Why doesn’t my Part D prescription plan cover anything?

My phone rings on Saturday night at 10pm.

“Doc, I went to the pharmacy today and my drugs cost me over $100 dollars! Can you believe this?  I thought I had coverage. What gives?”

“Steve (not the real name), did you remember when we talked about a deductible for your prescription coverage?”

“Vaguely, this whole health insurance thing is confusing.  I know we had gone through this a few times but it’s all a blur.”

Unfortunately, conversations like this are not uncommon.

Most people tend to understand co-pays, but get pretty upset at deductibles.

For many prescription plans under Part D, there is a deductible.  For 2015, no Part D deductible can be more than $320.  Some plans have a deductible that applies to all tiers of prescriptions while some plans may only have deductibles that apply to brand name prescriptions.

So what the heck is a deductible?

A deductible is the amount you pay before insurance kicks in.  If you have a deductible of $320 on all prescriptions, this means that insurance will only pay for prescriptions until after you’ve paid $320 at the pharmacy.

Let’s say you have a brand name prescription that costs $200 a month. You have a deductible of $320 and a co-pay of $45. 

When you go to the pharmacy in month 1, you’ll be paying the full $200 for your prescriptions.  In month 2, you’ll be typically paying $120 plus your $45 co-pay ($165 total) for your prescription.  In month 3, your co-pay will be $45 because your deductible would have been met.

Many plans have a deductible and the plans without deductibles often come with higher monthly premiums. 

I’m afraid to say that the days of 100% coverage for everything are behind us.  Although most people understand that we’ll all have to pay something, it can be hard to stomach paying 100% at any given time. 

Hopefully having realistic expectations will prevent sticker shock at the pharmacy.