Drug Coupons and Medicare: What You Need to Know
The Anti-Kickback Statute makes it illegal for pharmaceutical companies to offer discounts for medications that will be paid for by the federal government.
When purchasing medications, Medicare beneficiaries can choose to use either their prescription drug plan or a drug discount coupon.
Some Medicare-approved programs can help Medicare beneficiaries lower their prescription drug costs.
Even for Medicare beneficiaries who are on a prescription drug plan, out-of-pocket costs for medications can add up. Some manufacturers and companies offer prescription drug discounts, but can these drug coupons be used with Medicare?
The short answer is no. If you’re on a Medicare prescription drug plan, you won’t be able to use drug discount coupons.
In this article, we’ll explore the rules regarding drug discounts with Medicare, when to use coupons instead of your Medicare plan, and other ways to save money on your prescription drugs.
This article originally appeared on Healthline
What are the rules about using drug coupons with Medicare?
Prescription drug plans, like Medicare Part D, offer coverage to beneficiaries to help lower the cost of their prescription drugs. But while prescription drug plans help keep medication costs low for some enrollees, others experience significant monthly and yearly medication costs.
Private health insurance, on the other hand, allows certain discounts to help lower the cost of prescription drugs. These discounts can come directly from the manufacturer, a discount drug company with a contract with specific pharmacies, or the pharmacy itself.
While many of these drug discounts are offered cost-free, the U.S. Anti-Kickback Statute makes it illegal for individuals enrolled in Medicare to use manufacturer coupons or other drug discounts with their drug plan.
It’s illegal for drug manufacturers to even offer coupons to Medicare beneficiaries in exchange for purchases that could be federally reimbursed.
Why can’t I use drug manufacturer coupons if I have Medicare Part D?
The Anti-Kickback Statute was enacted as a deterrent to stop fraud and abuse in the healthcare industry. This legislation made it illegal for companies to exchange anything of value to generate business that would be reimbursable by federal healthcare programs like Medicare and Medicaid.
Within the pharmaceutical industry, the Anti-Kickback Statute made it a crime for pharmaceutical manufacturers to offer drug coupons to Medicare beneficiaries. This is because it became illegal to influence the purchase of any prescription drugs that Medicare could later reimburse.
When can I use drug coupons?
If you’re enrolled in Original Medicare (Parts A and B) or a Medicare Advantage (Part C) plan and also have a prescription drug plan (Part D):
You can’t use both a drug discount coupon and your Medicare prescription drug plan.
You can use a drug discount coupon instead of your Medicare prescription drug plan.
If you are in the coverage gap, or “donut hole,” for your Medicare prescription drug plan, you may be able to use the Medicare Coverage Gap Discount Program.
Most Part D plans have a coverage gap, which occurs after you and your plan have spent a certain amount on prescription drugs. This amount changes each year but is $4,660 for covered drugs in 2023 ($5,030 in 2024).
While in the coverage gap, you’ll pay a certain percentage of your prescription costs out-of-pocket until you reach a specific yearly limit.
The Medicare Coverage Gap Discount Program lets you take advantage of manufacturer discounts while in the coverage gap, as long as the drug manufacturer has signed an official agreement with the Centers for Medicare & Medicaid Services (CMS), allowing it to offer the discounts for that medication.
Is it ever cheaper to use a coupon?
Medicare Part D plans run on a formulary system. A formulary is a list of medications covered by a plan. Each Part D plan has its own formulary.
Prescription drugs included in a plan’s formulary are priced differently depending on which tier they fall in. For most plans, the tier system is as follows:
Tier 1: generic prescription drugs at the lowest cost
Tier 2: preferred brand name prescription drugs that are slightly more expensive
Tier 3: nonpreferred brand name prescription drugs that are even more expensive
Tier 4 and higher: the most expensive specialty prescription drugs
When you enroll in a Medicare Part D plan, your formulary will tell you the exact cost of the medications the plan covers. You can then take this information to the pharmacy to compare prices.
In some cases, the manufacturer of a drug (or a drug discount service) may offer the medication at a lower price than what you would pay under your Part D plan. This information is made freely available through the following laws:
The Know the Lowest Price Act of 2018 prohibits any Medicare-related prescription drug plan from withholding information about the price of a prescription drug on the plan and a lower price without the plan.
The Patient Right to Know Drug Prices Act prohibits any health insurance plan or pharmacy from withholding information about differences in the out-of-pocket costs of a prescription drug, both with and without the plan.
If you find that your medication is cheaper with a coupon or discount than through your Medicare drug plan, you can tell the pharmacist to charge you out of pocket for the drug.
If you choose to use a drug discount instead of your Medicare plan, any out-of-pocket costs paid for the medications will not contribute to your drug plan’s out-of-pocket costs.
These costs count toward the Medicare catastrophic coverage limits. This is the amount that you need to spend out-of-pocket to exit the coverage gap. For 2023, once your out-of-pocket spending reaches $7,400, you’ll automatically receive catastrophic coverage.
Generally, this means you’ll only pay a small coinsurance percentage (no more than 5%) or copayment for your covered Part D drugs for the rest of the calendar year. Starting January 1, 2024, the out-of-pocket spending amount rises to $8,000.
Can I use drug discount services with Medicare?
Drug discount companies are free services that help both insured and uninsured individuals save money on prescription drugs. These companies negotiate drug prices directly with pharmacies, which then pass along savings of up to 80% off the retail price to the consumer.
Prescription drug discount cards are free to use for Medicare beneficiaries who choose to pay out of pocket for their medications instead of using their drug plan.
In some cases, these drug discount companies may offer the drug at a lower cost than your Part D formulary. In this case, you can choose to pay out of pocket for the drug instead of using your Medicare plan.
Some drug discount programs to consider using include:
Before you use a drug discount card, visit the website of the program you want to use and perform a prescription drug search. Searching for your medications through these program websites can help you determine if and where your drug will be discounted.
No matter how you pay for your prescription drugs, there’s no double-dipping when it comes to discounted medications. You’ll need to choose either Medicare Part D or a drug discount program when you pay for your prescription drugs.
Why it may be a bad idea to drop Medicare drug coverage to use drug coupons
You may notice that certain medications are cheaper through discount programs than your Medicare drug plan. But dropping your Medicare prescription drug plan completely may not be the best idea.
For example, if you need new medication in the future and you don’t have coverage from a drug plan, you may end up paying full price if there are no coupons available. Plus, most manufacturer coupons eventually run out. This can leave you paying hefty prices out of pocket without coverage.
Finally, if you drop your Medicare drug plan and re-enroll later, it’s important to know that you will face a permanent late enrollment penalty on your plan premium each month.
Tips for reducing your prescription drug costs
Here are some tips for reducing your prescription drug costs while on Medicare.
Shop different pharmacies
Individual pharmacies decide what the retail price of a medication will be. Research from 2017 suggests that shopping around can help you save money on the cost of your medications.
A lower retail price can mean a lower out-of-pocket cost after Medicare covers its portion. Some pharmacies offer discounts to individuals who join a membership club, and there may be a fee to join.
Take note if you take multiple medications, though. Research from 2022 looked at discounted drug prices across different pharmacies within a single postal code. It found that there was no single pharmacy that consistently offered the lowest prices for prescriptions. That means while you may get the lowest price for one of your prescriptions at a specific pharmacy, you may pay more for another.
Check the discounted medication list
Some retailers offer a list of generic medications at low prices. A few examples include:
Walmart: Walmart offers some prescription drugs at $4 for a 1-month supply or $10 for a 3-month supply. There is no membership fee to access these savings.
Walgreens: The Walgreens Prescription Savings Club offers value-priced medication in 1-month and 3-month supplies. Pricing varies based on a medication tier. To access these savings, there’s an annual membership fee of $20 for individuals and $35 for families.
Kroger: The Kroger Rx Savings Club offers select medications for $6 or less for a 1-month supply. There’s also an annual membership fee involved, which is $36 for individuals and $72 for families.
Apply for Extra Help
Extra Help is a program that helps individuals with low income or resources pay for their prescription drug coverage. This program assists with costs like your monthly premiums, annual deductibles, and prescription copays. People with Extra Help also don’t enter the coverage gap.
The Extra Help program is estimated to be worth about $5,300 each year. However, you’ll need to meet certain income and resources requirements to be eligible. You can apply online for the program through the Social Security Administration’s site.
Use coverage gap discounts
Although it’s illegal to use drug discounts with your Medicare plan, the Medicare Coverage Gap Discount Program is a Medicare-approved option. Once a pharmaceutical manufacturer opts into the program, they can legally offer their medications for less while you’re in the coverage gap.
Get a plan that covers the gap
Some Part D plans offer additional coverage when you enter the coverage gap. However, it’s important to know that these types of plans often come with a higher monthly premium.
Apply for a PAP if you have a low income
Pharmaceutical manufacturer patient assistance programs (PAPs) are financial assistance programs offered by drug manufacturers, non-profit organizations, and individual states. PAPs can help cover out-of-pocket medication costs for low-income individuals.
Not every manufacturer has a PAP program, so you’ll need to do your research to see who offers one. Some examples of some of the larger manufacturer PAPs include:
Non-profit organizations like the PAN Foundation and the HealthWell Foundation also offer financial assistance. Additionally, you can also use Medicare’s search tool to find PAPs in your state.
Discuss alternatives with your doctor
If your doctor has prescribed a medication that’s out of your price range, ask if there’s a cheaper option. Most generic versions of drugs function just as effectively as the brand-name version, so going generic can help save you money.
The bottom line
With the enactment of the Anti-Kickback Statute, it became illegal to use discount drug coupons at the same time as Medicare prescription drug plans.
If a prescription drug is cheaper through a discount drug program, it’s completely legal to use the more affordable option instead of your Medicare plan.
For certain individuals, such as those in the coverage gap or with a low income, programs exist to help keep out-of-pocket medication costs low.
If you’re interested in saving more money on your prescription drugs, don’t forget to ask your healthcare professional about generic options and shop around your local pharmacies for the best prices.
View the original article on Healthline
