The Fall Open Enrollment Period (October 15-December 7) each year is a chance for people with Medicare to review their Medicare options and think about their health and drug coverage for the coming year. When considering your drug coverage for next year, it’s important to keep in mind what drug costs are going to be next year, and what you should expect to pay in the different phases of Part D drug coverage. Remember, if you have drug assistance through Extra Help or a State Pharmaceutical Assistance Program (SPAP), these costs may be different for you.
First, you will have to pay a monthly premium. Premiums vary by plan, some plans have no monthly premium and some plans have higher monthly premiums. The average national premium in 2018 will be $35.02.
At the start of each year, you will begin in the deductible phase. The Part D deductible phase is when you have to pay the full cost of your medications up to a certain limit before your plan begins paying part of the costs. Deductible amounts vary by plan; some plans have no deductible, and some have the full amount. A Part D deductible cannot be more than $405 in 2018.
After spending a pre-determined amount in total drug costs ($3,750 in 2018), you reach the coverage gap, where you need to pay more for your medications. During the coverage gap you will have to pay 35% out of pocket for most brand name drugs and 44% out of pocket for generic drugs. Almost the entire cost of brand name drugs bought during the donut hole counts toward getting you out of the donut hole. All of your out-of-pocket drug costs and payments from other people and groups such as charities and state drug assistance programs, count as well. The amount you pay out of pocket for your generic drugs counts, but the 56% generic discount does not.
After you have spent $5,000 out of pocket, you will leave the coverage gap and reach catastrophic coverage. Catastrophic coverage is when you will pay 5% of the cost of each drug, or $3.35 for generics and $8.35 for brand name drugs (whichever is greater) in 2018.
This coverage gap is slowly closing because of the health reform law. The donut hole will close completely by 2020 when you will typically pay no more than 25% for your drugs at anytime during the year after you’ve met your deductible.