How to Save Money on Your Medicare Prescriptions
Reviewing your Medicare prescription drug plan each year can potentially save you hundreds or thousands of dollars annually on your prescription costs. The more medications you take and the higher the costs of those medications, the more likely it is that you are overpaying for them. Minimizing your drug costs requires some effort, but it can pay big dividends.
How should you go about it? Start by going to www.Medicare.gov and input your prescriptions. Once you’ve completed that, you will be able to run a search and Medicare will pull up all of the available prescription plans in your area for which you can sign up. Often, the first 2-3 plans listed will be the best match for you. However, if you take numerous medications, you will have to dig deeper.
You will want to make sure your medications are covered under the plan’s formulary. Insurance companies also use other methods to limit their costs, so you will want to check to see how the following limitations apply to your drugs:
- Tier level
- Quantity limits
- Prior authorization requirements
- Step therapy requirements
Retail costs can also be a significant factor, especially with high-priced medications. You will also want to look at alternatives such as over-the-counter availability and discount companies such as GoodRx.
Let me give you an example as to how this might play out with a common medication such as lansoprazole (generic Prevacid) using actual pricing from one of the Medicare plans. Each plan will be different.
Lansoprazole is available over-the-counter. You might be able to obtain a 3-month supply for $80 – $100 at stores like Costco, Target, etc. When you look at your prescription plan you may find that you can get it through your in-network pharmacy for $9 for the same 3-month supply. Sounds like a no-brainer, right? Except that if you look more carefully you may see that your plan is paying nearly $400. That amount that is counted toward the coverage gap (donut hole). Fill that prescription four times per year and that medication just brought you $1,600 closer to the coverage gap ($4,130 in 2021). By itself, not terrible, but if you have some other expensive drugs, this can put you in the donut hole and increase your prescription costs later in the year.
* More detailed information about the donut hole is available here.
Continuing with our example, if you download the GoodRx app on your smartphone you will discover that you can get the same 3-month supply of lansoprazole for $12.79 at the Stop & Shop pharmacy. So, in this case it may be preferable to have your doctor send the prescription to Stop & Shop. Even though the prescription will cost you $3.79 more, there are no costs applied toward your total drug costs which is what determines your coverage stage. In other words, it may help you avoid the donut hole.
In some cases, your prescription plan will have the best price, hands down. With other medications, it will be GoodRx or some other discount card. In other situations, you may be better off just purchasing it over-the-counter if available.
You may also find that you can save significantly on the Medicare plan premiums. I did the homework for one of my clients who had a Medicare prescription drug plan that cost nearly $90 per month. Sure enough, the Medicare.gov website positioned that same plan as first choice on the list for 2021. I found that by using GoodRx for some of her medications, she could choose a plan for under $10 per month, saving her more than $900 in premiums for the year in addition to over $1,000 annually in prescription costs.
If you are one of those fortunate people who doesn’t take many medications it may not be worth the effort. On the other hand, if you’re paying significant money on your prescriptions, you may want to spend some additional time investigating your options. An extra thousand or two may come in handy for that vacation you’re saving for.