Terry Savage: Sorting out Medicare Part D drug coverage

Medicare's drug coverage has been dramatically changed for 2025. Figuring out what you should do is one of the most complex challenges you will face in the next few weeks. Only one thing is for sure: Everything has changed, so you MUST do something — even if you loved your 2024 drug coverage.

Whether you have a stand-alone Part D drug plan or your drug coverage comes with your Advantage all-in-one plan, you must do a review. (Note that not all Advantage Plans include drug coverage, and if you're in Advantage without drugs, you cannot buy a separate Part D plan!)

Every Part D plan has changed its drug coverage for the coming year. There is no longer a "donut hole," and the $2,000 cap on drug costs means everything above that level is considered "catastrophic coverage" and has no co-pay. But it doesn't mean that every drug will be covered in 2025.

Some Advantage plans are dropping more costly drugs or substituting alternatives. Since you only have this Open Enrollment period to change Part D plans, or to choose a different Advantage plan, this is the moment to compare — even if you take no prescriptions or just a few generics.

You can do that search at Medicare.gov, where you can create an account or sign into your existing account. You'll immediately see all your current prescriptions and can add or update your drugs. And you'll be asked to list your preferred pharmacies.

Then just a click will show you plans that are available to you in your zip code. You can easily compare the monthly premiums, total costs for the coming year, and see which drugs impact the cost. For some people it's simple. One click and you can either continue your existing plan or sign up for a new one, right at Medicare.gov. But for others, it's far more complicated.

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The hidden complexity

The headline good news — that you will no longer have to pay more than $2,000 out-of-pocket for your meds in 2025 — hides the fact that the insurance and pharma companies have to get their money somewhere, somehow!

That means they may no longer offer coverage for some drugs, or they may only offer generic versions (which not all people can use because, although the main ingredient works the same, the compounding materials may trigger allergies).

The 2025 plans may move some drugs into higher "tiers" with larger co-pays, pushing many participants (who may have paid small amounts in 2024) into paying much more in 2025, though still under the $2,000 limit.

For those who take few drugs, all generic: Some people will get their drugs for free! If you only take a few generic drugs — for blood pressure or a statin, for example — you can find a plan with zero monthly premiums and zero drug costs since these drugs aren't subject to a deductible! These Part D plans do exist — offered by Wellcare as a marketing tool.

One caveat: If your physician prescribes another drug six months from now, your zero-cost plan may not cover that drug, or it may cost a lot more. Still, with the $2,000 limit, it's worth the risk to take this plan.

For those who take lots of drugs: If you take many expensive prescriptions, you'll face a completely different set of calculations. By comparing plans, you may find that you'd be better off contacting the drug manufacturer of that one expensive prescription and seeking a special low-cost deal for needy seniors.

Or you might check to see if a non-Medicare program, such as a Good Rx card, could offer a lower price than the one built into your Part D plan. Sometimes, eliminating just one drug in your profile can result in a plan with dramatically lower monthly costs!

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Getting help

It's astounding that seniors must try to do the complex calculations that arise when multiple medications are involved.

Tom Dillon of JT Medicare Solutions in Elgin, Illinois, says he works with hundreds of seniors at this time of year to review their alternatives. Dillon says: "It's remarkable how much money I can save people by finding a less expensive way to get one drug, or changing pharmacies, or changing plans."

Online resources offering "help" will generate a barrage of sales pitches, mostly for Medicare Advantage plans. You can get unbiased Part D drug coverage and/or Advantage plan help through www.SHIPHelp.org — the website of the state health insurance programs, which connects you to a knowledgeable counselor familiar with programs available in your area.

Please stop what you're doing and review your Medicare Drug coverage for 2025 right now. It could save you a small fortune. And that's The Savage Truth.

— Terry Savage is a registered investment adviser and the author of four best-selling books, including "The Savage Truth on Money." Terry responds to questions on her blog at TerrySavage.com.