As we approach the fall, we will soon be entering the Annual Enrollment period which occurs between October 15th and December 7th. Each year health plans must send out the Annual Notice of Change or ANOC to inform beneficiaries of changes to their coverage. The ANOC must be out prior to October 15. This year, there are several changes to the prescription drug rules that every plan must implement. Whether you have a Medicare Advantage Plan with prescription drug coverage included in the plan, or whether you have a Medicare Supplement Plan (Medigap plan) with a stand-alone Prescription Drug Plan (PDP), you will see changes for 2020. You should read the ANOC carefully to understand the changes to your specific plan. What I will outline are changes mandated by the federal government for all plans in 2020.
First, the prescription drug initial coverage limit is going up. The initial coverage limit for 2019 was $3,820 and for 2020 the limit will be $4,020. This is the amount of prescription drug costs that can be incurred before a change in copayments or what used to be called the donut hole. The $4,020 includes the amount you pay plus the amount the plan pays, or the total cost of the drug. Second, once the initial coverage limit of $4,020 is reached in 2020, the copayments will be 25% of either the generic or brand name drug. Recall before 2020, generic was 37% in this phase (formerly called the donut hole phase). Finally, when your reach $6,350 of drug spend, or the catastrophic phase, your copayments go down to the higher of 5% or $8.95 for a brand drug or $3.60 for a generic drug.
Again, these changes in the coverage phases will take place with either Medicare Advantage Plans or stand-alone PDP’s.
I realize these coverage rules are very confusing and we have many clients call us wondering about the higher copays when they reach the initial coverage limit. Keep in mind that your plan has an obligation to report to you when you reach the initial coverage limit so you will know when and why your copays are increasing. As such, please look out for reporting of your drug costs from your insurance carrier if you have significant prescription medication cost. Of course, if you have any questions about your drug benefits, do not hesitate to call us and we will try and address your questions.
Prescription drug coverage can be one of the most valuable aspects of your health insurance coverage. It is very important that you review the coverage each year and make sure you are still getting your medications at the right copayment level and that there are no formulary changes (coverage changes) that affect the medications that you use. Another reason we encourage to review the ANOC when you receive it from your health plan.
As always, we wish you good health and please let us know if we can assist you or anyone you know with Medicare issues or coverage.
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