To figure the total cost of a given Part D prescription drug plan, take the following steps:
Add up the Part D drug plan's initial costs: monthly premium plus deductible. Some Medicare Part D drug plans charge little or no monthly premium, while most charge a monthly premium of $25 to $50 (or even more, in a few cases). The first cost to consider is a Part D plan's monthly premium.
In addition to premiums, most Part D drug plans have a yearly deductible (limited by Medicare to $310). This means that, for drugs covered by the Part D plan, you must spend this deductible amount out of your own pocket before the plan begins to pay anything. (A few Part D plans offer what's called "first dollar" coverage, which means there's no deductible at all.) When you consider a particular Part D plan, you have to add the plan's deductible amount to the monthly co-payments in order to get a complete picture of your initial costs with that plan.
Add up the monthly co-payments the Part D plan would charge for your regular medicines. Premiums and deductibles are not your only costs with Medicare Part D drug plans. In fact, for most people the largest costs are the co-payments you must pay with each prescription you fill. The usual co-payment is 25 percent of the cost of the drug, but Medicare Part D plans often charge different co-payments for different medicines. To get an accurate picture of how much a particular drug plan would cost you, you'll have to add up what your co-payments would be for all of the prescription medicines you regularly take. First, see what the co-payment would be for the brand name or generic version of the drug, whichever is available from the drug plan. If both are available, check the figure on the version you prefer.
Medicare Part D prescription drug plans charge a co-payment per prescription filled. To know how much your co-payments will be, you need to check how many doses of your medicine the Part D plan covers in any one filled prescription. Then, to find out what that drug will cost you, calculate how often you would need to fill the prescription, based on the number of doses you take. Let's say, for example, that you take 200 milligrams a day of "Pill A," which comes in a dose of 100 milligrams per pill. That means you'd take two pills a day, or about 60 pills a month. If each prescription is for 30 pills and has a co-payment of five dollars per prescription, that drug would cost you about ten dollars a month.
See if the Part D drug plan offers any coverage in the "doughnut hole." If and when your total prescription drug costs for the year reach $2,840 (combining what the plan pays and what you pay out of pocket), you will pay out of pocket for almost the full cost of your drugs until your drug costs reach a "catastrophic limit" for the year, which is $4,550 in your out-of-pocket costs (not total drug costs). If you reach the catastrophic limit, Part D plans restart coverage, paying 95 percent of further total costs for covered drugs.
This large gap in coverage between the $2,840 (total drug costs) cutoff point and the $4,550 (out-of-pocket costs) catastrophic coverage point is known as the "doughnut hole." In this doughnut hole during 2011, a Part D plan will pay only 7 percent of the cost of generic drugs; however, you can buy brand-name drugs at a 50 percent discount. A few high-premium Part D plans pay a slightly greater percentage of costs while you're in the doughnut hole. If your drug expenses are high and you're likely to find yourself in the doughnut hole for more than a few weeks a year, this coverage may be valuable to you even though it's likely to be accompanied by a higher monthly premium.
Find out if the pharmacy where you regularly shop participates in the plan.
Most large pharmacy chains participate in most Medicare Part D plans. But it's possible that the pharmacy where you regularly get your medicines doesn't participate in a particular Medicare Part D plan that you're interested in. If so, you might be forced to go to a different pharmacy that's less convenient for you, or to order your medicines online.
