We include products we think are useful for our readers. If you buy through links on this page, we may earn a small commission. Here’s our process.
- The Anti-Kickback Statute makes it illegal for pharmaceutical companies to offer discounts for medications that will be paid for by the federal government.
- When purchasing medications, Medicare beneficiaries can choose to use either their prescription drug plan or a drug discount coupon.
- Some Medicare-approved programs can help Medicare beneficiaries lower their prescription drug costs.
Even for Medicare beneficiaries who are on a prescription drug plan, out-of-pocket costs for medications can add up. Some manufacturers and companies do offer discounts on prescription drugs, but can these drug coupons be used with Medicare?
The short answer is no. If you’re on a Medicare prescription drug plan, you won’t be able to use drug discount coupons.
In this article, we’ll explore the rules regarding drug discounts with Medicare, when to use coupons instead of your Medicare plan, and other ways to save money on your prescription drugs.
Prescription drug plans, like Medicare Part D, offer coverage to beneficiaries to help lower the cost of their prescription drugs. But while prescription drug plans help keep medication costs low for some enrollees, others experience significant monthly and yearly medication costs.
Private health insurance, on the other hand, allows certain discounts to help lower the cost of prescription drugs. These discounts can come from the manufacturer directly, from a discount drug company that has a contract with specific pharmacies, or from the pharmacy itself.
While many of these drug discounts are offered cost-free, the U.S. Anti-Kickback Statute makes it illegal for individuals enrolled in Medicare to use manufacturer coupons or other drug discounts with their drug plan.
It’s illegal for drug manufacturers to even offer coupons to Medicare beneficiaries in exchange for purchases that could be federally reimbursed.
The Anti-Kickback Statute was enacted as a deterrent to stop fraud and abuse in the healthcare industry. This legislation made it illegal for companies to exchange anything of value as a means of generating business that would be reimbursable by federal healthcare programs.
Within the pharmaceutical industry, the Anti-Kickback Statute made it a crime for pharmaceutical manufacturers to offer drug coupons to Medicare beneficiaries. This is because it became illegal to influence the purchase of any prescription drugs that could later be reimbursed by Medicare.
- You can’t use both a drug discount coupon and your Medicare prescription drug plan.
- You can use a drug discount coupon instead of your Medicare prescription drug plan.
This program lets you take advantage of manufacturer discounts while in the coverage gap of your Part D plan, as long as the drug manufacturer has signed an official agreement with the Centers for Medicare & Medicaid Services (CMS) allowing it to offer the discounts for that medication.
Medicare Part D plans run on a formulary system in which prescription drugs are priced differently depending on which tier they fall in. A formulary is a list of medications covered by a plan.
For most plans, the tier system is as follows:
- Tier 1: preferred generic prescription drugs at the lowest cost
- Tier 2: preferred brand name prescription drugs that are slightly more expensive
- Tier 3: nonpreferred brand name prescription drugs that are even more expensive
- Tier 4 and higher: the most expensive specialty prescription drugs
When you enroll in a Medicare Part D plan, your formulary will tell you the exact cost of the medications the plan covers. You can then take this information to the pharmacy to compare prices.
In some cases, the manufacturer of a drug (or a drug discount service) may offer the medication at a lower price than what you would pay under your Part D plan. This information is made freely available through the following laws:
- The Know the Lowest Price Act of 2018 prohibits any Medicare-related prescription drug plan from withholding prescription drug prices, both with and without Medicare.
- The Patient Right to Know Drug Prices Act prohibits any health insurance plan or pharmacy from withholding prescription drug prices, both with and without insurance.
If you find that your medication is cheaper with a coupon or discount than through your Medicare drug plan, you can tell the pharmacist to charge you out of pocket for the drug.
If you choose to use a drug discount instead of your Medicare plan, any out-of-pocket costs paid for the medications will contribute to your drug plan’s out-of-pocket costs.
These costs count toward the Medicare catastrophic coverage limits in 2020.
Drug discount companies are free services that help both insured and uninsured individuals save money on prescription drugs. These companies negotiate drug prices with pharmacies directly, which then pass along savings of anywhere from 50 to 90 percent off the retail price to the consumer.
Prescription drug discount cards are free to use for Medicare beneficiaries who choose to pay out of pocket for their medications instead of using their drug plan.
In some cases, these drug discount companies may offer the drug at a cost that’s lower than your Part D formulary cost. In this case, you can choose to pay out of pocket for the drug instead of using your Medicare plan.
Some drug discount programs to consider using include:
- ScriptSave WellRx
Before you use a drug discount card, visit the website of the program you want to use and perform a prescription drug search. Searching for your medications through these program websites can help you determine if and where your drug will be discounted.
No matter how you pay for your prescription drugs, there’s no double-dipping when it comes to discounted medications. You’ll need to choose either Medicare Part D or a drug discount program when you pay for your prescription drugs.
You may notice that certain medications are cheaper through discount programs than your Medicare drug plan. But dropping your Medicare prescription drug plan completely may not be the best idea.
For example, if you need new medication in the future and you don’t have coverage from a drug plan, you may end up paying full price if there are no coupons available. Plus, most manufacturer coupons eventually run out. This can leave you paying hefty prices out of pocket without coverage.
Finally, if you drop your Medicare drug plan and re-enroll later, it’s important to know that you will face a permanent late enrollment penalty on your plan premium each month.
Tips for reducing your prescription drug costs
Here are some tips for reducing your prescription drug costs while on Medicare:
- Shop different pharmacies. Individual pharmacies decide what the retail price of a medication will be.
Research suggeststhat shopping around can help you save money on the cost of your medications. A lower retail price can mean a lower out-of-pocket cost after Medicare covers its portion. Some pharmacies offer discounts to individuals who join a membership club, and there may be a fee to join.
- Check the discounted medication list. Retailers like Walmart and Target offer a list of generic medications for $4 for a 1 month supply or $10 for a 3 month supply. There is no membership fee to access these savings.
- Use coverage gap discounts. Although it’s illegal to use drug discounts with your Medicare plan, the Medicare Coverage Gap Discount Program is a Medicare-approved option. Once a pharmaceutical manufacturer opts into the program, they can legally offer their medications for less while you’re in the coverage gap.
- Apply for a PAP if you have a low income. Pharmaceutical manufacturer patient assistance programs (PAPs) are financial assistance programs offered by drug manufacturers and individual states. PAPs can help cover out-of-pocket medication costs for low-income individuals. Not every state or manufacturer has a PAP program, so you’ll need to do your research to see who offers one.
- Discuss alternatives with your doctor. If your doctor has prescribed a medication that’s out of your price range, ask if there’s a cheaper option. Most generic versions of drugs function just as effectively as the brand-name version, so going generic can help save you money.
- With the enactment of the Anti-Kickback Statute, it became illegal to use discount drug coupons at the same time as Medicare prescription drug plans.
- If a prescription drug is cheaper through a discount drug program, it’s completely legal to use the more affordable option instead of your Medicare plan.
- For certain individuals, such as those in the coverage gap or with a low income, programs exist to help keep out-of-pocket medication costs low.
- If you’re interested in saving more money on your prescription drugs, don’t forget to ask your doctor about generic options and shop around your local pharmacies for the best prices.