By Harry P. Thal
The Centers for Medicare and Medicaid Services (CMS) has announced how the 2020 prescription benefit will be covered for the Medicare Prescription Plans (PDP) and the Medicare Advantage HMO plans that cover medication (MA-PD).
It is a “good news-bad news” scenario, as some people will be helped, and others will be paying more. Insurance plans are allowed to design their prescription benefits with a DEDUCTIBLE if they so choose. The maximum the law will allow next year is $435 up from the current $415. Some PDP plans always set a deductible, but other plans waive the deductible on certain “tiers” of medications, typically their preferred generics (Tier 1) and some the straight Generics (Tier 2).
If there is a deductible, and you have satisfied it, or if no deductible, this year you will find that you have $4,020 worth of medication that will be covered. This amount is not what you have paid at the pharmacy cash register, but rather what the insurance plan has established as the “negotiated list price.” Often this is a bogus number which has no basis in reality. (I will often recommend a PDP plan with a very high medication cost and recommend a coupon to buy the medication without the insurance – saves hundreds of dollars a year.)
Once you have hit the $4,020, which was $3,820 in 2019 you enter the DONUT HOLE. This can be a good thing for some, and not so much for others. The donut hole is now 25 percent. In the original legislation, the consumer was to pay 100 percent of the cost of the medication when in the hole. The brand name pharmaceutical companies kicked in 50 percent assistance, so initially, the cost in the donut hole was cut in half. Insurance plans contributed 5 percent. Today, the manufacturers kick in 70 percent, you pay 25 percent, so 95 percent is credited to your “maximum out of pocket” for this phase. Beginning in January 2020, generic drugs also will provide 75 percent discounts. So, then the combination of assistance from the manufacturers and you reach $6,350 ($5,100 in 2019) you will have some financial relief.
If you hit your maximum out of pocket, you will enter the last level, the Catastrophic Level. Generic and Preferred Brand drugs will have an out of pocket cost of $3.60 per 30-day refill and $8.95 for other drugs with a cost of $72 or less. If the medication costs more than $72, you pay 5 percent of the negotiated retail cost.
I am anticipating many changes in the plans for the coming year. One plan will be eliminating a fixed dollar copay and changing to a percentage on their tier 4 drugs. Consumers will be receiving their “Annual Notice of Change” and “Summary of Benefits” in the mail in September explaining the changes, if any, on their current plan. Beginning October 1, you will be able to review all the plans on the market.
SAVE THE DATE: Medicare and a Movie will be presented on Wednesday, October 9, at the Reel Cinema in Wofford Heights. This is my annual program where I explain Medicare for persons turning 65 or first joining the program and for those who are already receiving Medicare benefits. It is for all, and people with other insurance agents are welcome. Doors open at 12:15 p.m. with the pre-show. Seminar begins at 1:00 p.m. and stay after for this week’s feature film.
Harry P. Thal, MA, is a licensed insurance broker in California (0621106) and 27 other states. His offices are in Kernville. He is a member of the Society of Certified Senior Advisors and Past-President of the Kern Association of Health Underwriters. He may be reached at 760-376-2100, e-mail firstname.lastname@example.org or visit him on the web at www.harrythal.com.