Personal Finance Topics / Retirement Investing
No. of Recommendations: 4
How does my Medicare Part D drug plan insurer make a profit with a $0/month premium?
... and a $0 co-pay on 6 of the 7 drugs I take. The 7th drug has a $15 co-pay for a 90-day supply (i.e. $60/year. ) It would cost me $260 to buy a year's supply of that last one with a GoodRx coupon and a cash purchase. It seems impossible.
It's all about the "skim" and scam.
{{ In 2025, the national average monthly direct subsidy from the federal government to Medicare Part D plan insurers is projected to be <mark>**$142.67 per member per month**</mark> **(PMPM)** (i.e. $1,712 per year!)
My $0/month plan is sold by a captive subsidiary of Centene Corporation (#25 on the Fortune 500) They operate nationwide, though in some zip codes my $0/month "ValueScript Plan" may have a premium of $1 to $5/month.
Roughly 50% of Medicare beneficiaries take no medications, or one or two generic drugs that are as cheap as aspirin. If you can attract a lot of these folks to your health plan, while collecting the average $1,700 per year Gov''t subsidy, it's a frigging bonanza.
Now there's a possibility that I might need to take an expensive name-brand drug that costs $300,000 per year. What happens then? No doubt my el-cheapo drug plan doesn't have the good stuff in it's formulary.
That's actually a concern for me. That drug with the $15 copay could well be replaced at some point with a medication costing hundreds of thousands of dollars per year. At that point my doctor will request an exception to the formulary and provide documentation for medical need. It will then be covered and subject to the $2,000 maximum annual out of pocket cost for Part D drug plans (i.e., the most I'll pay for all my drugs in 2025 will be $2,000.)
But if you don't understand the arithmetic of how this works, you might be hoodwinked into buying a Drug Plan with a much higher premium thinking that it will provide you with (5* star) coverage.
intercst
No. of Recommendations: 0
I worry about Part D. Right now, both of us buy are scripts outside of insurance. It's cheaper. Mine is from CostPlus, and 1poorlady's is from Eagle Pharmacy. If we did a conventional pharmacy with insurance, mine would cost 4x as much (almost), and 1poorlady's about 2x as much. We could keep doing that. But what if we need a new unforeseen drug? Part D is extremely opaque, and if you want to make a change in the plan, there are heavy penalties (last I knew).
I'm going to have to start thinking about this in a year or so.
No. of Recommendations: 2
{{ But what if we need a new unforeseen drug? }}
They don't expect you choose a drug plan with a "new unforseen drug". If your current plan's formulary doesn't include what's medically required, you can request an exception to the formulary for the remainder of the year -- and it will be covered subject to the $2,000 annual out-of-pocket max (i.e., you won't have a total drug bill of over $2,000 for the year.}
But you will need to chose a plan with the new drug in its formulary during the next year's open enrollment period.
intercst
No. of Recommendations: 2
My cardiologist changed one of my prescriptions to a different drug that sometimes worked better.
Humana sent me a note saying that this new drug was not in the formulary, so I would have to pay more for it. Okay. Still cheaper than a heart attack. I got the standard 90 day supply of pills.
When time came for a refill, this new drug was now in the formulary.
