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Dear Liz: In the past you have discussed the pros and cons of Medicare Advantage plans versus original Medicare. There is one more point I think you should make to the readers, and that is the high cost of Part D prescription drug coverage for people who choose original Medicare.
For example, if you only need a few expensive Tier 3 or higher drugs, combined with the monthly premium, you could easily pay $3,000 per year or more.
I’m not saying original Medicare is bad. On the contrary, it gives you great freedom in choosing your health. However, Part D is expensive.
Answer: Let’s start with the news that Medicare Part D will have a $2,000 out-of-pocket maximum in 2025. The limit applies to Part D plans purchased by people with Original Medicare plans, as well as Medicare Advantage plans with prescription drug coverage. Once you reach the limit, you won’t have to pay for covered medications for the rest of the year.
Note the phrase “covered medications.” Prescription drug coverage is provided by private insurers, and their lists of covered prescriptions may change each year. An insurance plan that covers a drug this year may not cover it next year, so each year during Medicare open enrollment — which ends December 7 — you should shop around to make sure your plan offers the coverage you need have. If you don’t compare during the annual open enrollment period, you could end up paying significantly more than you expected.
As background, Medicare Advantage plans are offered by private insurers as an alternative to original Medicare. While with original Medicare you can choose any doctor who accepts Medicare – and the vast majority do – Medicare Advantage has networks of providers and may not cover care outside those networks, or may charge more. Also, Medicare Advantage networks and benefits can change from year to year.
Fortunately, Medicare offers one comparison tool to help you sort through your options. By entering the medications you take and your preferred pharmacy, you can select the best plan for your circumstances. Now is the time to compare plans and switch plans if necessary.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions can be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact Us” form at asklizweston.com.
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