Prescription drug costs can be a significant problem for older adults. According to a 2019 report published by the CDC, more than 88% of adults 65+ take at least one prescription drug per month — and almost 42% take five or more prescription drugs monthly.
If you are Medicare eligible or will be soon, it’s worth looking into how Medicare Part D prescription drug coverage may save you money — especially if you are already taking multiple prescriptions. Medicare Open Enrollment is from October 15 to December 7, 2022 for those who are already on Medicare. Those turning 65 later in 2022 (or in 2023) can enroll during their Initial Enrollment Period (IEP).
Here’s what you need to know about changes to Medicare Part D for 2023.
Specialty drug tier may lower costs
Many Medicare Part D plans place drugs on different “tiers” that determine what percentage patients pay in cost sharing. In 2022, the Centers for Medicare and Medicaid Services (CMS) allowed Medicare Part D plans to implement a lower, “preferred” specialty tier. This means that plans can negotiate with drug makers to get better discounts on specialty-tier drugs in exchange for being listed on the “preferred” tier. Plans can then pass the savings along to patients.
If you currently have one or more specialty-tier prescriptions, you may want to look for plans that include your medication on a less expensive, “preferred” specialty tier.
Changes to deductibles, copays, and the Donut Hole
Below are the annual updates to the CMS “Part D Benefit Parameters for Defined Standard Benefit,” which is the minimum amount of coverage that the Medicare Part D plan must provide.
Updates for 2023 include changes to the deductible, initial coverage limits (when you enter the Donut Hole), the TrOOP (when you exit the Donut Hole), and catastrophic coverage copays. However, your individual Medicare Part D plan may offer more generous benefits, such as a $0 initial deductible and/or fixed copayments
1. The initial deductible will increase by $25 in 2023, to $505.
This means you’ll pay slightly more before Medicare Part D begins paying its share if you have a plan with the highest possible deductible.
After the deductible is met, you pay 25% of covered costs up to the initial coverage limit. Some plans may offer a $0 deductible for lower cost (Tier 1 and Tier 2) drugs.
2. The initial coverage limit (ICL) will increase from $4,430 in 2022 to $4,660 in 2023.
This means you can purchase prescriptions worth $4,660 before entering what’s known as the Medicare Part D Donut Hole, which has historically been a gap in coverage. Thanks to cost sharing with your Medicare Part D plan and drug manufacturers, being in the Donut Hole isn’t nearly as expensive as it used to be — and exiting it may be easier than you’d think.
While in the Donut Hole, you’ll pay 25% for brand-name drugs. The manufacturer will give you a 70% discount during this time, and your Medicare Part D plan will pick up the remaining 5%.
The 25% you pay, plus the 70% discount from the manufacturer, will count toward your combined TrOOP (see below), which is when you exit the Donut Hole.
The situation is different for generic drugs. You still pay 25%, and your Medicare Part D plan covers the other 75%. However, only the 25% you pay counts towards meeting your TrOOP.
3. The Medicare Part D true (or total) out-of-pocket (TrOOP) threshold will bump up to $7,400 in 2023, a $350 increase from the previous year.
The true (or total) out-of-pocket (TrOOP) threshold marks the point at which Medicare Part D Catastrophic Coverage begins. Under Catastrophic Coverage, you only pay a small copayment for covered drugs for the rest of the year.
4. Catastrophic coverage copays will cost between $0.20 to $0.50 more in 2023 compared to the previous year.
You will now pay $10.35 for brand-name drugs and $4.15 for generics (or 5% of retail costs, whichever is higher).
Still have questions? Visit mygnp.com/medicare-part-d or talk with your pharmacist.