How Prescription Costs Can Change Your Medicare Decision

When people compare Medicare plans, they often focus on premiums, doctor networks, and extra benefits. But one of the most overlooked factors — and one of the most impactful — is prescription drug coverage.

The medications you take can significantly shift the total cost of one plan versus another. Two plans that look similar on paper can produce very different costs once you factor in how each one handles your specific prescriptions.

Why Drug Costs Vary So Much Between Plans

Every Medicare plan that includes drug coverage (either a Part D plan or a Medicare Advantage plan with drug benefits) has its own formulary — the list of drugs it covers. Within that formulary, drugs are organized into tiers, and each tier has a different cost-sharing level.

A typical tier structure:

| Tier | Drug Type | Typical Cost | |---|---|---| | 1 | Preferred generics | Lowest copay ($0–10) | | 2 | Non-preferred generics | Low copay ($10–25) | | 3 | Preferred brand-name | Moderate copay ($25–50) | | 4 | Non-preferred brand-name | Higher copay | | 5 | Specialty drugs | Coinsurance (25–33%) |

The same drug can be on different tiers — or not on the formulary at all — depending on the plan. That means:

• Plan A might charge you $10/month for a medication
• Plan B might charge you $47/month for the same drug
• Plan C might not cover it at all

This is why checking your specific medications against each plan's formulary is essential.

How to Factor Medications Into Your Plan Decision

Here is a practical approach:

Step 1: Make a Complete Medication List

List every prescription you take, including the drug name, dosage, and how often you take it. Include everything — even medications you think are inexpensive.

Step 2: Check Each Plan's Formulary

For every plan you are considering, look up each medication. Note:

• Whether the drug is covered
• What tier it is on
• Any restrictions (prior authorization, step therapy, quantity limits)

Step 3: Estimate Total Annual Drug Costs

Calculate what you would pay for your medications over a full year under each plan, including deductibles, copays, and how costs change through the coverage phases.

Step 4: Add Drug Costs to Other Plan Costs

Combine your estimated drug costs with premiums, doctor visit copays, and other expenses to get a total annual cost comparison.

This process takes time, which is why Summit Benefits Group handles it for Kentucky clients. We run your medications through available plans to show you which ones actually cost the least for your specific prescriptions.

• Your medications are a major cost variable — the cheapest-looking plan may not be the cheapest plan for you.
• Formularies and tiers differ across plans — the same drug can cost dramatically different amounts depending on the plan.
• Annual drug cost reviews are essential — formularies change every year, so a plan that worked well last year may not be the best fit this year.

When Drug Costs Tip the Scale Between Medicare Paths

Drug costs can also influence whether Medicare Advantage or Original Medicare + Part D is the better path:

• If your medications are mostly low-cost generics, the drug coverage in most plans will be similar, and other factors (network, flexibility) may matter more.
• If you take expensive brand-name or specialty medications, the differences between plans can be hundreds or thousands of dollars per year. Careful plan comparison is critical.
• If you take many medications, a plan with a lower deductible and better formulary coverage may save you money even if it has a higher premium.

The Annual Review Habit

Medicare plans can change their formularies, tier placements, and pharmacy networks every year. A drug that was on Tier 1 this year could move to Tier 3 next year — or be removed from the formulary entirely.

This is why annual plan reviews during the Annual Enrollment Period (October 15 to December 7) are so important. Even if you were happy with your plan last year, it is worth checking whether it is still the best option for your current medications.

Related Reading

For the mechanics behind these costs, what Medicare Part D is and whether you need it covers tiers, phases, and the late enrollment penalty, and our Medicare Part D page gives the product overview. Rising pharmacy costs are also one of the signs it may be time to review your coverage.

Comparing drug coverage is one of the most impactful things we do for our clients. At Summit Benefits Group, we take your complete medication list and run it through available plans to identify which options provide the best coverage at the lowest total cost.

This is not something you have to figure out alone.