplement Insurance (Medigap) that will help with Part B coinsurance and copayments.
Compare with Medicare Advantage plans: While Part B under Original Medicare has no out-of-pocket cap, Medicare Advantage plans are required by law to limit how much you can spend in a year. Consider whether Medicare Advantage would lower your drug costs.
Some insurers also differ on where they place coverage for certain drugs — under Medicare Part B or Part D — so it’s worth noting where yours lands.
“Under Part B, most people have some form of supplemental coverage that’s helping to cover the cost sharing, so they’re not completely exposed to the cost sharing that may be under Part D, which doesn’t have a hard cap on out-of-pocket costs,” says Gretchen Jacobson, vice president of Medicare for The Commonwealth Fund, a private foundation focused on promoting a high-performing health care system.
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2. Compare pharmacies
Medications can cost different amounts depending on the pharmacy. Use a site like GoodRx to compare prices for a drug at local pharmacies, or call a few pharmacies to ask them what your prescription will cost.
Likewise, look up your Medicare plan’s preferred pharmacies to make sure you’re buying from one of them. Or you may be able to get a lower price by going through your insurer’s mail-order pharmacy.
“Insurers develop networks of pharmacies just like they develop networks of doctors,” Jacobson says. “They get preferred pricing.”
3. Appeal your plan’s coverage
In some cases, Medicare companies may require people to try an alternative drug or change the coverage of the drug from Medicare Part B to Part D by having people give themselves the medication at home. You can appeal this decision and ask for your plan to continue to cover your original drug (rather than an alternative) or continue to cover it under Part B.
(Why might you prefer Part B coverage? Part B has an out-of-pocket cap under Medicare Advantage, or you can buy a Medigap plan to help cover coinsurance and copays under Original Medicare.)
If a newly prescribed drug isn’t covered by your plan, you can ask for a formulary exception, which can result in your medication being covered or being covered at a lower price. This can take some time — your medical team will have to provide documentation that the drug is medically necessary.
“What’s striking and concerning is that relatively few denials are appealed,” Jacobson says. “Many people may not realize they can appeal coverage determinations, and most coverage determinations that are appealed are actually overturned.”
4. Talk to your infusion place
If you’re getting an infused drug at a medical facility or care center, talk to your provider about what success they’ve had with Medicare companies. Their billing support staff and social work department may have good intel about which insurance plans are best about covering their services and medications.
“They’re used to this,” says Katy Votava, president and founder of Goodcare, a consulting firm focused on the economics of Medicare. “Rely on your providers.”
5. Try the generic
It’s old advice but still good to try: If there’s a lower-cost version of the drug that treats your condition, ask your medical provider if it might be an appropriate alternative.
If you’re starting a new drug, you may be able to try samples first from your physician’s office before getting a full prescription. That way you can see if the drug works well for you.
6. Check drug assistance programs
“Nearly every large pharmaceutical company has a drug assistance program,” Jacobson says. These programs can provide financial assistance to people who qualify. You can look up your medication on Medicare’s program finder to see if there’s an assistance program.
Your state may also offer a pharmaceutical assistance program. Medicare has a finder for those as well.
People with limited resources and income may qualify for Medicare’s Extra Help program, which assists with costs like monthly premiums, deductibles and prescription copayments within a Medicare prescription drug plan.
7. Shop plans
If you’re thinking of jumping to a Medicare Advantage plan, don’t let Part D be a secondary consideration.
“Often when people are trying to decide whether to go with Medicare Advantage versus traditional Medicare, they’re weighing other trade-offs like provider network and the out-of-pocket cap on Part A and Part B,” Votava says. “But drug coverage can be a very important part of people’s decisions.”
For instance, some Part D plans offer extra coverage during the “donut hole,” or the coverage gap that exists once you hit a certain threshold of out-of-pocket costs but haven’t hit catastrophic coverage yet.
When comparing plans, make sure to look at each drug plan’s formulary to see whether your current medications are covered. Keep an eye out, too, for limits on how much of a particular medication a plan will pay for in a year, or requirements that you try a less expensive medication before being approved for a costlier one.
“You’ve got to do some hunting and pecking,” Votava says. “But being an astute, smart shopper and spending the time is well worth it.”
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Kate Ashford writes for NerdWallet. Email: [email protected] Twitter: @kateashford.