Key Takeaways
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Avoiding costly Medicare Part D mistakes requires careful attention to plan details and annual changes.
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Comparing plans and understanding out-of-pocket costs can help you save money on prescription drugs.
Not Checking the Annual Changes in Your Plan
Every year, Medicare Part D plans undergo updates, which can include changes in premiums, deductibles, copayments, and formularies. What worked well for you last year may not be the best option this year.
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Drug tiers may shift, increasing your costs for specific medications.
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Formularies can exclude certain medications, requiring you to switch prescriptions or pay more.
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The deductible and out-of-pocket maximum can rise, impacting your overall spending.
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Network pharmacies might change, limiting access to preferred pricing.
How to Stay Informed
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Review your Annual Notice of Change (ANOC) letter, which is sent before the Open Enrollment Period from October to December.
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Compare available plans each year to determine if your current plan is still the most cost-effective.
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Consult Medicare’s Plan Finder tool or a licensed agent listed on this website to get help selecting the best plan.
Not Considering the Total Cost of a Plan
Choosing a Part D plan based solely on the monthly premium is a mistake that could lead to higher overall expenses. While a low premium may seem attractive, it doesn’t always translate to savings.
Factors That Impact the Total Cost
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Deductible – Some plans have high deductibles, requiring you to pay more out-of-pocket before coverage kicks in.
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Copayments and Coinsurance – Different plans have varying cost structures for medications.
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Coverage Gap (Donut Hole) – Once total drug spending reaches a certain limit ($5,030 in 2025), you pay a higher percentage of medication costs.
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Catastrophic Coverage – After reaching $2,000 in out-of-pocket drug costs, your medications are covered at 100% for the remainder of the year.
How to Make a Better Decision
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Look beyond the premium and evaluate how much you’ll pay in total for the year.
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Choose a plan with a cost structure that matches your medication needs and budget.
Ignoring Drug Formularies and Pharmacy Networks
Not all Medicare Part D plans cover every medication, and some plans limit where you can fill prescriptions at the lowest cost. Ignoring these details can lead to unexpected expenses.
What to Look for in a Plan’s Drug Formulary
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Ensure that your regular prescriptions are included in the plan’s list of covered drugs.
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Check whether any of your medications require prior authorization or step therapy.
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Look at which tier your medications fall under, as lower tiers generally have lower copayments.
The Importance of Pharmacy Networks
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Some plans have preferred pharmacies that offer lower copays.
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Using an out-of-network pharmacy could mean paying full price for medications.
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Certain plans may include mail-order options, which can be more affordable and convenient.
Missing the Medicare Part D Enrollment Deadlines
Medicare has specific enrollment periods, and missing these deadlines can result in coverage delays and permanent late penalties.
Key Enrollment Periods for Medicare Part D
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Initial Enrollment Period (IEP): Begins three months before your 65th birthday and lasts seven months.
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Annual Open Enrollment Period (OEP): Runs from October 15 to December 7 each year. This is when you can switch or enroll in a new plan.
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Medicare Advantage Open Enrollment Period (MA OEP): From January 1 to March 31, those already enrolled in Medicare Advantage can change plans or return to Original Medicare with a Part D plan.
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Special Enrollment Periods (SEPs): Available for specific circumstances, such as losing employer coverage or moving out of your plan’s service area.
Consequences of Late Enrollment
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A late enrollment penalty applies if you go without creditable prescription drug coverage for 63 consecutive days or more after your Initial Enrollment Period.
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The penalty is 1% of the national base beneficiary premium per month you go without coverage and is added to your premium permanently.
How to Avoid Late Penalties
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Enroll in a Part D plan as soon as you’re eligible.
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If you have employer coverage, confirm that it qualifies as creditable prescription drug coverage before delaying enrollment.
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Keep track of Medicare enrollment deadlines and act promptly during Open Enrollment.
Making an Informed Decision Can Save You Money
Medicare Part D is essential for covering prescription drug costs, but choosing the wrong plan or missing key details can leave you paying more than necessary. By reviewing your plan annually, comparing total costs, checking formularies, and enrolling on time, you can make an informed decision that keeps your medication expenses in check. If you need help finding the right Medicare Part D plan, speak with a licensed agent listed on this website for expert guidance.