Prescription drug costs can be a significant problem for older adults. According to a 2019 report published by the CDC, more than 88% of adults 65+ take at least one prescription drug per month — and almost 42% take five or more prescription drugs monthly.
If you’ll be at least 65 before 2023, it’s worth looking into how Medicare Part D prescription drug coverage may save you money — especially if you are already taking multiple prescriptions. Medicare Open Enrollment is October 15, 2021 to December 7, 2021 for those who are already at least 65. Those turning 65 later in 2021 (or in 2022) can take advantage of a special enrollment period. Here’s what you need to know about changes to Medicare Part D for 2022.
Specialty drug tier may lower costs
Many Medicare Part D plans place drugs on different “tiers” that determine what percentage patients pay in cost sharing. Patients typically pay 25% to 50% of the cost for drugs on the highest-priced specialty tier — and all drugs on the specialty tier have the same level of cost sharing.
But starting in 2022, Centers for Medicare & Medicaid Services will allow Medicare Part D plans to have a lower “preferred” specialty tier. This means plans can negotiate with drug makers to get better discounts on specialty tier drugs in exchange for being listed on the “preferred” tier. Plans can then pass the savings along to patients.
Changes to deductibles, copays, and the Donut Hole
Here are the annual updates to the standard Medicare Part D “Defined Standard Benefit,” including deductibles, Initial Coverage Limits (when you enter the Donut Hole), TrOOP (when you exit the Donut Hole), and Catastrophic Coverage copays:
The initial deductible will increase by $35 to $480 in 2022. This means you’ll pay slightly more before Medicare Part D begins paying its share if you have a plan with the highest possible deductible.
After you meet the deductible, you pay 25% of covered costs up to the initial coverage limit. Some plans may offer a $0 deductible for lower cost (Tier 1 and Tier 2) drugs.
The Initial Coverage Limit (ICL) will go up from $4,130 in 2021 to $4,430 in 2022. This means you can purchase prescriptions worth up to $4,430 before entering what’s known as the Medicare Part D Donut Hole, which has historically been a gap in coverage. Thanks to cost sharing with your Medicare Part D plan and the drug manufacturers, being in the Donut Hole isn’t nearly as expensive as it used to be — and exiting it may be easier than you think.
In the Donut Hole, you’ll pay 25% for brand-name drugs. The manufacturer will give you a 70% discount during this time, and your Medicare Part D plan will pick up the remaining 5%. The 25% you pay plus the 70% discount from the manufacturer will count toward your combined TrOOP (see below), which is when you exit the Donut Hole.
The situation is different for generic drugs. You still pay 25% yourself, and your Medicare Part D plan covers the other 75%. However, only the 25% you pay yourself counts towards meeting your TrOOP.
The Medicare Part D total out-of-pocket threshold will bump up to $7,050 in 2022, a $500 increase from the previous year. The true (or total) out-of-pocket (TrOOP) marks the point at which Medicare Part D Catastrophic Coverage begins. Under Catastrophic Coverage, you only pay a small copayment for covered drugs for the rest of the year.
Catastrophic Coverage copays will cost between $0.25 to $0.65 more in 2022 compared to the previous year. You will now pay $9.85 for brandname drugs and $3.95 for generics (or 5% of retail costs, whichever is higher).
Still have questions? Visit mygnp.com/medicarepart-d or talk with your pharmacist.