First, the good news. If you have clients with prescription drug coverage through a Medicare Part D or Medicare Advantage plan, they may benefit from some trends and developments in 2014.
• The prescription drug “doughnut hole” is about $80 smaller in 2014 because the coverage limits have changed. The doughnut hole is the gap of coverage in which the individual pays a greater percentage of drug costs. For 2014, the initial coverage limit will be $2,850 (versus $2,970 in 2013), at which point beneficiaries enter the doughnut hole; the out-of-pocket threshold will be $4,550 ($4,750 in 2014), at which point beneficiaries exit the doughnut hole. Catastrophic coverage then begins with the beneficiary paying just 5 percent of drug expenses and their plan covering the rest for the remainder of the year.
• Seniors in the doughnut hole in 2014 also will pay less for their prescriptions than they did in 2013. They’ll still pay 47.5 percent of the cost of brand-name drugs, the same as in 2013. But they will pay less for their generic drugs, 72 percent in 2014, down from 79 percent in 2013.
• The Part D base beneficiary premium is $32.42 in 2014, up slightly from $31.17 in 2013.
• Brand-name drugs such as Nexium and Cymbalta are set to lose patent protection in 2014, opening the door for lower cost generics to enter the market.
The bad news, however, is that it’s likely your clients with Medicare are paying more than they need to for prescription drugs.
A recent study from the University of Pittsburgh found that 95 percent of Medicare beneficiaries don’t choose the most cost-effective Part D plan. This is important because prescription drugs can make up such a sizable portion of health care costs.
Many factors can contribute to less-than-optimal Medicare plan choices. Seniors may have dozens of plans to sort through, leading to “choice overload.” This makes it tempting to take a shortcut, such as choosing a plan that a friend or family member has, despite having different health-care needs. Or seniors may choose a plan that looks good in an advertisement rather than doing the research required to find a plan that meets their drug needs at the lowest cost.
Another pitfall for many seniors is to stay with the same plan year after year, even though their medications have changed or the plan itself has changed.
Four Steps For Managing Prescription Drug Costs
Your clients may not realize that they could save hundreds (even thousands) of dollars over the year by switching to a prescription drug plan that’s a better fit.
You can offer your clients valuable guidance by helping them to understand the financial impact of their Part D plan and drug choices. Following are steps to more cost-effective coverage decisions.
1. To begin, your client should review her drug list with her doctor. It’s important for patients to periodically review their prescription drug list with their primary care doctor. Together, the doctor and patient can assess the appropriateness of the patient’s current drug regimen. Such a meeting also provides an opportunity for your client to discuss with the doctor whether a less expensive brand or a generic equivalent may work just as well as the drug she currently takes.