Tracking your Medicare Part D prescription drug plan costs can be a complicated process. You’ll need to review a form called the Explanation of Benefits, which is a lengthy document broken into six sections. While the EOB is not a bill, it is important to familiarize yourself with the information it contains. If you do not, it is possible that mistakes made by Medicare or your pharmacy could cause your prescription drug costs to increase unnecessarily. This article will explain Section 3 of the Explanation of Benefits form.
Section 3 of the EOB lists your out of pocket costs and total drug costs. It is one of the simplest portions of the EOB to understand. The section features a two-column chart. The first column details out of pocket costs and the second column details total costs.
Out of pocket costs include:
- your payment for filling or refilling a Part D prescription drug
- any payments made on your behalf by third parties (Medicare Extra Help, Medicare’s Coverage Gap Discount Program, AIDS drug assistance programs, Indian Health Service, State Pharmaceutical Assistance Programs, and most charities)
Out of pocket costs do not include:
- Part D plan monthly premiums
- drugs not specifically covered by your plan
- non-Part D drugs (such as drugs administered during a hospital stay)
- drugs that fall under Supplemental Drug Coverage
- drugs obtained from an out of network pharmacy
- any payments made on your behalf by union or employer health plans as well as government programs like TRICARE, the Veteran’s Administration, and Worker’s Compensation.
Total drug costs, listed in the second column of EOB Section 3, include what your Part D plan pays. Total costs also include what you pay as well as what third-party organizations pay on your behalf.
Estimating your costs
While it is beyond the scope of this document to estimate the numbers you will see in your individual EOB document, you can get a general idea of what to expect by examining Medicare’s nationwide averages for the current year and factoring in the cost of your frequently used drugs. The average nationwide monthly premium for a Medicare Part D prescription drug plan in 2016 is $34.10. Your plan costs may vary somewhat depending on your state of residence and the specific plan that you choose.
The highest allowable Part D deductible for 2016 is $360. The largest variation will occur based on the drugs that you need. For example, if your annual cost of prescriptions is $3000 and you select a Part D plan that pays 75%, then your annual out of pocket expenses should be approximately $420 (monthly premiums) plus $360 (deductible) plus $750 (25 percent of the $3000 drug cost) for a total of $1530. Keep in mind that this a very basic example; your numbers will most likely differ.