insurance

Lower Your Prescription-Drug Costs

These three strategies will help you save money when you're in the Medicare Part D doughnut hole.

I reached the doughnut hole for my Medicare Part D plan, and now I have to pay for all of my drugs myself. How can I lower my costs for my medications?

One of the toughest things about Medicare Part D is the doughnut hole, which kicks in when your prescription-drug expenses total $2,830 for the year (including both your share and the insurer’s share of the costs). At that point, you generally have to pay all of your drug bills until the total cost of your drugs for the year reaches $6,440, when catastrophic coverage kicks in and the insurer picks up most of the bill.

That coverage gap will start to shrink in 2011 -- when there will be a 50% discount for brand-name drugs in the doughnut hole -- and will disappear by 2020. See What Health Care Reform Means to Medicare Drug Coverage for more information.

Until then, the government is helping seniors by sending them $250 checks when they reach the doughnut hole in 2010. More than 750,000 Medicare beneficiaries have already received the one-time rebate checks, which are generally sent within 45 days of reaching the doughnut hole (see FAQs about the Medicare Rebate for details). But that’s just a small piece of your total costs. Here are three ways to save money on prescription drugs.

1. Switch to generic medications. You can save big money if you switch to generic drugs. A Medicare beneficiary who takes Glucophage, Prilosec and Zocor -- three drugs that seniors commonly use -- can save more than $3,500 per year by switching to generic equivalents Metformin, Omeprazole and Simvastatin, says Ross Blair, president and chief executive of PlanPrescriber.com.

Ask your doctor whether there are generic equivalents to the medications you’re taking. You can also use our Doughnut Hole Calculator to find generic or other low-cost alternatives to your medications. Switching to generics can make a huge difference in the doughnut hole, when you’re paying the full cost yourself, and it can lower your costs before you reach that point, too. Our Doughnut Hole Calculator shows the co-payments you’ll be making for those drugs under your specific Part D plan. Most plans have three or four tiers of co-payments -- $5 for generics, $20 for preferred brand-name drugs and $30 for nonpreferred brand-name drugs, for example. With a lower retail cost, it will take you a lot longer to reach the doughnut hole and your share of the cost will also be smaller.

2. Ask your doctor about therapeutic alternatives. There are no generic alternatives for some drugs, but there may be another drug that could also treat your condition but cost a lot less -- or have much better coverage under your Part D plan. For example, Trandolapril, an ACE inhibitor used to lower blood pressure, has a retail price of about $33 for a 30-day supply, but Lisinopril, also an ACE inhibitor, is just $7, says Blair. If your doctor lets you switch to the therapeutic alternative, you could save more than $312 per year. And the cost savings can be particularly large if one drug is covered by your plan and another is not. Our Doughnut Hole Calculator can also let you know whether there is a similar drug that costs less, but always talk with your doctor first about whether the substitution would work in your circumstances.

3. Find a lower-cost pharmacy. Different pharmacies in your area may charge varying rates for the same drugs. At PlanPrescriber’s RxDrugsaver.com, enter your zip code to get a list of the retail cost of a 30-day and 90-day supply of your medications at pharmacies in your area. You may also save money by switching to a mail-order pharmacy, depending on your plan. A UnitedHealthcare AARP plan member in Florida who takes Lipitor, for example, could save more than $122 per year by getting 90-day supplies of his drugs from a mail-order pharmacy, says Blair.

The Prescription Drug Plan Finder at Medicare.gov shows how much you could save by switching to a mail-order pharmacy after you type in information about your drugs and dosages.

These strategies will help you save money in the doughnut hole. And keep them in mind as you shop for your Part D plan for 2011, which will be during open-enrollment season from November 15 to December 31, 2010. The plan that offered you the best deal for preferred drugs, for example, may not be the one that offers the best deal for generics -- which could save you even more money next year.

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