By Patricia Prewitt
My Personal Rx Adviser
Many of you may be hoping to see savings in 2025 with the new $2,000 out-of-pocket cap for Medicare enrollees. The Kaiser Family Foundation estimates that close to 7 million Medicare beneficiaries will experience significant savings in 2025.
You may be wondering, “What’s the catch?” since health care rules are complicated.
It is important to understand that Medicare Part D plans define the $2,000 out-of-pocket as it relates to “covered expenses.” Let’s define what that means. Prescriptions must meet the following criteria:
- Included in the plan’s formulary: This is the list of drugs covered by the plan, categorized into tiers.
Real world: This is why it is so important to check the Medicare Part D Plans during open enrollment from October 15 through December 7 to verify that your plan covers your medications. - “Covered” must be deemed as medically necessary for the condition, and prescribed by a licensed health care provider.
Real world: Certain covered products (the expensive ones) may require a prior authorization for an approval. Once approved, the medication would be considered a “covered expense” subject to $2,000 out-of-pocket cap. - To qualify as a “covered expense,” prescriptions must typically be filled at pharmacies that are in the plan’s network.
Real world: A non-traditional pharmacy such as www.costplusdrugs.com would not be considered in the network.
What are excluded products?
Not every medication or therapeutic class of treatment has formulary coverage. For example, many plans exclude lifestyle medications. Some examples are products for hair growth, skin conditions, or hormone therapy. Lifestyle products are generally excluded from coverage by standard commercial plans, too.
Real world: For prescriptions that are not covered by your plan, make it a habit to check savings cards for a lower price option vs using your plan.
How does a prescription plan choose which products to cover?
General Medicare rules require plans to cover at least two drugs in each therapeutic drug class that treat the same condition. This two-drug minimum ensures some level of choice for the prescriber and the patient. Plans often prefer certain drugs over others.
There are certain “protected classes” that Part D plans must cover substantially all of the medications. They are antidepressants, antipsychotics, anticonvulsants, immunosuppressants, anticancer medications, and HIV/AIDS medications.
What else?
Not every medication will qualify as a covered expense. If it is not covered, your out-of-pocket costs will not be calculated toward the new $2,000 annual cap.
If you choose to use a prescription savings alternative like a savings card program (GoodRx/SingleCare/etc.) or a direct-to-consumer option, this is a “cash pay” option not processed by your insurance plan. Your costs will not accrue to your prescription plan out-of-pocket cap.
This area of health care is changing rapidly, and will continue to evolve. I do hope that many of the readers here will experience lower costs in 2025 with this new $2,000 out-of-pocket cap.
Content provided is for educational purposes only, and is not intended as a substitute for advice from a qualified medical professional. The opinions expressed within are those of the author.
About the Author: Patricia Prewitt is a local Massachusetts resident who spent more than 30 years in the pharmaceutical industry. Tricia is a consumer education advocate, and loves helping people find ways to save money on their prescriptions. More information and free resources are available on her website at https://mypersonalrxadvisor.com/resources or call her at 508-507-8840. Favorite Quote: “Act as if what you do makes a difference. It does.” – William James
