Medicare Prescription Drug Plan Cost Estimator
- Our mission is to supply you with health and insurance information about the newest "medicare prescription drug plan" and "no deductible" "prescription drug benefits."
Private companies will offer Medicare prescription drug coverage starting in 2006. The decisions you make depends on what kind of health care coverage you have now. To find out more about what Medicare drug coverage means to you, read our publication, "A Guide to Getting Started."
Key factors to consider in comparing your drug plan options are: Coverage, cost, convenience and peace of mind now and in the future. To find out more about these factors, read "Things to Think about when You Compare Plans."
The cost estimator assumes that you have no current drug coverage or receive any type of discounts, such as from a drug discount card, on your prescription drug cost. If you know what you spend monthly on prescription drugs you can use the cost estimator to see what your potential savings will be by joining a Medicare prescription drug plan. It will also provide you with information on the lowest premium available in your State.
The cost estimator is a quick tool to give you a sense of the savings you can anticipate with Medicare Prescription Drug coverage. This tool is not able to take into account any insurance you may have now for drugs. Therefore, if you currently have insurance for drugs, the tool will not be able to compare current costs to those you may have in the future if you switch to Medicare drug coverage.
Medicare Prescription Drug Plan
Cost Estimator Tool Methodology
The calculations for the Cost Estimator tool on medicare website are based on the standard benefit Medicare Prescription Drug Plan. The calculation includes the four levels of coverage, including:
$250 deductible (beneficiary pays full discounted drug cost based on plan negotiated prices)
25% drug cost share to the beneficiary during the initial coverage period ($250 - $2250)
100% drug cost share during the coverage gap period (total drug cost from the initial coverage limit ($2250 to beneficiary total out of pocket cost of $3600)
5% drug cost share once beneficiary's total out of pocket drug cost reaches $3600
The insurance cost estimates are annualized and include the lowest annual premium offered by a Medicare Prescription Drug Plan for a particular state. In addition, a 5% discount (See Note 1) was added to the monthly drug cost entered by the user to reflect additional plan negotiated discounts.
For example: Beneficiary in Minnesota with monthly drug
spending of $200.00 ($2400.00
annualized). The amounts in the boxes indicate beneficiary's responsibility.
a. Annual Premium for drug plan: $1.87 X 12 months = $22.44
b. Annual drug spending after 5% discount: $2400.00 x 0.95 = $2280.00
c. $250.00 deductible: $2280.00 - $250.00 = $2030.00 - target="_blank"
d. 25% drug cost share during initial coverage level ($250.00 - $2250.00):
0.25 x 2000.00 = $500.00
e. 100% drug cost share during the coverage gap period:
$2030.00 (item c) - $2000.00 = $30.00
Estimated total annual Medicare drug spend including premium:
$500.00 + $30.00 = $802.44
Estimated annual savings: $2400.00 - $802.44 = $1597.56
Cost Share after Deductible: $500.00 + $30.00 = $530.00
Note 1: Based on preliminary Medicare Prescription Drug Plan pricing data and CMS analysis1, the national average discount of AWP (Average Wholesale Price) minus 15% for brand name drugs was used to derive the 5% discount amount. To recognize that those persons paying retail pricing (with no insurance) rarely pay the full AWP price, we assumed a non-insured person could obtain drugs in a retail setting at a price of ~AWP-10%. This figure is based on commercial drug plan data licensed through a vendor. By enrolling in a Medicare Prescription Drug Plan, beneficiaries can obtain an additional 5% discount (i.e. AWP-15% versus AWP-10%) even when paying the full amount for a drug (i.e. during the deductible and coverage gap period). We believe that final pricing data for Medicare Prescription Drug plans will result in a discount greater than AWP-15% but we chose to be conservative in our projected savings. In addition, we chose to use the national average discount for brand name drugs although we recognize that generic drugs would have a much larger discount.
Websites of Interest
1. Federal Register/Vol. 70, No.18/ Friday, January 28, 2005, page 4466