Cost-sharing refers to the portion of your Medicare Part D plan coverage or Medicare Advantage plan coverage that you pay (such as $30 to fill a brand-name prescription or $20 to visit your primary care physician (PCP) or $75 to see a specialist).
Like any insurance, when you need coverage or have a claim, a certain amount of the cost is paid by your Medicare Part D plan (or Medicare Advantage plan) and the remainder of the cost is paid by you (and, in some situations, some of the cost may be paid by Medicare or the US Government or the pharmaceutical manufacturer).
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.
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, 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.
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 increase for medications, co-insurance costs can increase, so predicting your annual medical spending is difficult (if not impossible).
Coverage Gap or Donut Hole Discounts:
Starting in 2020, the cost-sharing in the Donut Hole will be 25% of retail for 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
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.