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What do I pay when I refill my prescription and a single purchase moves me from my initial deductible into the part of my plan where I get paid coverage?

Category: Straddle Claims
Updated: Sep, 06 2022

When the cost of your medication covers two parts of your Medicare Part D plan, you have a “straddle claim” where your drug costs are split over two different phases of your drug plan coverage.

For example, if you have currently spent $395 dollars toward your $405 Initial Deductible, and your next purchase is for $60 worth of prescriptions (the $60 is your drug plan's negotiated retail price), the $60 would be split between your Initial Deductible and your Initial Coverage phase.

So the first $10 of the $60 purchase would go toward satisfying the remainder of your $405 Initial Deductible and the next $50 of the $60 drug price would fall into the Initial Coverage phase.

In our example, the $60 drug purchase would "straddle" two phases of your Medicare Part D plan: the Initial Deductible and the Initial Coverage phase.

25% Co-insurance Example
Let us assume you pay a 25% co-insurance as cost-sharing during the Initial Coverage phase, and this means you would then be responsible for 25% of the remaining $50 in the Initial Coverage Phase or a cost sharing of $12.50.

In the end, your total cost for the $60 purchase would be $10 from the Initial Deductible plus $12.50 from the Initial Coverage or $22.50.

$30 Co-payment Example
Assuming that you have a co-payment cost-sharing model instead of co-insurance, the calculation is a little different. 

For example, if you had a $30 tier-3 co-payment for our $60 medication, the first $10 of the $60 purchase again goes to satisfy the $405 Initial Deductible and the remaining $50 goes into the Initial Coverage phase.

Your cost-sharing for the purchase would be $30 so your total cost would be $40 ($10 + $30).

$70 Co-payment Example
If your cost-sharing or co-payment is higher than the remaining retail cost, then you would pay the lower retail cost based on the Medicare "lesser of" logic.

In other words, you will never pay more than your plan's negotiated retail drug price.

So if the medication in this example had a co-payment of $70, the $70 co-payment is more than the remaining $50 negotiated retail price balance and you would never pay more than your plan negotiated retail price and you would pay a max of $60.  Here is a review of our example:

Retail drug cost: $60
Remainder of the Initial Deductible: $10 (you already have spent $395)
Remainder of drug cost "straddle" into the Initial Coverage Limit: $50
Your Medicare plan's co-pay in the Initial Coverage Phase: $70 (more than the balance of $50)

Result: You pay only $60 (the retail drug price) since the price is the "lesser of" $80 ($10 + $70).

So instead of paying a total of $80 for a $60 retail drug, you would pay a maximum of $60.

Please note:  You Medicare Part D plan's negotiated retail price may not be the same as the retail price as your pharmacy list (or your pharmacy's discounted retail price).  The Centers for Medicare and Medicaid Services (CMS) anticipates that your Medicare plan will offer prices that are very similar to a pharmacy's every-day-low pricing, but this is not always the case.

You may remember paying $50 for a medication before having a Medicare Part D plan and now your new Medicare prescription drug plan has a negotiated retail price of $60 for the same drug.  You may also return to the same pharmacy next month and find that your Medicare plan has increased their retail price to $65.

Medicare Part D plans can change their retail pricing throughout the plan year and drug prices can even change on a weekly basis.

Drug prices using your Medicare Part D plan can also very from pharmacy to pharmacy (even when both pharmacies are listed as "preferred-network pharmacies").  Your Medicare Part D plan's preferred network pharmacy XYZ may have a retail cost of $60 and your Medicare Part D plan's preferred network pharmacy ABC may have a negotiated retail cost of $70. 

Important: You can call your Medicare Part D plan's Member Services department - the number is on your Member ID - and ask the representative where to find the lowest costing pharmacy in your area.

The Medicare.gov website is usually the only source that accurately reports a Medicare Part D plan's current negotiated retail price for a specific drug (or you can call 1-800-Medicare and speak with a Medicare representative about retail drug pricing).

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