Mike Mergen | Bloomberg | Getty ImagesIf you’re a Medicare beneficiary, now’s the time to evaluate your prescription drug coverage for 2023.In addition to checking during Medicare’s annual fall open enrollment whether there’s a more cost-effective plan for you, some legislative changes take effect next year that may reduce how much you pay out of pocket for your coverage.”It’s a quality of life issue,” said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans. “Saving money on medications means there’s more Social Security money left for other necessities in life.”More from Year-End PlanningHere’s a look at more coverage on what to do finance-wise as the end of the year approaches:Medicare’s enrollment period opened Oct. 15 and runs through Dec. 7. Beneficiaries can make changes to their coverage during this period.Prescription drugs are generally delivered through Medicare Part D. Of the estimated 64.5 million people enrolled in Medicare, about 50 million have such coverage, through either a standalone Part D plan or an Advantage Plan — both of which are offered by private insurance companies. Advantage Plans deliver Part A (hospital coverage) and Part B (outpatient care) and usually Part D.Here are some changes you may notice next year, as well as some tips for what to look for when evaluating your options for 2023.Insulin costs will be cappedSome changes to prescription drug coverage, enacted as part of the Inflation Reduction Act, take effect next year. This include a monthly $35 cap on cost-sharing for insulin under Part D, which will start on Jan. 1. (Some plans may already offer a $35 cap.)Part D deductibles — which vary from plan to plan but cannot be more than $505 in 2023, up from $480 this year — also won’t apply to the covered insulin product. For beneficiaries who take insulin through a traditional pump (which falls under Part B), the benefit starts July 1.”Some of my clients had to choose between buying food and buying insulin [or] rationing the insulin to make it last longer, thereby taking much less than the prescribed amount,” Gavino said. “This was dangerous, and now they can use the right amount they need to live.”100% coverage for recommended vaccinesAdditionally, there will no longer be any cost-sharing for recommended inoculations under Part D beginning Jan. 1, including for the shingles vaccine. “In the past, many people paid quite a bit for the shingles vaccine because of Part D’s rather high deductible,” said Danielle Roberts, co-founder of insurance firm Boomer Benefits.”The vaccine usually was a covered medication, but because they hadn’t yet satisfied the deductible, they spent quite a bit for it,” Roberts said.
Other provisions that are intended to reduce Part D spending take effect in later years. This includes eliminating an existing 5% coinsurance in the so-called catastrophic phase of coverage (2024) and capping beneficiaries’ annual out-of-pocket Part D spending at $2,000 (2025). Currently, there is no out-of-pocket limit, regardless of whether you get your coverage as a standalone Part D option or through an Advantage Plan.Medicare also will be able to start negotiating the price of some drugs beginning in 2026.Your plan could change its list of covered drugsAs for choosing your 2023 coverage: While you aren’t required to take any action during open enrollment — your current coverage generally would continue into next year — plans often change their list of covered drugs and the price of them.Additionally, each plan assigns individual drugs to different tiers, with the first tier generally being the least expensive and the fifth costing the most. From year to year, various drugs may move from one tier to another in any given plan — which makes it important to check where your prescriptions fall for 2023.Also be sure to look at the pharmacies included in the plan. Some are “preferred” — meaning your medicine will be less expensive there than at a “standard” pharmacy.”The pharmacy you use can really impact the price of what you pay for your prescriptions,” said Ari Parker, a senior advisor at Chapter, a Medicare advisory firm.Beneficiaries with higher income pay more for coverageThe average premium for standard Part D coverage next year is projected to be $31.50, compared to $32.08 in 2022, according to the Center for Medicare & Medicaid Services. However, be aware that if your income is above certain limits, you will be subject to so-called income related adjustment amounts, or IRMAAs, which are in addition to any premium you pay (see chart below). Part B also comes with those extra amounts.Your tax return from 2021 is generally what would be used to determine whether you’re subject to those surcharges in 2023. You can ask for a reconsideration if your income has dropped since then.Getting prescription drug coverage through Medicare is optional. However, if you fail to sign up when you first qualify for coverage at age 65 and change your mind later, you’ll face a life-lasting penalty unless you meet certain exclusions (i.e., you receive acceptable coverage through an employer).The penalty is 1% of the national base premium for each month you didn’t have Part D or creditable coverage and should have.Be aware that while you can change your Advantage Plan early next year (Jan. 1 to March 31) if you discover it’s not a good fit, that’s not the case for standalone Part D plans.”Unless a special circumstance applies, you won’t be able to change it,” Parker said.Also, sometimes you can find medicines at a cheaper cost than through your plan, such as with a free drug-discount card. However, if you go this route instead of through your insurance, your plan won’t count the medicine’s cost and your copay toward your deductible or other calculations it uses to determine your share. .
“It can cost more in premiums to pay less out of pocket … but many families can’t afford unexpected costs,” Levin-Scherz said. Employees are contributing an average $4,412 for their health insurance in 2022, of which $2,520 is paid in the form of premiums and $1,892 is paid through cost sharing such as deductibles, copays and coinsurance, according to Aon.Other benefits may be availableAside from health insurance, you may be offered disability insurance for free or at a low cost. The two basic types are short-term disability, which generally replaces 60% to 70% of your salary, and long-term disability, which generally kicks in after three to six months and is about 40% to 60% of your income. Some companies also let you purchase additional coverage. The same goes for life insurance: You may get a certain amount of coverage — say, equal to one year’s salary — for a low or no premium, with the opportunity to purchase additional coverage.If you consider purchasing extra disability or life insurance, keep in mind that the policy is generally tied to your employment at the company offering the coverage — meaning if the coverage is important to you for the long term, you may want to explore securing a policy outside of the workplace.Other common benefits that might be available through your job include financial planning, tuition reimbursement programs and backup child care, according to a 2021 survey from Willis Towers Watson. Some companies also are offering emergency savings options, providing help with student loan debt or making contributions to 529 college savings plans. .
