If you are low-income, you may qualify for a reduced premium.
Ultimately, the costs you pay out of pocket will depend on a variety of factors:
- The drugs you use, and whether you opt for generics, when available
- Whether those drugs are listed on your plan's formulary
- Your plan itself, and its premiums
- Whether you qualify for reduced premiums or other subsidies or assistance
Out-of-Pocket Costs. If you choose to purchase prescription drug coverage under Medicaid, you will have to pay the following out of pocket costs:
Premiums. Each plan has a set premium that you will know in advance. However, if your income is more than $85,000, you may have to pay anywhere between $12.70 and $72.90 extra. The more you earn, the more you will be expected to pay for prescription drug coverage.
Deductibles. Your deductible is the amount you must pay out of pocket before your plan will begin to pay benefits. For the year 2016, the maximum allowable deductible by law is $360 per year. So you will have to pay up to $360 out of pocket, depending on your plan, before Medicare will pick up any of the cost of prescription drugs for the year.
Copayments and Coinsurance. A copay is a set amount you must pay with each new prescription after you have covered your deductible. Each plan has a different copay, but $10 to $25 per new prescription filled and covered by Medicare is not unusual.
Coinsurance is a percentage of the cost you pay for the prescription drug.
Example: If you have an 80-20 plan with a $10 copay and a $360 deductible, and you pick up a prescription that normally costs $1,000, and it's your first covered prescription of the year, you'll have to pay the following costs out-of-pocket:
- $360 deductible
- $10 copay
- $128 co-insurance. That is, 20 percent of the amount of your prescription after you pay the $360 deductible.
So that prescription will cost $488 out of pocket. But if you need to get it filled again before the end of the year, it will only cost you $210. That's 20 percent of the $1,000 drug cost, plus a $10 co-pay.
The Coverage Gap
Medicare part D has a coverage gap, sometimes called "the donut hole." This means that once your plan has spent $3,310 on prescription drugs for you (as of 2016), you will have to pick up some more of the cost. Your coinsurance will increase to 45 percent for brand-name drugs, and 58 percent for prescription drugs, up to certain limits.
The coverage gap does not apply to some lower-income individuals who qualify for a State Health Insurance Assistance Program (SHIP).
How to Lower Costs
You may be able to lower costs by using generics rather than name-brand drugs, by choosing a plan that has more coverage if you enter the coverage gap, by using a pharmaceutical assistance program or applying for a SHIP program. Discuss your coverage options with a HALO Insurance agent,