A person with Medicare cannot use a drug discount coupon with their prescription drug plan. However, a person can choose to use coupons instead of their Medicare drug coverage.
Some manufacturers and pharmaceutical companies may offer discount coupons on drugs. However, a criminal law, known as the Anti-Kickback Statute, makes it illegal for people enrolled in Medicare to use manufacturer coupons or other drug discounts with their drug plan.
This article discusses drug discount coupons and services, and the associated rules for people enrolled in Medicare. It then looks at the Medicare drug plans, and when a person might want to use coupons. Finally, it considers alternative ways to reduce prescription drug costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Drug coupons offer a discount on the cost of named prescription drugs. The manufacturer or a pharmacy selling the medication may provide the coupons. Discount drug companies may also offer the coupons.
An individual enrolled in a Medicare prescription drug plan cannot use drug coupons to help them pay for their prescription medications while using their Medicare coverage. This rule applies to people enrolled in the following plans:
- original Medicare (Part A and Part B)
- Medicare (Part D) prescription drug plan
- Medicare Advantage (Part C) plans with prescription drug coverage
However, Medicare beneficiaries can choose to use a drug discount coupon instead of using their Medicare coverage. A drug coupon could reduce the cost of drugs not covered, or help pay for drugs with restrictions such as quantity limits or prior authorizations.
People without health insurance or with private health insurance can use drug coupons.
Drug discount companies offer free services to help their members purchase prescription drugs. These services can help insured and uninsured people save money on medications
The discount service company negotiates the drug price directly with the pharmacies for savings they can pass to their members. The company then publishes the prescription drug prices, and members can search for their medication.
People can compare these prices to their Medicare Part D plan formulary, which lists prescription drugs covered by Medicare, and calculate if it is cheaper to use their Medicare coverage or the discount service.
A person’s medication may be less costly to buy with the drug discount service than with their Medicare prescription drug coverage. However, a person with Medicare can use the drug discount service only when they pay out of pocket for their prescriptions.
A person cannot use both Medicare coverage and the drug discount service.
Medicare has several plans, which offer various levels of drug prescription coverage.
Original Medicare (Part A and Part B)
Original Medicare does not provide drug prescription coverage. However, a person can choose to get prescription drug coverage through a Medicare drug plan, called Part D.
Medicare Part D
Most Medicare drug plans include generic drugs and brand name prescription drugs. They provide a formulary of those drugs and the costs.
Some plans put their drugs into different levels, called tiers. Within each tier, the drugs have a set copay and the drugs generally range in cost from generic drugs to the highest prescription drugs.
Medicare Advantage (Part C)
Many Medicare Advantage (Part C) plans offer prescription drug coverage.
People can enroll in or make changes to a Medicare Part D or Medicare Advantage Plan during various periods.
- The Initial Enrollment Period (IEP) runs for seven months, starting 3 months before someone turns 65.
- The Open Enrollment Period (OEP) runs from October 15–December 7.
- The Medicare Advantage OEP runs from January 1–March 31. During this time, a person can change Medicare Advantage plans, or choose to go back to original Medicare. A person can also enroll in a Medicare Part D plan.
This online tool can help people find a plan that suits their needs.
Medicare prescription drug plans generally have monthly premiums, an annual deductible, copays, or coinsurance.
Most Medicare drug plans have a temporary limit on what they pay for prescription drugs. In 2020, the coverage gap begins after someone has spent $4,020 on covered drugs.
In July 2020, President Trump enacted four new executive orders aiming to reduce out-of-pocket costs, and lower the cost of prescription drugs.
A person can choose to use drug discount coupons instead of their Medicare prescription drug plan. However, a person may wish to consider several factors before making that decision.
For example, although a drug discount coupon may initially offer a particular medication at a lower cost than through a Medicare plan, canceling a Medicare prescription drug coverage plan could eventually lead to higher out-of-pocket expenses.
The higher expenses may occur if the drug discount price is available for only a certain amount of time, or coupons may be single use. Without coupons, a person may have to pay full price for the medication. Without Medicare coverage, these costs could be considerable.
If a person drops their Medicare drug plan and then decides to re-enroll, they may have to pay a late enrolment penalty on each monthly plan premium.
If a person chooses to use their Medicare prescription drug coverage rather than a discount service or coupons, there are several ways they may reduce costs.
An individual can ask their doctor if there is a cheaper option for the drug prescribed. Many drugs have generic versions that are cheaper than the brand-name medication.
Each pharmacy sets the prices of the drugs they sell. People can check prescription drug prices in several pharmacies to see which one offers the most cost savings. It could lead to lower out-of-pocket costs outside a person’s Medicare coverage.
Some large, multi-state retail chains offer generic medications for treating diabetes, cholesterol, high blood pressure, and other conditions. According to non-profit NeedyMeds, charges for generic drugs range from $4 to $15. The drug quantities also range from sufficient for 30 to 90 days.
Some programs require a person to take out a membership, while others do not. NeedyMeds offers an online tool to help a person find generic drug programs.
Coverage gap discounts
The Medicare program is a federal government-approved option that provides manufacturer discounts for people who are enrolled in Medicare Part D and get the drugs covered by the plan.
Pharmaceutical drug manufacturing companies can join the program to lawfully offer discounts to Medicare beneficiaries.
Patient assistance programs (PAPs)
Drug manufacturers and the state government may offer patient assistance (PAP) programs to people with a low income. The programs may include free drugs or financial assistance to help people pay their out-of-pocket prescription drug costs. However, not all states offer the program.
Because of the Anti-Kickback Statute, an individual cannot use discount drug coupons together with their Medicare prescription drug plan.
However, if an individual finds that their prescription is cheaper through a discount drug program, they can choose this option instead of using their Medicare plan.
Some states provide programs to help people with a low income reduce the costs associated with their prescription drugs.