The high cost of prescriptions is a problem for many Americans, especially among the senior population. According to a KFF Health Tracking Poll, 24 percent of seniors who take prescriptions say it’s hard for them to afford their medicine.
Even with Medicare, prescription drugs can be expensive. Here’s what’s being done to help seniors afford their medicine.
The Coverage Gap (The Donut Hole)
Medicare prescription drug plans typically had a coverage gap between initial coverage and catastrophic coverage. Known as the donut hole, this coverage gap could result in very high out-of-pocket costs.
The donut hole has been “narrowed,” providing some relief to seniors with expensive prescriptions. However, according to The Centers for Medicare and Medicaid Services (CMS), prescriptions won’t be free, and some seniors may still end up paying more.
Once you and your plan have spent $4,020 on covered drugs in 2020, you're in the coverage gap. According to CMS, Medicare enrollees will typically pay 25 percent of drug costs while in the coverage gap. For expensive prescriptions, that can still be a lot. You remain in the Coverage Gap until your true out of pocket equals $6,350. Then you move to the catastrophic stage and remain for the remainder of the calendar year.
Rising Prescription Drug Costs
With U.S. prescription drug spending exceeding $500 billion a year and growing three times faster than inflation according to The Press Democrat, a cost-control plan remains stuck in congress, establishing a major campaign issue in congressional and presidential races this year and prices keep rising.
Newsweek has reported numerous prescription drug cost hikes going into effect in 2020. The medications that will see price increases include prescriptions for arthritis and cancer.
Some price hikes are fairly small, but others outpace inflation and put a real strain on budgets. According to a WRCBTV report, some combination drugs have experienced price hikes of 1,600 percent.
Prescription price increases impact both individual beneficiaries and the Medicare program itself. Each year the Medicare premiums, deductibles, and copayment rates are adjusted according to the Social Security Act. For 2020, the Medicare Part B monthly premiums and the annual deductible are higher than the 2019 amounts. CMS has said, “The increase in the Part B premiums and deductible is largely due to rising spending on physician-administered drugs. These higher costs have a ripple effect and result in higher Part B premiums and deductible.”
Under current law, HHS cannot negotiate prescription drug costs. Some people have proposed changing this in order to bring down drug prices.
The House recently passed a bill that would add dental, hearing and vision coverage under Original Medicare while letting the government negotiate prescription drug costs. According to CNBC, the CBO says that this change could result in savings of $456 billion.
For more information and help in understanding prescription costs and how they affect you, contact your Medicare consultant. They can help guide you and perhaps save on your prescription costs.
Kenneth Kiker, CHC spent 49 years in the insurance industry before retiring in 2011 after working in United Healthcare’s Tucson office for 6 years specializing in their Medicare division. He continues to work with Medicare beneficiaries helping them with their Medicare coverage decisions. Ken achieved his Certified Health Consultant (CHC) designation in 1990 after attending The CHC School of Marketing at Purdue University and passing a series of national program exams. Email me at email@example.com.