Does Medicare Cover Insulin?
The cost of insulin has been soaring over the last decade. For diabetics on Medicare, the out-of-pocket costs can be overwhelming. The Centers for Medicare and Medicaid Services estimates that 1 in 3 Medicare recipients is diabetic and a large percentage of those diabetics require insulin to manage their health.
The Medicare Part D Senior Savings Model
In May of 2020, the Centers for Medicare and Medicaid Services (CMS) approved a change to insulin prices based on The Medicare Part D Senior Savings Model. The goal of the model is to test a 5-year plan where private insurance companies and drug manufacturers cover a large portion of the price of insulin to make the cost of this critical medication more manageable for diabetics enrolled in Medicare.
How Does Medicare Cover Insulin Cost under the New Model?
The model involves having private insurers offer Medicare Part D enhanced plans for insulin users starting in 2021. The enhanced plans will have a price cap for insulin. Manufacturer rebates will partially offset the difference between the actual cost of insulin and the price cap. These rebates will apply to insulin costs by the insurance providers who offer the Medicare prescription drug plans. The CMS projects manufacturer rebates will cover an estimated $250 million of insulin costs over the model’s 5-year test period.
To receive price cap savings, Medicare recipients must opt-in to an enhanced Part D prescription drug plan or a Medicare Advantage Plan that includes prescription drug coverage. Plan providers do not automatically enroll diabetic Medicare recipients in these enhanced plans because most Medicare beneficiaries are not insulin users.
If you choose to opt-in to an enhanced plan, it caps Medicare copays in all four phases of the coverage year, including the donut hole. The four phases of the coverage year are:
- The deductible phase
- The initial phase
- The coverage gap (or donut hole)
- The catastrophic phase
How Much Does Insulin Cost under the New Model?
This is the easy part. If you enroll in a Medicare Part D enhanced plan that includes the price cap, then your co-pay for insulin will be no more than $35 for a 30-day supply. This price cap applies to the first 3 phases of your Plan’s coverage year. Once you reach the catastrophic phase, you are only responsible for a 5% co-pay.
The goal is to provide pricing stability for diabetic seniors, many of which are living on a fixed-income budget. The CMS estimates that cost savings for diabetics under the new pricing model could be as much as 66% per year. Their analysis shows that 2019 Medicare Part D Plan recipients frequently paid over $1,100 each year just for insulin.
How Much is Insulin under a Basic Medicare Part D Plan?
The 4 coverage phases of a traditional Medicare Part D Plan results in a wide range of insulin costs over the year. So, budgeting for insulin under a traditional Part D plan can be stressful and difficult.
For instance, during the first phase, Medicare recipients are responsible for the total cost of insulin until they reach their deductible. The initial phase follows, providing some price stability until you reach the coverage gap. Insulin costs are higher during the coverage gap (the donut hole) because you have a 25% copay for all prescription drugs until you reach the catastrophic phase.
The new pricing model for enhanced Medicare Part D plans will limit the total cost to around $440 annually. This is great news for diabetic seniors on Medicare who desperately need insulin price stability.
There are a few limitations to consider before you choose to opt-in to a Medicare enhanced plan to benefit from the new insulin savings model.
Most Medicare enhanced prescription drug plans come with a higher premium to offset some of the extra costs incurred by insurance providers. The premium for enhanced plans is decided by the private insurance companies that manage them. In 2020, the difference in cost for premiums between average Medicare Part D plans and enhanced plans was at least $20 per month and sometimes more.
If you are a Medicare recipient on an enhanced plan and receiving a Low-Income Subsidy (LIS) then you are not eligible for the new insulin price cap. Additionally, the new model doesn’t have provisions for a Part D drug plan management strategy referred to as “non-medical switching”.
An example of non-medical switching is when your insurance company requires you to use a generic brand of prescription medication instead of the doctor-recommended name brand. The insurance plans that enforce non-medical switching do so to control medication costs.
The CMS allows Part D Plan providers to cover a wide range of insulin brands under the model’s price cap. However, those providers are not required to offer plan recipients a choice of insulin brands. As a result, if you choose to opt-in you may have to change insulins to receive the discounted price.
It’s important to note that Medicare currently covers approximately 15% of the total population. The Part D Senior Saving Model is only available to seniors over the age of 65 who are Medicare recipients. Diabetics who are below 65 and are struggling with the high cost of insulin are not eligible.
Without a doubt, the Medicare Part D Senior Savings Model is the first step to more affordable insulin costs for individuals and families living with diabetes.
If you are eligible for Medicare and require insulin to manage your health, you can research enhanced Medicare Part D plans and Medicare Advantage plans that provide insulin savings. Remember, you must choose to opt-in to a qualified plan to receive the discounted copay. If you find a plan with a monthly premium that fits your budget, be sure to review the plan’s formulary to make sure that your preferred insulin brand is included.