Ask The Medicare Specialist

QUESTION:

Recently my doctor prescribed me Question from Bette:

Nurtec for migraines. It works wonders, however, it’s very expensive with a retail cost of around $2,000 for a 30-day supply. When I went to the pharmacy and found out my share was $600, I didn’t pick up it up as I wanted to verify the cost with my Advantage Plan company. They confirmed I have to pay 33% of the allowed amount for this “Specialty” medication. I was also told once what me and my plan pay equals $5030, I go into the Coverage Gap and will then be responsible for 25% of the retail. My booklet says, “After what you spend for the whole year, and what the drug manufacturers pay during the coverage gap reaches $8,000, you move to Stage 4.” Does the $5030 count toward the $8,000? Or am I starting out at zero to get to $8,000? I got two different explanations from the insurance carrier.

ANSWER:

I’d like to quickly point out that Bette is not a client of ours. If she was, there would have been no confusion for her on this matter. She wouldn’t have had to make multiple phone calls to an insurance company and been given bad information or different answers to the same inquiry asked of multiple representatives. Our clients simply contact us anytime they have questions, issues, or concerns even remotely related to Medicare or their policies and we take care of them. After 16 years dealing with all sorts of quandaries and advocating for our clients, we’ve become experts in problem solving. Now let me explain exactly how costs for expensive medications work.

There are currently four stages of Part D drug coverage. Stage 1 is the Deductible when one has to pay full cost for medications until the deductible has been met. In Western Pennsylvania, there’s no deductible on medications as of 2024 for those on Medicare Advantage Plan HMOs and PPOs, although I think that could change in the next couple of years. Those who have Supplements purchase “Stand Alone” drug plans and the vast majority pay a $545 deductible on Tiers 3, 4, and 5 medications.

Stage 2 is called Initial Coverage. During this time, you pay set co-pays or coinsurance (percentage of the retail) for covered medications. Tiers 1 and 2 generics are generally $0 to $10. Tier 3 brand name drugs for those on Advantage Plans are $42 to $47, and 18% to 25% coinsurance for the majority of those on Stand Alone Part D. Tiers 4 and 5 (Specialty drugs) have 33% to 46% coinsurance. Stage 3 is the Coverage Gap, aka Donut Hole. People enter once they’ve received $5,030 worth of retail medications. What is paid out of pocket for drugs by those on Medicare during this time has nothing to do with that figure and was the bad information given to Bette by her insurance company. Since Nurtac is $2,000 for a 30-day supply, Bette will wind up in the Donut Hole in March.

Stage 4 is called Catastrophic. During this phase drugs become no cost. The $8,000 figure is where it gets very confusing. No one must spend that amount before hitting the Catastrophic stage because drug manufacturers provide, or “pay,” as Bette’s booklet stated, a 75% discount to those in the Donut hole and the discounted amount counts towards the $8,000. So does anything that is paid out of pocket by the insured.

The bottom line is once someone on Part D has spent between $3,200 to $3,400 for medications in 2024, from that point until the end of the year, all covered drugs will be $0. That will start for Bette around July or sooner depending on what else she’s prescribed besides Nurtec.

This $0 cost in Stage four is the result of the Inflation Reduction Act that put a cap on what people those on Medicare D can pay out of pocket for their meds in a calendar year. It also eliminated further costs for drugs once in the Catastrophic Stage. In prior years, many people would still pay thousands more for their mediations in Stage 4. In 2025, once someone on Medicare spends $2,000 all meds will be no cost, saving those like Bette significantly more money.

This may sound wonderful, but I have a real problem with because people have been led to believe the actual cost of medications are going down. That’s false. The retail prices of drugs in the US are not being reduced and Big Pharma will continue to make record profits. In fact, in 2025, the drug manufacturers will no longer be responsible for a 75% discount when someone on Medicare Part D enters the Donut Hole, which is basically being eliminated in 2025. Instead, people will go straight from their Initial Coverage to the Catastrophic Stage. Only 20% of the cost of medications will be discounted by the drug manufacturers when that happens. The other 80% will be the Advantage and Part D company’s responsibility, which is going to be a new liability, and huge drain on profit for them which means they’re going to pass that on to seniors in the form of any or all of the following: higher premiums, increased copays and MOOP, larger (or new) deductibles for medications, and the reduction or elimination of many of the extra benefits such as comprehensive dental and OTC allowances their Advantage Plans now provide. I’m predicting a very large increase in Stand Alone premiums, up to $500 or more per year, and significant changes to Advantage Plan benefits that people aren’t going to be happy with.

The bottom line is the prices of medications are not being reduced, rather who is going to pay the biggest chunk of the costs for expensive drugs is being shifted from the some of the most profitable companies in the world, indirectly to all seniors on Medicare, especially those who don’t use any brand name medications. It’s crony capitalism at its worst, and slap in the face to seniors who worked and paid taxed all their lives in my opinion.

If you have questions regarding this or any other column, please give us a call or email me personally at aaron@ getyourbestplan.com. Consultations in office, over the phone, or via virtual internet meeting are always no cost. To remind our readers, in order to continue running the columns in the Post Gazette, we need to generate a minimum of 100 new clients per year from this source. Thanks for those who have supported and put their faith in us!