Sunday, October 25, 2020

No, PDP is not a drug; it stands for Prescription Drug Plan. PDP. For those of you in or about to be in the Medicare-eligible market, chances are extremely high that you are very possibly in or will choose to be in a PDP that is not the most cost efficient for your situation.

If you are new to Medicare, it’s important to understand that you will need a separate Medicare PDP if you choose to be in a Medigap/Supplement health plan. Those are the lettered plans you have heard about and, yes, you might not be in the most cost efficient one of those either.

If you are in a Medicare Advantage plan, your PDP is part of the plan but you still have co-pays for the drugs themselves.

To best understand your options it’s important to be cognizant of how the carrier PDPs are designed. All drugs are divided into what is known as tiers and formularies. The tiers are numbered 1-5. The lower the tier the drug is in the lower cost. A formulary can be thought of as a list of drugs available.


Now, here is the catch with Medicare PDP: Each Medicare PDP carrier has its own tiers and formulary, so both in theory and in reality, per the many clients I have worked with. Two carriers can have the same drug in different tiers, creating a substantial cost difference. The same applies to the formulary, as one carrier can have a drug in its formulary and another carrier may not, also creating a large cost difference.

In addition to the actual drug cost variance between the carriers, every PDP carrier charges a monthly premium that they, not the drug companies, receive. Also, most have a yearly deductible for drugs that are tier 3 or higher. The monthly premiums range from approximately $13.50 to about $95 and the deductibles from $235-$435, which is the maximum allowed by Medicare. The carrier, with Medicare approval, can move a drug to a higher or lower tier and/or add or remove a drug from their formulary, creating major cost changes. This usually happens with the tier 3-5 drugs, and there is no way to know in advance if a drug you are currently taking or might get prescribed during the year is going to have an increase or decrease in cost during the year.

Why do almost all my clients, before I work with them, wind up in PDP plans that are not the most cost efficient for them? The carrier media bombardment convinces and very often has brainwashed them into believing that the more they pay in premiums, regardless of drug costs, the better off they are. What they don’t realize is that the most important concept with PDP is: The carriers do not make the drugs.

With that in mind, why would you, as some of my clients have, pay a $35-$95 premium per month to the carrier when you are taking tier 1-2 drugs that cost no more than $5 or so each per month, when you can pay a monthly premium of approximately $13.50 for the same drugs?

To be transparent, cost efficiency with PDP, no matter what tier of drugs you are taking, is determined by the combination of the total monthly and yearly cost between the carrier premium, actual drug costs and the deductible. With 35 to 40 PDP plans in the NJ/NY metro area, you can attempt the exhausting, time consuming and frustrating process of attempting PDP cost efficiency yourself, or work with a Medicare licensed and certified professional.

Robert Remin is a licensed and certified independent agent with all Medicare carriers in NJ, NY and CT. Robert‘s only goal is to provide you a customized solution for all your insurance needs (without pushing products). He also works with advisers well versed in innovative tax strategies and design. For questions or a cost free consultation, contact Robert at 914-629-1753 or email [email protected], or visit www.robertremininsurance.com. Learn about the 2021 Medicare options in Robert’s next free Zoom: Solving the Medicare Puzzle/Medicare Myths Exposed class. Call, text or email for next class dates.