Monthly Medicare premiums are going up in 2024 all over the country, and there’s not much you can do about that. We’ve also spotted three other trends during the current Medicare Open Enrollment period that can increase your cost and/or jeopardize coverage of your medications. The good news is there is still time to identify these changes and figure out what to do.
During Medicare Open Enrollment (Oct. 15-Dec. 7), everyone with Medicare prescription drug coverage has the opportunity to review their plan and identify changes in cost and coverage. Unless beneficiaries take action to enroll in a different plan, their current plan will renew automatically and be locked in for the year.
The three trends we’ve identified relate to changes in cost sharing, dropping insulin from the formulary and the additional coverage rules. Here’s a closer look at these trends and some action points for Medicare beneficiaries:
1. Changes in cost-sharing
Once you have paid your monthly premium and met any deductible, you encounter cost sharing: the share of drug costs covered by the insurance company that you pay out of pocket. These two costs are the most important.
- Copayment: This is a predetermined amount, such as $2 or $35, that does not change during the year. Tier 1 (preferred generic), Tier 2 (generic), and some Tier 3 (preferred brand) drugs charge a copayment.
- Coinsurance: Some Tier 3, most Tier 4 (non-preferred brands) and all Tier 5 (specialty) drugs charge coinsurance, which is a percentage of the drug’s retail cost. If the price of the drug increases, your cost can go up during the year.
My firm, 65 Incorporated, reviewed the “Costs by Drug Tier,” found on the plan details page in the Medicare Plan Finder for three zip codes, a total of 65 plans. Here are some findings:
- Over 25% of plans are increasing the copayment: Tier 1 and Tier 2 drugs will cost $1-$9 more.
- One-third of plans are changing a copayment to a coinsurance. This change can have a big impact on your bottom line. A Tier 3 drug with a retail cost of $550 has a $47 copay this year. Next year that is changing to a 25% coinsurance, which will increase the individual’s cost to $137.50.
- Almost 30% of the plans reviewed are increasing the coinsurance for Tier 4, non-preferred drugs, and Tier 5, specialty drugs. This will hurt a pocketbook the most. A specialty drug is the most expensive, and it treats a complex medical condition. One drug has a retail price of $20,000. Increasing the coinsurance by just 3% will increase cost-sharing by $600.
What you can do: You may still be able to find a plan with lower cost-sharing that could work for you. But if you can’t, you may need to revise your budget.
2. Dropping insulin from the formulary
The Inflation Reduction Act capped insulin at $35 a month. Insulin administered by a pump is covered under Part B, medical insurance, and is not an issue for Open Enrollment. However, injectable insulin is a Part D benefit, and that is a big concern for this year’s OEP.
A 65 Incorporated client has taken Levemir insulin for three years. She has not changed drug plans during that time because her plan offered the best coverage. A review of her situation for 2024 revealed that her plan will not cover Levemir next year. I decided to check the 22 stand-alone Part D plans sponsored by eight insurance companies in her zip code to see what was happening.
I checked 10 common insulins in five categories: rapid-acting, short-acting, intermediate-acting, long-acting and mixed. Here are the significant findings:
- Ten plans are dropping one or more insulins from their formularies. Specifically, I found that four plans will each drop four insulins from its list of covered drugs, with the other six plans dropping one to three insulins.
- Plans will cover fewer insulins in 2024 than they do this year. Bottom line: five plans will cover only three of the 10 common insulins, four will cover only four, and six will cover five. That presents a challenge to insulin users like my client, who now has to find another plan or a substitute.
What you can do: If your current plan won’t cover your insulin next year, first look at other plans in your area. If you can’t find one that will work, talk with your physician about another insulin. If all else fails, your physician may need to request a formulary exception, a process to obtain the Part D drug that is not covered. The physician’s statement must prove that the noncovered drug is necessary to treat the medical condition and that no alternatives on the formulary would work.
3. Adding more coverage rules
Part D drug plans have always had rules that enrollees must follow if they want the plan to cover their medications. Here’s a brief explanation of the rules:
- Pharmacies: Enrollees must purchase drugs from an in-network pharmacy. If using an out-of-network pharmacy, the individual pays full price.
- Quantity limit: The plan limits the number of pills in a prescription, the number of prescriptions in a month, or the dosage strength.
- Prior authorization: The plan wants to ensure that the drug is medically necessary and will be used appropriately, so the physician must obtain consent from the plan before prescribing a certain medication.
- Step therapy: Before ordering a certain medication (usually a very expensive one), the physician must prescribe a less expensive but proven-effective medication. If the individual experiences side effects or other problems, the physician can then “step up” to order the more costly drug.
During the first two weeks of plan reviews, I caught plans adding prior authorization requirements to drugs that did not have them in place this year. Mostly this has happened to Tier 3, preferred brand-name drugs, and Tier 4, non-preferred drugs. However, I also found something that I had not seen before: prior authorization added to a Tier 2 generic drug, with a copayment of $5.
Although this new issue is less widespread than the first two, it can still create barriers to getting necessary medications, especially if the plan does not approve the request.
What you can do: If a new coverage rule could interfere with getting necessary medications, look for a plan that doesn’t have that rule. If there are no options, make sure your physician files an authorization request. And if the plan denies it, file an appeal.
The Open Enrollment Period isn’t merely about administrative formalities; it’s a window for strategic decision-making. Whether or not you need insulin, take more costly drugs or face coverage rules, you still need to review the changes in your plan for 2024. Staying well-informed and taking decisive action during this period is more critical than ever to ensure your Medicare plan effectively aligns with your evolving healthcare needs and financial considerations for the upcoming year.
Diane Omdahl, a registered nurse, has been a trailblazer in the Medicare industry for over 30 years. She started her first company in the basement of her home and developed it into a multi-million-dollar organization providing Medicare-related training and tools for home health agencies and long-term care facilities. Diane now operates 65 Incorporated and i65, providing unbiased and expert Medicare enrollment guidance to seniors, their families and professional advisors. She recently published “Medicare For You: A Smart Person’s Guide.”