As inflation reaches unprecedented levels, many Americans feel the financial strain of not only the increasing costs of gas and food, but also the cost of prescription drugs. For seniors, the expenses associated with much needed medication can be a monthly challenge that people need support with. That is why it is important for us to know the 5 ways for seniors to reduce the prescription drug costs.
- the Many adults aged 65 and older take four or more prescription medications regularly, which can strain their finances because of the rising cost of prescription drugs.
- The prices of the top 20 most frequently prescribed brand-name drugs for seniors have grown almost ten times more than the average inflation rate in five years.
- The Affordable Care Act (ACA) made changes to the Medicare prescription drug plan that have reduced the donut hole. For example, the ACA provided a 50% discount on brand-name drugs for beneficiaries in the donut hole and additional discounts for generic drugs. However, the donut hole still exists, and many beneficiaries still struggle to afford their medications.
What is Medicare Part D?
The Medicare prescription drug plan (Part D) was created in 2006 as part of the Medicare Modernization Act to provide prescription drug coverage to seniors and people with disabilities. The plan is designed to help beneficiaries save money on their prescription drug costs. Still, the coverage gap, or the “donut hole,” has made it difficult for some beneficiaries to afford their medications.
What Are the Costs of Prescription Drugs?
Medicare Part D plans can determine the cost of prescription drugs based on the plan’s formulary, which is the list of drugs covered by the plan. It’s important to note that formularies can change yearly, so your out-of-pocket costs may also vary.
Enrolling in a Medicare Part D plan comes with many benefits compared to not having prescription drug coverage. These benefits include:
- A cap on out-of-pocket expenses
- Access to preferred pharmacies with lower costs
- Option to use mail-order pharmacy
- Set prices for drugs
Enrolling in a Medicare Part D plan as soon as you become eligible is highly recommended to avoid paying the Medicare Part D late enrollment penalty. This penalty increases every month that you go without drug coverage and is permanent, meaning you must pay the penalty for as long as you’re enrolled in Part D.
What is the “Donut Hole”?
The “donut hole” is a term used to describe a coverage gap in the Medicare prescription drug plan (Medicare Part D). This gap occurs when a person’s prescription drug costs reach a certain threshold. After that threshold, they are then responsible for paying a more significant portion of their out of pocket drug costs. This can be a significant burden for many seniors, especially those who take multiple medications.
One major factor contributing to the donut hole is the high cost of drugs. Drug manufacturers set prices for their products, which are as high as they can justify. Unfortunately, there is no mechanism to negotiate drug prices for Medicare beneficiaries. The inflation reduction act, passed in 2019, has slightly reduced the cost of drugs, but it’s still not enough to eliminate the donut hole.
If your senior loved one is facing high costs for their medication, exploring options to lower the cost of prescription drugs could result in substantial savings.
Here are 5 ways for Seniors to reduce the Prescription Drug Costs:
1. Switch to Mail-Order Pharmacy
Many Medicare Part D plans have a mail-order option that allows you to purchase 90-day supplies of your medications at a discounted price. However, not all drugs are available through mail-order pharmacies, so you must check with your plan to see if this option is available for your medications.
2. Get Rebates from Drug Manufacturers
Some Medicare Part D plans can offer lower costs to beneficiaries by receiving rebates to Medicare from drug manufacturers. These rebates are intended to help offset the cost of drugs for Medicare beneficiaries. However, the number of rebates a plan receives can vary greatly, and they are only sometimes passed on to beneficiaries in the form of lower out-of-pocket costs.
3. Switch to Generic Drugs
Generic drugs are bioequivalent (that means they do the same thing) to their brand-name medication counterparts but are typically much less expensive. The cost of a generic drug can be as little as a fraction of the cost of a brand-name drug. However, not all drugs have a generic equivalent, and in some cases, the brand-name drug may be more effective for specific individuals.
4. Get Extra Help from the State
Private insurance plans typically have more generous coverage than the Medicare prescription drug plan and may also have lower out-of-pocket costs. However, private insurance plans can be expensive and may not be accessible to all seniors.
Several state programs can help Medicare beneficiaries with the cost of their Medicare Part D prescription drug coverage. Some of these programs include:
- State Pharmaceutical Assistance Programs (SPAPs): These programs are run by individual states and provide financial assistance to eligible Medicare beneficiaries to help pay for their medication costs. Eligibility and benefits vary by state, so you must check with your state’s program to see if you qualify.
- Low-Income Subsidy (LIS) Program: This program, also known as “Extra Help,” provides financial assistance to low-income Medicare beneficiaries to help pay for their prescription drug costs. Eligibility is based on income and resources, and beneficiaries may qualify for help with costs such as premiums, deductibles, and coinsurance.
- Medicare Savings Programs (MSPs): These programs provide financial assistance to eligible Medicare beneficiaries to help pay for their Medicare premiums and cost-sharing. Eligibility is based on income and resources, and beneficiaries may qualify for help with costs such as premiums, deductibles, and coinsurance.
- Medicaid is a joint federal and state program that provides health coverage to low-income individuals, including those who qualify for Medicare. Medicaid can help pay for Medicare premiums and cost-sharing and provide additional benefits such as long-term care.
Contact your State Health Insurance Assistance Program (SHIP) or visit the Medicare website to determine if you qualify for any of these programs. They can help you understand your options and provide the application forms and information you need to apply.
5. Switch to a Low-Cost Drug
In addition to these strategies, there are other ways to save money on prescription drugs. For example, you can ask your doctor if there are any lower-cost alternatives to the drugs they prescribe. You can also shop for the best medication prices by comparing prices at different pharmacies.
One of the most effective ways to cut down on your Medicare prescription drug expenses is by selecting the right Medicare Part D plan that aligns with your medication regimen, utilizing available discounts, and opting for generic medications when possible. You can save thousands of dollars annually on drug expenses by following these simple steps. Although not every option may be suitable for every situation, it’s good to know that low-cost drug options are available.
Working with a licensed Medicare agent specializing in Medicare Part D plans can also significantly reduce out-of-pocket costs by reviewing your Medicare drug expenses every year.
Besides evaluating plans, utilizing discounts, choosing generic drugs, and opting for low-cost pharmacies, many Americans hope to find relief from high drug costs through legislation such as the Inflation Reduction Act of 2022. This Act has caps on Medicare Part D drug expenses and helps alleviate millions of Americans’ financial burden of prescription drugs.