Medicare Part D is Medicare’s prescription drug program offered through private companies. While many think that the enhanced plans offered better drug coverage that generally is not the case. Let us explain the real differences between the two prescription drug plans.

What Makes a Plan Enhanced?

Enhanced plans are required to have a higher actuarial value than basic plans. Actuarial value is just fancy language for plan the percentage of cost covered. Enhanced plans cover more, but it is important to remember that how an insurance provider covers these costs can vary from deductibles to lower costs on certain drugs -see below, because enhanced plans generally have higher cost-sharing.

Enhanced Plans Generally Have Higher Premiums

Medicare enhanced drug plans usually have a higher premium than a basic plan. This is not always the truth, so you’ll want to research the cost of each plan.

More Enhanced PDPs Have $0 Deductibles

According to the Kaiser Family Foundation (KFF) more than two-thirds of enhanced prescription drug plans do not have a deductible, whereas only 12% of basic plans offer a $0 deductible. When a basic plan offers a $0 deductible they make up these costs by charging more in cost-sharing (copays and coinsurance (% charged), but an enhanced plan that offers a $0 deductible generally has a higher premium and therefore does not need to make up costs from drug purchases.

Enhanced Plans Can Offer Coverage in Donut-Hole

Enhanced plans can offer coverage in the donut-hole, but basic drug plans cannot do so. While gap coverage may be your deciding factor in choosing an enhanced plan you must remember that most donut-hole gap coverage is limited to a small group of generic drugs and an enhanced plan that offers this type of coverage will charge a much higher premium. Therefore a higher premium enhanced plan with gap coverage may not be worth its extra costs.

Basic Plans Generally Have Lower Cost-Sharing

Basic plans generally have lower cost-sharing costs than enhanced prescription drug plans. Nearly a third of all enhanced drug plans charge more than the average for preferred brand name drugs, more than half charge more for non-preferred brand drugs, and nearly 75% charge more for specialty tiered drugs.

Enhanced Plans Usually Don’t Cover More Drugs

Most people think you get better drugs from an enhanced plan but that isn’t necessarily the case. In actuality, most basic and enhanced plans offered by the same insurance company cover identical drug formularies (list of drug coverage).

Which to Choose: Basic or Enhanced?

Truth is a basic plan may be your better bet, as it generally offers lower premiums and lower cost-sharing, even if you pay a deductible. KFF backs up our assessment, “Our analysis suggests that beneficiaries may find it difficult to identify the added value of an enhanced plan, and when that added value justifies the higher premiums associated with enhanced coverage.”

Our suggestion is that when you research a plan that you look to see what coverage is offered during the donut-hole (if you know or think that you might hit the coverage gap in the year) and decide whether the extra monthly premium is worth the cost.

To help decide between a basic and enhanced PDP call the number above or contact Senior65.