Why Compare Medicare Drug Plans


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Part D Medicare made prescription drug coverage available to Medicare recipients. There are many part D plans and none are created by the government. Instead, the government approves private insurance companies to create a part D plan. Consequently, there are as many Medicare drug plans as there insurers. You need to compare plans to find the one that is the most cost-effective to you.

However, before we get into cost, you need to understand the drug formulary. The drug formulary is a list of drugs that the plans cover. The drugs in the formulary are covered at different rates. There are preferred medications that the plan offers the highest benefit. There are secondary tier medications. You can still get these drugs, but you will be picking up a larger portion of the cost. There are still may be another group of drugs listed that for which the plan will not pay. If the drug is not on the formulary, you will have to check with the company for your coverage.

The amount you pay for a medication is called co-pay. For a preferred drug, your co-pay is lower than for second-tier drugs. Co-pay is one of the costs that you need for your drug plan comparison.

To know how much you are going to pay in co-pay annually, you need to know what medications you will be taking during the year and the amount of the annual deductible. Your annual co-pay amount calculation starts with the total medication cost less the annual deductible. From this amount, you need to calculate your co-pay based on the amounts provided in the formulary.

With the annual co-pay amount in hand for the plan, you will have to add the annual costs. That means you will have to add back the annual deductible and add up the monthly premiums for the year.

Now you have the total annual cost for the plan. To compare Medicare drug plans, calculate this total cost for each plan and select the lowest cost plan.

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