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Clients often ask us for help with Medicare planning. The rules can be confusing, and making assumptions can be costly. Cardan Capital Partners Co-Founding Partner Marti Awad recently teamed with Carol Janz Booth of Group Insurance Analysts Inc., to share some tips to help you make proactive choices when it comes to your Medicare coverage.

A frequently asked Part D drug question is: “ What payment stage am I am in? ”  We write this article as a follow up to Getting the Biggest Bang for your Part D Buck republished September 3, 2021.

How much you pay for a covered drug depends on which payment stage you are in when you fill the prescription.  You may move from one payment stage to the next within the calendar year.  If you are currently enrolled in a Medicare Part D prescription drug plan, you receive a monthly personalized prescription benefit statement by mail or electronically.  We recommend you keep these summaries for the current year to reference and understand the movement through the stages. These are not bills, but summaries of your prescription drug fulfillment and payment.  They include useful information such as:  Out-of-Pocket Costs, Total Drug Costs, definitions, and any updates to the drug guide that affect the drugs you take.

Ms. Janz Booth is a Licensed Colorado Health Broker, Senior Health Plan Specialist and Certified Gerontologist

Each Part D drug plan groups medication into one of five tiers.  The amount you pay depends on the drug’s tier and what stage of the benefit you have reached.  If you take multiple drugs that are in different tiers, you could be in Stage 1 for one drug and Stage 2 for another. Some tier 1 and tier 2 drugs are NOT subject to a deductible. This varies from plan to plan, year to year.

Tiers and costs: You need to use the online formulary (list) provided by your current drug plan to determine what tier your drug is in and how much it will cost.

Stage 1: Yearly deductible – This is the amount you pay before a plan covers your prescription costs. Plan deductible ends when total prescription costs reach $445 ($480 in 2022).

Stage 2: Initial Coverage – During this payment stage, the drug plan pays its share of the cost of your drugs and you pay your share of the cost. This is also called the Initial Coverage Period.  You generally stay in this stage until the amount of your year-to-date “total drug costs” reaches $4,130 ($4,430 in 2022).

*”Total drug cost” is the total of all payments made for your covered Part D drugs. It includes: what the plan pays, what you pay and what others (programs or organizations) pay for your drugs.

Stage 3: Coverage gap – When your drug costs and plan payments for the year reach $4,130 ($4430 in 2022), you enter the Coverage Gap State. You pay 25% of the cost for the formulary generic and brand name drugs.  You stay in this stage until your out-of-pocket costs for the year reach $6,550 ($7050 in 2022).

Stage 4: Catastrophic coverage – After your out-of-pocket costs for prescription drugs reach $6,550 ($7,050 in 2022), the plan pays most of your drug costs for the rest of the year. You pay the greater of 5% or $3.70 for generic drugs ($3.95 in 2022) and $9.20 ($9.85 in 2022) for all other drugs. The plan pays the rest.

Use preferred plan pharmacies versus standard.  Check you plan each year to see what pharmacies are preferred.

Marti Awad, CFA, CFP®, JD, LLM in taxation and Founding Partner of Cardan Capital Partners

Marti Awad, CFA, CFP®, JD, LLM in Taxation and Founding Partner of Cardan Capital Partners

If you see mistakes or have question on your monthly summaries, you can look for answers on the website of your plan or call customer service. You have the right to make an appeal or complaint.

Be a smart consumer of your Part D prescription plan and review the new plans each upcoming year during the Annual Enrollment Period beginning Oct 15th to Dec 7th for an effective date of Jan 1st the coming year.  Plans in each state change, formularies change and companies change.  What is a wise consumer choice for you this year, may not cover some of your drugs the next. This is one Medicare plan not to let go into “auto-pilot”.   Be smart and be well.






The content contained in this article is meant for educational purposes and is not an endorsement of Group Insurance Analysts Inc. Information presented is not meant to be a complete discussion of Medicare, Medicare Part D, nor plan-specific benefits. All expressions of opinion are as of its publishing date and are subject to change.

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