5 Tips To Help You Manage Prescription Costs in Retirement

When you’re on a fixed income, it’s important to manage all your costs. Even prescription costs. For some people, the cost of their medications can make a noticeable dent in their monthly budget.

So, what can you do? Here are five tips to help you manage your prescription costs.

1. Enroll in Part D – if you haven’t already.

Medicare Part D is the part of Medicare that covers prescription drugs. When reviewing Medicare plans, look at the insurance company’s formulary, which is the list of drugs covered by their Part D plan, to see if your prescriptions are covered. Making sure your insurance carrier has a good formulary is important, as formularies prioritize effectiveness, safety and cost.

If you don’t get Part D when you enroll in a Medicare plan, but select a Part D plan later, you may be required to pay a late enrollment penalty. The penalty is 1% of the national average plan premium ($34.70 in 2024) for each month you don’t have creditable drug coverage. “Creditable” means comparable to or better than Medicare Part D. While it may not seem like a lot, it can add up. For example, if you go 14 months without coverage, the penalty will be 14%. The longer you wait, the more expensive your penalty.

Why is there a penalty at all? Medicare depends on healthy people paying into the system to make up for the costs paid out for those who aren’t as healthy. If everyone enrolled later when they needed more care, the costs for everyone would be much higher.

2. Choose a Medicare drug plan that offers additional coverage during the drug coverage gap, also called the donut hole.

Prescription “coverage gap” and “donut hole” are terms used to describe the coverage gap that’s part of all Medicare Part D plans. It occurs when the health plan and member have paid a certain amount for prescription drugs. For instance, let’s say a member fills prescriptions as part of their Part D plan. The Medicare drug plan will keep track of what the member and their plan have paid. When the dollar amounts hit a predetermined level ($5,030 in 2024), the member hits the coverage gap.

The coverage gap for 2024 means Medicare Part D members pay no more than 25% of the price of all generic drugs. For brand-name drugs, plan members pay 25% of the negotiated price and a portion of the dispensing fee after the $5,030 threshold has been reached. However, some plans continue to offer coverage of Tier 1 preferred generics. These are the most common and effective medications for conditions like diabetes, cardiovascular disease, osteoporosis, etc.

3. Ask your doctor about switching to generic or less expensive medications.

When the patent expires for a brand-name drug, that drug can be produced and sold as a generic drug at a lower price. Generic drugs work the same way as brand-name drugs and have the same active ingredients, quality, dosage, strength and instructions. When a patent runs out, generics often flood the market and prices for these drugs often decrease dramatically. Talk to your doctor to see if a generic drug is right for you.

4. Take advantage of over-the-counter supplemental benefits.

Many Medicare Advantage plans offer over-the-counter supplemental benefits at no additional cost to you. Over-the-counter (OTC) items often include pain relievers, vitamins and supplements, dental care items, incontinence products, a blood pressure cuff or smoking cessation products.

5. Apply for Extra Help.

Extra Help is a program created to help those on a limited income and with limited resources pay for Medicare prescription drugs. In fact, according to the Social Security Administration, Extra Help can save seniors up to an estimated $5,000 per year.  

6. Get assistance from charity programs.

If you have Medicare Part D but still find it difficult to pay for your prescriptions, there are charities that can help. Here are some worth looking into:

• National Organization for Rare Disorders
• BenefitsCheckUp
• CancerCare
• Good Days
• The HealthWell Foundation
• The Leukemia & Lymphoma Society
• Patient Advocate Foundation
• Accessia Health