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What is Medicare Part D or Medicare Advantage plan cost-sharing?

Category: Cost-sharing: What You Pay
Updated: Sep, 18 2022

With any type of insurance, when you need coverage or have a claim, a certain amount of the cost is paid by your insurance company - in our case, your Medicare Part D plan (or Medicare Advantage plan) - and the remainder of the coverage cost is paid by you - or,  in some situations, some of the coverage cost may be paid by other parties such as a benevolent group or your state or Medicare or the US Government or a pharmaceutical manufacturer).

So, "Cost-Sharing" usually refers to the portion of your Medicare Part D plan coverage or Medicare Advantage plan coverage that you pay - such as $40 to fill a 30-day Tier 3 brand-name prescription or $20 to visit your primary care physician (PCP) or $75 to see an in-network healthcare specialist.

We may say, "if you go to see your in-network doctor, you will have $5 cost-sharing or a $5 copay" or "if you purchase a Tier 5 Specialty drug, you will pay 33% of the retail drug price as co-insurance".

Your Medicare Part D drug plan's cost-sharing can vary depending on whether you are using a standard or preferred network pharmacy.

And your Medicare Advantage plan's cost-sharing can vary depending on whether you are visiting a healthcare provider who is in-network or out-of-network.

Below are examples of Medicare Part D prescription drug cost-sharing information shown within our Medicare Part D Plan Finder (https://PDP-Finder.com/CA) and healthcare cost-share information in our Medicare Advantage Plan Finder (https://MA-Finder.com/90210).

Please note that the prescription drug cost-sharing information shown below is for "preferred network pharmacies" - and depending on your drug plan, you may pay higher cost-sharing at standard network pharmacies.  You can also click on the plan name to see more information about each Medicare plan.

Examples of cost sharing chart

For Medicare Advantage plan healthcare cost-sharing, you can start at https://MA-Finder.com, enter your ZIP, see a list of Medicare Advantage plans in your area, and then click on the plan name to see an overview of healthcare (and prescription drug) cost-sharing. 

You may wish to telephone the Medicare Advantage plan (using the toll-free number provided on the same page) to confirm or clarify any cost-sharing details that you find unclear.  (For example, "What will I pay if I visit an out-of-network healthcare provider without a referral from my primary care physician?")

Examples of Medicare Advantage plan cost-sharing

Important:  Medicare plan cost-sharing can change every year.

Remember that what you pay this year for cost-sharing may not be the same as what your Medicare plan charges for cost-sharing next year.  In fact, most likely, your Medicare plan will change cost-sharing designs each year - meaning you may pay more next year.  You can read more about plan changes in example article here:   Examples of how 2022 Medicare Part D plans can change prescription cost-sharing designs.  (Examples from 2021)

Examples of Medicare Part D and Medicare Advantage cost-sharing:
  • Initial Deductible:

    During the initial deductible, you will pay 100% of the coverage costs (unless your plan excludes Tier 1 and Tier 2 drugs from the formulary).  So if you purchase a medication with a retail cost of $100, you pay the $100.  After you have met your initial deductible, your Medicare plan will begin to pay a portion of the coverage costs.  So if your plan has a $435 deductible, you pay the first $435 and then your Medicare Part D plan will begin to pay a portion of the costs.  Not all Medicare Part D plans have an initial deductible ($0 deductible plans) and the amount of the deductible can vary between plans.

  • Co-Payment:

    You pay a flat or fixed amount for a specific medication, no matter how the drug's retail price changes.  For instance, if you buy a medication that usually costs $100 retail, you may only pay a co-pay of $30.  If the medication becomes more expensive and the retail price increases to $500, you will still only pay the $30 co-pay.  If your medication only costs $25, you will pay $25 and not the $30 co-pay because you never pay more than retail.

  • Co-Insurance:

    You pay a percentage of the retail price for a specific medication. If the drug's retail price increases, you will pay more for the same drug. For instance, if you buy a medication that usually costs $100, you may pay co-insurance of 25% or $25.  If the medication becomes more expensive and the retail price increases to $500, you will still pay 25% or $125 for the same medication.

    Important:  As the retail prices fluctuate (increase) for medications or healthcare, co-insurance costs can change (increase), so accurately predicting your annual medical spending is difficult (if not impossible).  So, in general, co-payment may be a more "stable" form of cost-sharing as compared to co-insurance which can change throughout the year.

  • Coverage Gap or Donut Hole Discounts:

    Since 2020, the cost-sharing in the Donut Hole will be 25% of retail for all generic and brand-name formulary drugs, meaning, you will pay 25% of retail costs.  Here is a link showing how the Donut Hole discount has increased over the years, before reaching 25%:  http:/Q1FAQ.com/470.html - however, it is possible that your Medicare drug plan will provide you with additional coverage in the Donut Hole and your cost-sharing may be less than 25% of retail prices.

  • Cost-sharing in the Catastrophic Coverage phase:

    If you spend beyond your Total Out-of-Pocket limit (TrOOP) and exit the Coverage Gap or Donut Hole, you will pay the greater of a flat-fixed price (for example, $3.70 for generics and $9.20 for brands) or 5% of the retail cost for generic and brand-name medications.
Question:  Where can I learn more about my Medicare plan's cost-sharing?

You can find more information about your Medicare Part D or Medicare Advantage plan's cost-sharing by looking in your plan's documentation: Summary of Benefits, Annual Notice of Change (ANOC), or Explanation of Benefits.

If you need these documents, please call your plan using the toll-free number found on your Member ID card or your plan's printed documents and speak with one of your plan's Member Services representatives.  If you cannot find this information, telephone a Medicare representative at 1-800-633-4227 for assistance.

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