Your costs will depend on the plan you choose, and your out-of-pocket costs will differ considerably from plan to plan. For this reason, the Centers for Medicare and Medicaid Services (CMS) is encouraging beneficiaries who currently have plans to reconsider their choice, and all beneficiaries are urged to make careful comparisons. It is very important to go beyond a comparison of the premiums and deductibles that apply to each plan. You should also look at the copayments that will be required each time you fill a prescription and whether the drugs you take now will be covered by the plan. In addition, it is important to check if your plan has prior authorization, quantity limit or step therapy rules that limit access to covered drugs.
In 2020, due to the expiration of the Affordable Care Act provision that limited growth in out-of-pocket costs, Medicare Part D enrollees faced a relatively large increase in out-of-pocket drug costs before they were able to qualify for catastrophic coverage. The threshold reverted to the level that it would have been using the growth rate calculation before the Affordable Care Act became law. As a result, for 2021, the out-of-pocket spending threshold will increase by $200, from $6,350 to $6,550.
It is useful to do comparison shopping during every annual open enrollment period. In 2021, the base beneficiary premium for Part D plans —which is different than the actual premium beneficiaries pay—will increase slightly to $33.06 from $32.74 in 2020. Plans will change their formularies and the copayments they charge for drugs. Therefore, it is important that you closely examine the letter from your plan that details how your coverage will change. CMS requires plans to send this letter by September 30.
A few points to remember as you consider your out-of-pocket costs:
- Only qualified drug expenses will count toward out-of-pocket Prescriptions not covered by the plan you sign up for, imported drugs from Canada, or received coverage from a drug company’s patient assistance program do not count toward out-of-pocket cost limits;
- All dollar amounts are annual, so CMS will begin counting from zero each year;
- Premiums and copayments will change from year to year, and will vary from plan to plan;
- If your income is limited, you may be eligible for Extra Help to pay these costs;
- For higher-income Part D beneficiaries, the thresholds for those required to pay a higher premium are projected to increase to $88,000 for individuals and $176,000 for couples in 2021. Premiums increase on a sliding scale basis depending on income. The increased amount results from lower Medicare subsidy support for the premiums of high-income earners.