A non-government resource for the Medicare community
Powered by Q1Group LLC
A non-government Medicare community resource
  • Menu
  • Home
  • Contact
  • MAPD
  • PDP
  • 2024
  • 2025
  • FAQs
  • Articles
  • Search
  • Contact
  • 2024
  • 2025
  • FAQs
  • Articles
  • Latest Medicare News
  • Search

What you pay for your Medicare drugs can change throughout the year.

Category: Straddle Claims and high costs
Published: Jul, 05 2024 07:07:52

What you pay for your Medicare drugs can change throughout the year depending on changes in retail drug prices and where you are within the phases or parts of your Medicare Part D prescription drug coverage.  And this applies to both stand-alone Medicare Part D plans (PDPs) and Medicare Advantage plans that also include drug coverage (MAPDs).

Changing costs as you move through your Medicare drug coverage.

All Medicare drug plans have phases and you move through these parts of coverage based on your formulary drug purchases.

The phases of Medicare drug coverage include: (1) An initial deductible (some drug plans have a $0 deductible and skip this phase) (2) Initial Coverage (3) Coverage Gap (or Donut Hole) and (4) Catastrophic Coverage (most people do not reach this last phase) and starting with the 2024 plan year, you pay nothing ($0) for formulary Part D drugs purchased in the Catastrophic Coverage phase.

As you move between these parts of your Medicare Part D drug coverage, the cost-sharing for a single formulary drug purchase will also change.

As an example, Imagine you are purchasing a brand-name drug with a $400 retail cost and your plan has a copay of $35.  Here is how your drugs costs will change as you move through your Medicare drug coverage:

(1) Initial Deductible (you pay 100%): $400
(2) Initial Coverage (you pay plan's copay): $35
(3) Coverage Gap (or Donut Hole) (you pay 25% of retail): $100
(4) Starting with plan year 2024 in Catastrophic Coverage you pay: $0

But wait . . . there is even more variation when your formulary drug purchase crosses between parts of your drug coverage.

As you move across or between parts of your Medicare Part D plan coverage, the cost-sharing for a single formulary drug purchase will be calculated as a “straddle claim” where your cost can be higher than any of the individual stages of coverage.

Some good news:  No matter what, your drug cost-sharing will never be more than the full negotiated retail cost of the drug.

The following graphic illustrates how the cost for the same drug can change throughout the plan year - and this is not considering that the retail price of your drug can change at any time.

2024 Example - with changes to Catastrophic Coverage cost-sharing

Your Medicare drug costs can change throughout the year and may be higher than you expect
In this example, assume you are in your Initial Coverage phase, but are close to your Initial Coverage Limit (the point where you cross into the Coverage Gap), you will first pay the Initial Coverage phase cost-sharing for the drug - plus - you will pay 25% of the retail drug price that carries into the Coverage Gap (75% Donut Hole discount).

Claim that "straddles" the Initial Coverage and Coverage Gap phases.

Using our same example drug, if you are purchasing a brand-name drug with a $35 copay (the drug has a $400 retail cost) – and this year you have already purchased drugs with a retail cost totaling $4,930 – and your 2024 plan’s retail coverage limit is $5,030 (you have only $100 until reaching the Coverage Gap) – your cost-sharing will be calculated as adding your copay ($35 in our example) and 25% of the drug’s retail cost that is carrying over into the Coverage Gap.

So, in our example, $100 of the drug’s $400 retail price will meet the plan’s $5,030 initial coverage limit with the remaining retail drug cost of $300 ($400 - $100) carrying over into the Coverage Gap where you get the 75% Donut Hole discount on this retail balance ($300) for an added cost of $75 (25% of $300).

This means that your total drug cost-sharing for this straddle claim is $110 ($35 + $75).

After this “straddle claim”, your next drug purchase will fall only in the Coverage Gap where you will pay 25% of the full $400 retail drug price or $100 ($400 x 25%).

If you have high prescription drug spending (exceeding the total out-of-pocket spending limit (TrOOP), you will exit the Coverage Gap and enter Catastrophic Coverage where, starting with plan year 2024, you will pay nothing for any formulary drug purchases.  You will stay in this last part of your Medicare drug coverage for the remainder of the year.

Bottom Line:
  Plan for changing prescription drug costs throughout the year. Your formulary drug costs can change (increase or decrease) as retail drug prices change and as you move through your Medicare drug plan coverage phases:

In our example:
(1)  Your drug cost in the Initial Deductible: $400
(2)  Your drug cost in the Initial Coverage phase: $35
(3)  Your drug cost of with our Straddle Claim example: $110 ($35 + $75)
(4)  Your drug cost in the Coverage Gap (Donut Hole): $100
(5)  Your drug cost in Catastrophic Coverage, 2024 and beyond: $0

Changing retail drug prices and changing drug costs through your plan coverage.

We assumed in this example that our retail drug price of $400 remained the same throughout the year.  However, retail drug prices can change at any time (unpredictably) and any increases (or decreases) in retail price will affect our example cost-sharing.  For instance, if the price of our drug increases from $400 to $700, your cost in all phases except Catastrophic Coverage will all increase.

Tips & Disclaimers
  • Q1Medicare®, Q1Rx®, and Q1Group® are registered Service Marks of Q1Group LLC and may not be used in any advertising, publicity, or for commercial purposes without the express authorization of Q1Group.
  • The Medicare Advantage and Medicare Part D prescription drug plan data on our site comes directly from Medicare and is subject to change.
  • Medicare has neither reviewed nor endorsed the information on our site.
  • We provide our Q1Medicare.com site for educational purposes and strive to present unbiased and accurate information. However, Q1Medicare is not intended as a substitute for your lawyer, doctor, healthcare provider, financial advisor, or pharmacist. For more information on your Medicare coverage, please be sure to seek legal, medical, pharmaceutical, or financial advice from a licensed professional or telephone Medicare at 1-800-633-4227.
  • We are an independent education, research, and technology company. We are not affiliated with any Medicare plan, plan carrier, healthcare provider, or insurance company. We are not compensated for Medicare plan enrollments. We do not sell leads or share your personal information.
  • Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. Our PDPCompare.com and MACompare.com provide highlights of annual plan benefit changes.
  • The benefit information provided is a brief summary, not a complete description of benefits. For more information contact the plan.
  • Limitations, copayments, and restrictions may apply.
  • We make every effort to show all available Medicare Part D or Medicare Advantage plans in your service area. However, since our data is provided by Medicare, it is possible that this may not be a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
    Statement required by Medicare:
    "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options."
  • When enrolling in a Medicare Advantage plan, you must continue to pay your Medicare Part B premium.
  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
  • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
  • You must be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan. Members may enroll in a Medicare Advantage plan only during specific times of the year. Contact the Medicare plan for more information.
  • If you are enrolled in a Medicare plan with Part D prescription drug coverage, you may be eligible for financial Extra Help to assist with the payment of your prescription drug premiums and drug purchases. To see if you qualify for Extra Help, call: 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week or consult www.medicare.gov; the Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or your state Medicaid Office.
  • Medicare evaluates plans based on a 5-Star rating system. Star Ratings are calculated each year and may change from one year to the next.
  • A Medicare Advantage Private Fee-for-Service plan (PFFS) is not a Medicare supplement plan. Providers who do not contract with the plan are not required to see you except in an emergency.
  • Disclaimer for Institutional Special Needs Plan (SNP): This plan is available to anyone with Medicare who meets the Skilled Nursing Facility (SNF) level of care and resides in a nursing home.
  • Disclaimer for Dual Eligible (Medicare/Medicaid) Special Needs Plan (SNP): This plan is available to anyone who has both Medical Assistance from the State and Medicare. Premiums, co-pays, co-insurance, and deductibles may vary based on the level of Extra Help you receive. Please contact the plan for further details.
  • Disclaimer for Chronic Condition Special Needs Plan (SNP): This plan is available to anyone with Medicare who has been diagnosed with the plan specific Chronic Condition.
  • Medicare MSA Plans combine a high deductible Medicare Advantage Plan and a trust or custodial savings account (as defined and/or approved by the IRS). The plan deposits money from Medicare into the account. You can use this money to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount, so you generally have to pay out-of-pocket before your coverage begins.
  • Medicare MSA Plans do not cover prescription drugs. If you join a Medicare MSA Plan, you can also join any separate (stand-alone) Medicare Part D prescription drug plan
  • There are additional restrictions to join an MSA plan, and enrollment is generally for a full calendar year unless you meet certain exceptions. Those who disenroll during the calendar year will owe a portion of the account deposit back to the plan. Contact the plan provider for additional information.
  • Medicare beneficiaries may enroll through the CMS Medicare Online Enrollment Center located at www.medicare.gov.
  • Medicare beneficiaries can file a complaint with the Centers for Medicare & Medicaid Services by calling 1-800-MEDICARE 24 hours a day/7 days or using the medicare.gov site. Beneficiaries can appoint a representative by submitting CMS Form-1696.