While Medicare Part D has made prescription drugs more affordable for people with Medicare, many beneficiaries continue to face affordability challenges, in part because there is no hard cap on out-of-pocket spending under Part D. A new resource from the Kaiser Family Foundation examines the financial burden this places on Part D enrollees who rely on high-cost medications.
There are several different phases of part D coverage that beneficiaries pass through during the year. In each, the beneficiary pays a different percentage of the total cost of the needed medication. This structure puts Part D enrollees without low income subsidies who rely on specialty tier drugs—which Medicare defines as drugs that cost more than $670 per month in 2019—at particularly high risk of facing significant out-of-pocket costs.
In the initial coverage period, Part D plans are allowed to charge between 25% and 33% coinsurance for specialty tier drugs before enrollees reach the coverage gap, where they pay 25% for all brands. Once a beneficiary reaches the annual total out-of-pocket threshold ($5,100 in 2019) they move into the catastrophic coverage phase, where they stay for the remainder of the year.
During this period, enrollees pay lower coinsurance (5%) for their covered drugs. However, for individuals who take high-priced medications, this relatively small percentage can translate into significant out-of-pocket costs. According to the Kaiser Family Foundation, in 2019 the cost of certain specialty-tier drugs in the catastrophic phase alone is over $5,000.
Because there is no hard cap on spending in the Part D benefit, enrollees who need expensive medications can face substantial out-of-pocket costs—which may lead to unfilled prescriptions, poor medication adherence, and worse outcomes.
Medicare Rights continues to support improvements to Part D that will improve beneficiary access and affordability, including establishing an out-of-pocket cap. We look forward to working with our partners and policymakers to address the issue of high and rising prescription drug prices for people with Medicare and their families.