Ask the Medicare Specialist

This weeks new material will be featured in this Sunday 3/21 Edition of the Post-Gazette.

QUESTION:

From Frank: I’m in my last year of working prior to retirement and currently covered by my employer provided medical plan. I have an annual overall medical and prescription deductible of $1,400 and then 10% coinsurance after that until I hit a Maximum Out of Pocket (MOOP). I ordered my first refill for 2021 of a very expensive prescription that I take and was quoted $2,400 as my portion (which I understand and was okay with). Good news: the drug manufacturer paid that entire cost under their Copay Card. Bad news: it appears their Copay Card is not eligible for use with Government programs, such as Medicare, even in the Doughnut Hole. Why is that?

ANSWER:

No drug manufacturers honor these Copay Cards for those on Medicare. The reason is it costs them much more money because of the “Doughnut Hole,” which employer plans don’t have. Most people on employer health plans have a copay for brand name medications between $25 and $100. You’re an exception Frank, because you have a qualified high deductible Health Savings Account compatible plan, aka QDHP, where the deductible must be met first before anything is paid for by the plan, including prescriptions. However, once your MOOP has been met, which I know based on what you were quoted for your first refill is $2,400, your medication would be fully paid for by your insurance. This means the manufacturer wouldn’t have to discount the drug one penny thereafter. Drug manufactures who are offering to lower or eliminate co-pays, are only providing what amounts to a very small discount on a medication that in your case retails for $3,200 a month.

People on Medicare who fall in the Doughnut Hole, which would happen in February with a medication as expensive as Frank’s, must pay 25% of the cost for brand names drugs. One that retails for $3,200 would be discounted $2,400 per month if they allowed those on Medicare to use a Copay Card. Once approximately $2,300 out of pocket is spent on medications for the year, which Frank would reach by May, one enters the Catastrophic Stage and then pays 5% of the retail cost, which would result in the manufacturer eating the other 95%, or $3,040 per month for the next 7 months. We’re talking about $30,000 in discounts in one year compared to around $1,200 for someone with an employer plan, or the $2,400 Frank received. I’m sure it’s now crystal clear why Big Pharma doesn’t honor Copay Cards for those on Medicare.

We still need to address Frank’s upcoming dilemma however, because when he enrolls in Medicare Part B, he’s looking at close to $4,000 in out-of-pocket costs for the medication in question, as opposed to the $0 he’s paying now. The first order of business in this situation is to see if he qualifies for PACENET, which has income limits of just over $29,000 for a single person and $39,000 for a married couple. Frank doesn’t, so the next step is to research if the manufacture of his medication has a Patient Assistance Program (PAP) that usually provides medications for free to those who qualify. They do, and it has an income limit of 500% of the Federal Poverty Level, which is $64,400 for a single individual and $87,100 for those who are married. Most drugs have PAP’s. However, they aren’t all the same and can be very confusing, often by design in my opinion. Some have higher or lower income levels. Some won’t provide assistance until one has spent a certain amount of money on medications, which may occur right before the end of the year, making the program conveniently (for the manufacturer) useless. If a medication isn’t available using a PAP or if one can’t afford the medication prior to what needs to be spent before relief is provided, there may be other foundations available.

I’m very excited that The Health Insurance Store now has a new team member, Tony Diroma, who has been given the job of Prescription Drug Caseworker. Tony will be working one on one with any client who we anticipate will fall in the Doughnut Hole or is spending a lot of money on medications. He has been diligently researching programs, making contacts, and collaborating with anyone and everyone who can provide information which can help relieve the financial the burden that many on Medicare deal with when it comes to their medications.

Frank has been in contact with me and another agent in our Forest Hills office and plans to use our services when he goes on Part B. He will then work directly with Tony, who will match him up with a program(s) that will best help him reduce his out-of-pocket drug costs. This is an extremely valuable service which all our clients receive at no charge. Tony has already found multiple options for Frank and shared them, relieving the anxiety he had.

If you’re facing a similar situation or currently paying exorbitant costs for medications, please feel free to contact myself or Tony, who can be reached by phone at our Connellsville office or via email at tony@getyourbestplan.com.

And thank you for all the great questions! Please keep them coming! When you submit one, not only are you helping yourself, but other seniors as well.