Prescription drugs are a major component of the overall cost of caring for the elderly.  By some reports, persons 65 and older spend an average of over 3% of their income on prescription drugs.  That percentage is even higher when over-the-counter medications are included.  While Medicare Part D pays for some medications for those enrolled in a plan, it is reported that over 65% of seniors’ prescription costs are out-of-pocket.

Fortunately there are many state, federal and other programs that can help the elderly lower their cost of medications.  This webpage explores both the prescription drugs benefits of many commonly held insurance programs and non-insurance based assistance programs.  One can browse the options discussed on this page or search for financial assistance for eldercare.

 

Medicare and Prescription Drugs

Medicare is a federal health insurance program for persons aged 65 and older which is composed of multiple parts: Medicare Part A, Part B, Part C and Part D.   Prescription drugs are covered by Medicare Part D.  Part D plans are sold by private insurance companies either as a standalone plan known as a Medicare Prescription Drug Plan (or PDPs) or as part of a Medicare Advantage Plan (or MA-PDs) which groups Parts A, B and D coverage into a single plan.  Medicare Part D’s contributions for 2011 are outlined in the table below.

2011 Medicare Part D Coverage and Donut Hole Limits

Prescription Spending	Coverage Area	Individuals Responsibility
$0 - $310	Deductible Period	Seniors pay 100%
$310 - $2840	Coverage Begins	Seniors pay co-payments only
$2840 - $4550	Donut Hole	Seniors pay 50%
$4500 and over	Catastrophic Coverage	Seniors pay co-payments only

Medicare Extra Help
Extra Help is a program that provides additional financial assistance to seniors with limited resources to help pay for prescription drug costs. Seniors are eligible if their total assets (not including their home) are valued at less than approximately $12,640 for individuals or $25,260 for married couples.  Learn more about Extra Help or apply online.

 

In addition to the federal Extra Help program, many state governments provide seniors with financial assistance to help with the cost of medications.  These programs typically provide assistance as Medicare Wraparound Programs, meaning they help seniors paying the extra costs which their Medicare Part D plans don’t cover.  Alternatively these programs provide assistance making Medicare Part D premium payments instead of paying for the extra prescriptions costs. 

Connecticut PACE
Delaware RX Assistance Program
Hawaii SPAP
Illinois Cares Rx
Indiana Hoosier Rx Assistance
Massachusetts Prescription Advantage
Maryland SPDAP Subsidy
Maine DEL and RX Plus
Missouri Rx Plan
Montana Big Sky Rx Program
New Jersey Senior Gold and PAAD
Nevada Senior RX Program
New York EPIC Rx Assistance
Pennslyvania PACE Rx Assistance
Rhode Island RIPAE Rx Assistance
Vermont VPharm, VHAP and VSCRIPT
Wisconsin SeniorCare Rx Assistance

Medicaid is a state run, health insurance program for low income and disabled individuals.  The definition of “low income” changes by state but typically an individual must have an annual income of less than $20,000 and assets of less than $10,000.  All 50 states and Washington DC’s Medicaid programs cover the majority of the cost of prescription drugs for participants.  Program participants are usually required to make small co-payments (also referred to as share of cost) for their medications.  Per prescription co-payments range from as low as $.50 per prescription to about $3.00.   Some states have limitations on the number of brand name drug prescriptions they will cover per month or per year.  This limit typically lies between 5-8 prescriptions per month.    Read more about qualifying for Medicaid and Medicaid Prescription Drug benefits in your state.

 

When a pharmaceutical company releases a new drug, the US Food and Drug Administration allows that company to have a patent on the drug for several years.  As the patent expires other pharmaceutical companies are allowed to copy the drug and sell generic versions of it.  Generic versions are less expensive than brand names for two reasons.  The manufacturers of generics do not shoulder the research and development costs and can therefore sell the drugs at a lower price and the increased competition further drives the cost down.

There is an ongoing and sometimes heated debate whether generic drugs are of lower quality.  The final decision whether to use a brand name or generic drug should be up to the individual and their doctor.  However, two things are certain.  Generic drugs are pharmacologically the same as their brand name equivalents and generic drugs are considerably less expensive for the consumer.  Most individuals are able to lower their out-of-pocket costs by between 25%-75% by using a generic instead of a brand name drug.

 

The use of a mail order or online pharmacy can provide modest saving over a retail pharmacy.  Often the cost of the medication is the same but the insurance company allows an individual to receive a greater quantity of their medication if they use a mail order pharmacy.  For example, an individual might have a $20 co-pay for a 30 day supply of a medication filled at a retail pharmacy.  They may be able to receive a 90 day supply by using a mail order pharmacy for the same $20 co-pay. 

More than costs saving is the convenience of mail order pharmacies.  Aside from not having to travel to the pharmacy, most mail order pharmacies will call the individual to remind them when it is time to refill a prescription or when a new prescription is required. 

 

The rules for purchasing prescription drugs from Canadian pharmacies change with frequency and by state.  Legal questions aside, there is no debate over the fact that some medications can be purchased online from Canadian pharmacies with ease and at significant cost savings.  Savings for brand name drugs are higher than for generics.  Typically consumers can save as much as 50% for the former and 25% for the latter.  One can check the cost of medications at different Canadian and US pharmacies at this website that tracks medication costs to see if using a Canadian pharmacy would benefit their family.

 

Patient Assistance Programs, or PAPs for short, are programs run by nearly all the major pharmaceutical companies in which assistance is offered to low income individuals by providing them with reduced cost or free medications.  These programs are typically open to both individuals with insurance and those that do not have insurance although sometimes the pharmaceutical companies maintain two different programs for these groups.

To participate in a PAP, applicants are usually required to show proof of income, their doctor’s prescription for the required medication and documentation of any insurance coverage they have.  Learn more about Patient Assistance Programs and find links to major pharmaceutical company programs.

 

The out-of-pocket costs paid for prescription drugs are considered tax deductible under the Medical and Dental Expense Tax Deduction.  In order for this deduction to be relevant to an individual tax filer, the total sum of their medical and dental expenses must be greater than 7.5% of their adjusted gross income.  Fortunately for seniors, the range of items and services that can be considered a medical or dental expense is quite broad and because most seniors have fixed incomes, it is quite common for their expenses to exceed 7.5% of their adjusted gross incomes.  In addition to our analysis of the medical and dental expenses tax deduction, one can read the IRS’ webpage on the subject.  It is worth noting that over-the-counter medications are not considered tax deductible.

 

The American Automobile Association provides a Prescription Saving Card free to all AAA members who do not have prescription drug coverage. Typical saving are 35% on generic drugs and 15% on brand drugs.  Learn more on AAA website. 

Many pharmaceutical companies make discount coupons available online for their brand name drugs.  Often these coupons will discount the cost of a brand name drug so that it equals the cost of the generic version.  To find these coupons, simply conduct a web search for the brand name of the drug + “discount coupon”.  Most coupons can simply be printed from a webpage and brought to the pharmacist.  Be wary of any website that asks you to pay to receive the discount coupon and any websites that request excessive personal information to provide you with the discount coupon.