How Should I Choose a PDP Plan?

Choosing a PDP plan

Choosing a Medicare PDP plan is a very particular and custom-tailored event - just as no two people are alike, no two people have the same healthcare needs

A Prescription Drug Plan (PDP) is also called Medicare Part D. It is optional and covers prescriptions only. If you opt to get a Medicare Advantage plan, called part C or MAPD, most of them have prescription coverage included. Some people keep original Medicare Part A (covers hospitals) and Part B (covers doctors, etc.) and buy a stand-alone PDP plan.  This is what’s known as, “going bare with Medicare.”  That may be a bad idea – read a post I wrote on the subject earlier by clicking here.  Oh, and you’ll need to buy a PDP if you purchase a Medicare Supplement plan, too.

So, how do you know which one is better for you? First you need to decide if you want to participate in a Medicare Advantage Plan. Researching these that are available in your area can be done by clicking here for the Medicare Planfinder. Have fun.  However, the remainder of this article deals with PDP (Part D), not Medicare Advantage Plans, but the logic is the same.

Assuming that you are shopping for a PDP, what do you look for? You need to take into account more than its premium when deciding if it’s the right choice for you. If you already take prescriptions, you want to make sure that your prescriptions are covered. You can ask the plan for a formulary, which is a list of all the drugs that they cover and their tiers.

Most of these plans will have the ability to look at their formularies online. Some have a system where you can enter your drugs and dosages and they will help you select their best plan. Medicare has a plan finder that will help you find a plan in your area. Note: it helps find medical and prescription plans so you need to be careful to select what type of plan you are looking for to get the most accurate results.

Explanation of Tiers

Tiers are levels of cost sharing. They dictate what your copay will be usually in increasing levels of cost for higher tier levels. At the highest tier often is a percentage not a direct amount of cost.

It is important to check not only that your prescriptions are on the formulary but at what tier/copay. The tiers correspond to copays that are different for each plan. An example of in-network tiers structure would look something like this example: Tiers 1-4: $0/$20/$47/50% On your formulary it would say the drug name and T3 to explain that the drug is covered at tier 3. In this example, this prescription would be $47 for tier 3.

Deductible versus Premiums

You may be subject to a deductible before you have any coverage. If you factor in a plan with a deductible and a low premium, you may be best of with a higher premium and no deductible. During the period of a deductible, you pay the full cost of a drug with no coverage until your deductible is met. At the point where you meet the deductible your costs will be the tiers as discussed above. Can you afford to pay out of pocket at the beginning of the year?

Other Things to Consider

Some plans may require you to use mail-order, or you may need to use certain pharmacies to get coverage. Be sure to read the entire requirements and understand what your duties are in order to receive your benefits.

The Takeaway

Choosing a prescription drug plan should be based on:

  • Do they cover your prescriptions?
  • Are you better off with a deductible at the beginning of the year or a slightly higher premium throughout the year?
  • Do you care if your prescriptions are mail ordered or you go to a retail pharmacy?