Medicare plans with prescription drug coverage organize medications into different price categories called “tiers.” Medicare plans can have as many as 4 or 5 tiers and generally, drugs in the lower tiers have lower costs while drugs in higher tiers have higher costs. For example, a tier 1 drug will usually have lower copays than a tier 3 drug. But it is important to note that this is not always the case—it is up to the individual insurance company to determine the benefits of a given tier level. For this reason, we advise our clients to be aware of what tier their medications fall into and what the copay or coinsurance will be for that tier level.
It is important to know if your Medicare plan includes a Part D deductible. If a deductible is included, it is important to know which tiers are affected by the deductible. Your plan will list which tiers are affected by the deductible in your Evidence of Coverage. The deductible amount must be approved by the Centers for Medicare and Medicaid Services (CMS).
If your plan has a deductible, the deductible needs to be satisfied before your insurance company will pay anything toward your medications. Once the deductible is met, you will begin paying the copays or coinsurances that are associated with the tier level of your medication. On some plans, the deductible only applies to specific drug tier levels as opposed to all tiers.