By Elizabeth O'Brien

Retirees who sign up for Medicare could be in for a rude surprise: Their drug coverage may be worse than what they had with their employer's insurance plan.

A study from GoodRx Research found that the average Medicare plan excludes 44% of medications. Conversely, the average commercial insurance plan doesn't cover 21% of medications.

What's more, nearly half of the drugs that are covered by Medicare plans are subject to certain restrictions. Americans who have drug coverage through their employer -- provided by companies like UnitedHealth Group, CVS Health, and Cigna -- might find that their benefits aren't as good when they retire and go on Medicare.

These findings suggest that the 11,000-plus baby boomers who are turning 65 each day should budget more time and money than they might have planned on for their drug coverage when they enroll in Medicare. Those who are already on Medicare can monitor their coverage and, if their stand-alone Part D or Medicare Advantage plan no longer meets their needs, switch to another one during the fall open enrollment period.

The study looked at drug coverage across all Medicare plans -- the stand-alone Part D plans available to accompany traditional, government-run Medicare, and the drug coverage that comes with most Medicare Advantage plans run by private insurers.

The average stand-alone Part D premium in 2025 is $46.50 a month, according to the Centers for Medicare and Medicaid Services, whereas most Advantage plans bundle in drug coverage at no additional cost. The average Advantage premium in 2025 is $17 a month, according to the CMS. (The study didn't include Medigap supplemental insurance, optional coverage that sits alongside traditional Medicare and covers copayments and coinsurance but doesn't fill in the gaps in Part D drug coverage.)

Medicare requires drug plans to cover most drugs in six protected classes: antidepressants, antipsychotics, anticonvulsants, immunosuppressants, HIV/AIDS drugs, and cancer drugs. But the report highlights how coverage doesn't guarantee access to the medication your doctor prescribes.

In 49% of drug plans, Medicare patients are subject to cost-saving measures like "prior authorization," which requires medical providers to supply the insurer with certain information before a prescription is approved. Another cost-savings tool is called "step therapy," requiring patients to try and fail on various medications before their insurers will cover the one their doctor prescribes.

These practices add up to delays, denials, and onerous appeals processes. How do you avoid them? While it might not be possible to find a plan that meets 100% of your needs, there are steps you can take to mitigate coverage restrictions, says Tori Marsh, director of research at GoodRx.

Before comparing your drug coverage options on Medicare.gov, compile a list of your medications and dosages for easy reference. Most people know to look at the plan's formulary -- the list of covered drugs -- but not as many check the plan's coverage rules, Marsh says. Prioritize plans that cover the most expensive medication you take.

Involve your healthcare team in your drug plan choice, Marsh says. Ask your provider if there's a chance you'll need to switch medications within the next year and, if so, make sure new drugs are covered. If there's no way to avoid restrictions on certain medications, create a plan with your doctor to deal with them and mitigate delays in coverage.

Medicare patients can use drug coupons from GoodRx for drugs their plans don't cover. But the site and others like it are separate from Medicare, and money spent through them won't count toward your plan's deductible.

A 65-year-old in traditional Medicare can expect to pay $24,457 on Medicare Part D premiums throughout retirement, and $43,146 on out-of-pocket prescription-drug spending, according to projections by HealthView Services, a data analytics firm. Someone in a Medicare Advantage plan with drug coverage can expect to spend the same amount on out-of-pocket costs, without the monthly drug premium.

Medicare Advantage might seem like the better deal, but keep in mind that these plans frequently impose restrictions on care, whereas traditional Medicare uses prior authorization to a much lesser degree for procedures.

Write to Elizabeth O'Brien at elizabeth.obrien@barrons.com

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(END) Dow Jones Newswires

May 09, 2025 21:30 ET (01:30 GMT)

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