Prescription drug costs can be a significant problem for older adults. According to a 2018 report published by the CDC, more than 87% of adults 65 and older take at least one prescription drug per month, and almost 40% take five or more prescription drugs monthly.
If you’ll be at least 65 before 2022, it’s worth looking into how Medicare Part D prescription drug coverage may save you money, especially if you are already taking multiple prescriptions.
The Medicare Open Enrollment is from October 15, 2020 to December 7, 2020 for those who are already at least 65. Those turning 65 in 2020 or 2021 can take advantage of a special enrollment period.
Here’s what you need to know about changes to Medicare Part D for 2021.
Reduced insulin costs
One significant change to Medicare Part D for 2021 is a reduction in insulin costs for some diabetics. Patients who are part of a participating Medicare Part D plan will pay only $35 out of pocket for a 30-day supply of insulin.
The Centers for Medicare and Medicaid Services (CMS) estimates that those who need insulin should save an average of $446 in out-of-pocket costs for insulin for the year. If you are a diabetic who requires insulin, it’s worth shopping around for an enhanced Medicare Part D plan that’s participating in this new, voluntary insulin pricing scheme.
Changes to deductibles, co-pays and the donut hole
Here are the annual updates to the standard Medicare Part D deductible, initial coverage limits (when you enter the donut hole), TrOOP (when you exit the donut hole), and catastrophic coverage co-pays.
1. The initial deductible will increase by $10 to $445 in 2021. This means that you’ll pay slightly more before Medicare Part D begins paying it’s share if you have a plan with a standard Initial Deductible. After the deductible is met, you’ll pay 25% of covered costs up to the initial coverage limit. Some plans may offer a $0 deductible.
2. The initial coverage limit (ICL) will go up from $4,020 in 2020 to $4,130 in 2021. This means you can purchase prescriptions worth $4,130 before entering what’s known as the Medicare Part D donut hole, which has historically been a gap in coverage.
Thanks to cost sharing with your Medicare Part D plan and the drug manufacturers, being in the donut hole isn’t nearly as expensive as it used to be, and exiting from it may be easier than you’d think.
During your time in the donut hole, you’ll pay 25% for brand name drugs. The manufacturer will give you a 70% discount during this time, and your Medicare Part D plan will pick up the remaining 5%.
The 25% you pay, plus the 70% discount from the manufacturer, will count toward your combined TrOOP (see below), which is when you exit the donut hole.
For example, if your brand-name drug costs $100, you would pay $25, your Medicare Part D plan would pay $5, and you’d get a $70 discount from the manufacturer. A total of $95 would count toward meeting your TrOOP.
The situation is different for generic drugs. You still pay 25% yourself, and your Medicare Part D plan covers the other 75%. However, only the 25% you pay yourself counts towards meeting your TrOOP.
If your generic drug costs $100, you would pay $25, your Medicare Part D plan would pay $75, and a total of $25 would count toward meeting your TrOOP.
3. The Medicare Part D total out-of-pocket threshold will bump up to $6,550 in 2021, a $200 increase from the previous year. The true (or total) out-of-pocket (TrOOP) cost marks the point at which Medicare Part D catastrophic coverage begins. Under catastrophic coverage, you pay only a small co-payment for covered drugs for the rest of the year.
4. Catastrophic coverage co-pays will cost between $.10 to $.25 more in 2021 than in the previous year. You will now pay $3.70 for generic drugs and $9.20 for brand-name drugs, up from $3.60 and $8.95, respectively.
Still have questions? Visit myGNP.com/Medicare-Part-D or talk with your pharmacist.