This Tier 3 Copay Change Could Cost You Hundreds of Dollars

by Lance D Reedy

Every fall, your Part D prescription plan (PDP) or Medicare Advantage (MA) plan sends you what’s called the Annual Notice of Change or the ANOC for short. It’s important to carefully read it, as buried in the verbiage are sometimes substantial changes in your plan.

When this happens, every year without fail, we receive a call in January from a disgruntled member that’s unhappy about being hit with a large premium increase or more costly copays. Let’s be pro-active and see if we can deal with this issue BEFORE the October 15 to December 7 Annual Election Period (AEP) ends. There’s little we can do after December 7th!

Going into 2024 we have another potential train wreck loaming on the horizon. Because of compliance issues, we can’t use an actual company’s name. Therefore, we have at hand our fictitious and popular Acme Value Prescription (AVP) plan.

Here is their 2023 copay structure.

Tier 1 drugs: $1.00 copay

Tier 2 drugs: $5.00 copay

Tier 3 drugs: $47 copay*

Tier 4 drugs: $90 copay*

Tier 5 specialty drugs: 33%*

*Tiers 3-5 are subject to the $505 deductible

Now watch carefully…

Here is their 2024 copay structure.

Tier 1 drugs: $0.00 copay

Tier 2 drugs: $5.00 copay

Tier 3 drugs: 25% co-insurance*

Tier 4 drugs: 50% co-insurance *

Tier 5 specialty drugs: 33%*

*Tiers 3-5 drugs are subject to the $545 deductible.

It all looks very similar, right? Well, not exactly.

The Analysis

Tiers 1 and 2 are almost the same, and they are both excluded from the 2024 $545 deductible. So far, so good.

Hmm, tier 3 is now a 25% co-insurance.

Here’s the Good Part About this Change…

For 2023, Ramona Homestead has taken hydrocodone/acetaminophen 320-10mg 3 times per day. Even though this is a generic, AVP lists this drug as a tier 3 on their formulary. She has met her deductible, so she has a $47 copay for her med. However, the $47 copay is more than the $32 cost for hydrocodone at her pharmacy, so she receives no help from her plan.

In 2024 she pays just 25% for her med after she has met her deductible. Assuming that she has met her deductible with other prescriptions, she now pays 25% of $32 or just $8.00 for her hydrocodone. That is an improvement compared to the 2023 copay structure.

And Now the Bad and the Ugly…

Ramona also takes Eliquis, 5mg, 2x per day. To make our math easy, let’s says that the retail cost of Eliquis is $600 per month.

In 2023 she pays $47 after her deductible has been met.

In 2024 she pays $150 (25% of $600) after her deductible has been satisfied. Her cost sharing has gone from $47 to $150 or tripled!

If she doesn’t take any action, she might faint from sticker shock when she sees her pharmacist in February 2024. She’s expecting a $47 copay once her deductible has been met, but instead she’ll be hit with $150!

How Do I Know if this Change Helps or Hurts Me?

Any tier 3 drug that is less than $188 per month will benefit you. At exactly $188 it’s a wash as 25% of $188 is exactly $47. However, once you’re above $188, AVP’s plan change is going to cost you much, much more. There are plenty of tier 3 drugs with a monthly retail cost of $400 to $1,000.

The Solution

Most of you already know this one. Have us update your list of prescriptions and re-shop your PDP for 2024. Please see our companion articles, The House Always Wins and End

The House Always Wins

by Lance D Reedy

The Part D Prescription (PDP) plans and Medicare Advantage plan were authorized by the 2003 Medicare Modernization Act passed by Congress in 2003 during the George Bush II administration.

2024 will mark the eighteenth year that I have been involved with the afore-mentioned plans. I have seen some reoccurring themes of what the PDP companies do to maintain their profitability, and that is the theme of this article.

The Original Structure of a PDP

Before discussing some of tricks of the trade that the PDP companies use to boost revenue, let’s look at the original plan design.

Phase 1: The member had to meet a $250 deductible.

Phase 2: The member paid 25% of the retail cost of the prescriptions up to the coverage gap limit.

Phase 3: The member was responsible for 100% of the costs when in the coverage gap (aka the donut hole).

Phase 4: This is the catastrophic phase where the member in general paid 5% for the cost of his/her meds. Note: In 2024 this is now zero percent.

Here are some takeaways:

The 25% co-insurance that I referenced in my companion article for the fictious Acme Value Prescription (AVP) plan is nothing new. However, most plans have gone to a flat copay system for several years. As several new expensive drugs have hit the market, the PDP companies are resurrecting the 25% coinsurance schedule.

Medicare has allowed the PDP companies to create alternative plans to the original design. This could consist of flat copays instead of the 25% coinsurance, no deductible plans, or reduced deductible plans. For several years we have seen plans where tiers 1 and 2 drugs were excluded from the deductible.

As many formerly expensive brand names have gone generic, we have seen some plans offering $0.00 or $1.00 copays for many of these low-cost generics. The following are a few examples of expensive brands that have gone generic. The brand name is followed by its generic equivalent.





Blood pressure:


Toprol– Metoprolol succinate





Actos– Pioglitazone




and dozens more.

Expensive New Brand Name Drugs

What has changed the dynamic regarding the PDPs are the new generation of brand name drugs. Before going generic, many of these older brands listed above used to have a retail cost ranging from $100 to $200 per month. We used to think that these were expensive drugs.

Now we’re seeing brands with a retail cost of $500 to over $1,000 per month. Some popular examples are Eliquis, Xarelto, Mounjaro, Trelegy, and Ozempic.

The writing is on the wall. Many of the low premium PDPs will be phasing out covering these drugs with a fixed $40 to $47 tier 3 copay. Another popular plan made this change a year ago. Where we’ll likely see a continuance of the tier 3 and 4 fixed copays is with the high dollar PDPs. These premiums typically start at $70 per month and go up from there.

The PDP Companies’ Tricks of the Trade

First, it’s important to understand how the PDP companies are financed.

The government subsidy: We could dig though online documents of over 200 pages to feret out every last detail as to how the PDPs are financed. Let’s do the simplified version. According to, Medicare (the Federal government) finances 74% of the PDP costs. Your premium covers 15%, and the states kick in around 11%. These percentages may vary from plan to plan, but this will give you the gist of how the financing works.

Even if your plan premium is zero, the PDP companies derive most, or all of their funding from state and federal governments. I fielded a phone call from a concerned client who read in her Annual Notice of Change (ANOC) that her 2024 PDP premium was dropping to less than a dollar. She thought something must be amiss.

She was relieved when I explained where the bulk of the financing comes from. In addition, I discussed how her Acme Value Prescription (AVP) plan was changing its tier 3 copay structure.

Trick Number One

A prescription drug company comes out with a super low premium plan. Because of the low premium, the plan gains more market share. After three years, give or take, the members have a substantial rate increase. Many members will change, but the companies understand senior psychology which is that people don’t like making changes. In the end, the member that doesn’t shop ends up paying the higher freight.

Recently, we have seen a new trend, and that is decreasing premiums. That’s good but keep the big picture in mind.

Trick Number Two: Tier Juggling

A tier 1 generic is moved to a tier 2 generic. Generally, this means that a $0.00 to $3.00 copay goes to a $4.00 to $8.00 copay. Even worse is when a tier 2 drug is kicked up to tier 3. Even though tier 3 drugs are called “preferred brands,” there are often many generics included as a tier 3 drug. For example, the generic equivalents to the brands Diovan and Micardis are Valsartan and Telmisartan respectively. Some of the low-premium PDPs have moved these generics from tier 2 to tier 3.

Trick Number Three: Dropping an Expensive Drug from the Formulary of a Budget PDP

Let’s say that the AVP plan used to carry the popular blood thinner Eliquis on its formulary. Buried in the verbiage of its ANOC is the list of drugs no longer included in their formulary for the next year. Who reads every word of their ANOC? Worse, some members say, “It’s all Greek to me, and I don’t understand any of it, so it goes into file 13.” PLEASE TAKE THE TIME TO CAREFULLY READ YOUR ANOC!

Trick number Four: Changing a Tier’s Copay Structure

Going from a flat copay to a percent (usually 25%) co-insurance: I have discussed this one in detail in my companion article, This Tier 3 Copay Change Could Cost You Hundreds of Dollars.

Trick Number Five: Disenrollment Confusion

A few years ago, our fictitious Acme Insurance Company carried these three plans:

Acme Pharmacy X Plan: $26 per month
Acme Regular Plan: $38 per month
Acme Premier Plan: $56 per month

They made changes to its Acme Pharmacy X Plan and renamed it to the Acme Value Prescription (AVP) plan. Because there were so many changes including formulary changes, Medicare required Acme to send out disenrollment notices to its Acme Pharmacy X Plan members.

Buried in the ANOC verbiage was the statement that those who remained in the Acme Pharmacy X plan would automatically be migrated to the Acme Premier Plan. Notice that this caused the premium to more than double.

Between emails and phone calls, we did our best to alert our clients to this issue. Unfortunately, there were those who we were unable to reach who were unaware of what was happening. Sadly, they were shocked when they were hit the big rate increase in January.

I don’t believe the companies are being malicious when this happens. As I understand it, when companies want to make major changes to their plans, Medicare requires them to migrate their members to the plan with a formulary that is at least as robust as the one in the outgoing plan. This inevitably winds up being the highest premium plan.

However, I think the companies could be more diligent with even a second or third communication alerting their members to an ensuing train wreck. The bottom line is this: PLEASE BE SURE TO READ EVERY COMMUNICATION FROM YOUR PRESCRIPTION OR MEDICARE ADVANTAGE PLAN. If you are not sure of what those notices mean, please contact us.


When it comes to casino gambling, most people understand that the House always wins. Slot machines have a payout ratio of around 83 to 95%. Sure, some gamblers hit the jackpot and win big, but it’s at the expense of the others that lose.

The Part D prescription companies lose on some members that are high prescription users. However, they are extremely profitable with those that are either non or minimal users. No matter how they structure their plans, they will be profitable. And that’s fine as long as it’s not too big of a profit. Just keep in mind as with the casinos, the House always wins. End

The Annual Election Period (AEP) for 2024 Plans

The Annual Election Period (AEP) for 2024 Plans

The fall Annual Election Period (a.k.a. Medicare open enrollment) is upon us. We have already started discussing 2024 plans as of October 1st. We can start taking applications October 15th for the 2024 plan year. December 7 is the closing date of the AEP. Please help us to avoid the last-minute rush.

Please Ignore the Medicare-related TV and Clicky Internet Advertising

Note:  This article was originally published in 2021. We have updated it to reflect current changes.

We received an email from a client with a copy of an internet click-bait ad that stated the following:

$2,041 SS payment—All seniors are due a large $2,041 Social Security benefit this week.”

This verbiage has scam written all over it. All seniors? Really? Why $2,041? Where does this money come from and who’s paying for it? This is classic click-bait that entices the greed and gullible person to click on it.

Let’s revisit the psychology of advertising. Most advertising is designed to create anxiety, apprehension, and discontent. It also presses your fear and greed buttons. The ads are purposely choreographed to upset your equilibrium and peace of mind. Please remember that this is all done very subtly, and that’s the cleverness and deceptiveness of advertising. This is why advertising copy writers get paid big bucks.

Another element of advertising is to create fear. Misguided Medicare advantage advertising creates fear that you might be missing out on something really important such as a big payment or some other Medicare benefit. The bottom line is that the advertising by design is manipulative.

A more sinister aspect of advertising, especially television advertising, is to bombard your senses to the point where your ability to differentiate between truth and fiction is broken down. Your senses are dulled. The trickery is to “push your feelings button rather than your intellect button. Be assured, there are no pots of gold sitting at the end of the rainbow!

For more understanding about the scamsters and click-baiters, please view our companion article, Medicare ‘boiler room’ Scams Prey on Senior Citizens Ahead of Open Enrollment

If you have questions, doubts, or concerns after viewing a Medicare-related TV or internet ad, please call or email us FIRST! Please keep in mind that we are swamped this time of year and will get back with you as fast as possible.


Part D Prescription Plans: Many people have us re-shop these plans for them every year. We need to change these plans to stay current with the best buys.

The Types of Changes You Can Make During the Fall AEP


  1. Medicare advantage plan = MA.
  2. Medicare advantage with prescription drugs = MAPD
  3. Prescription Drug plan = PDP

For those where a change is appropriate, the following list are changes that you can make.

  1. You can change from one PDP to another PDP.
  2. You can add a new PDP if you never had one but need one now. A late enrollment penalty may apply.
  3. You can change from one MA/MAPD to another MA/MAPD plan. Remember, the MA plan only does not have a prescription plan embedded in it.
  4. You can drop your Medicare supplement plan and switch to a MA/MAPD plan if one is available in your county of residence.
  5. You can drop your MA/MAPD plan, go back to original Medicare, and add a Medicare supplement plan. Medical underwriting applies in most situations. Medicare also allows you to sign up for a PDP so you do not lose prescription coverage.
  6. The Lasso MSA plan is discontinued for 2024 and is no longer is available.

Changing from one Medicare Supplement Plan to Another

First, it’s important to note that you can change your Medicare supplement plan ANY month of the year. This change is NOT restricted to the fall AEP, however, you must medically quality with the new company you are applying to. This change is usually done to get lower rates.

There is an exception. Washington has continuous open enrollment. Oregon and Idaho have the birthday rule which allows you an open enrollment period following your birthday. In these cases, there is NO medical underwriting.

Part D Prescription Plan (PDP) News

Please refer to our two companion articles:

This Tier 3 Copay Change Could Cost You Hundreds of Dollars

The House Always Wins

Many of you have successfully used our website, to submit a list of your prescriptions to us. Doing so helps us to shop for you the most competitive PDP or MAPD.

Ways to Contact Us

Phone: (208) 746-6283 or (888) 746-6285

Fax: (888) 819-0176

Email: or

Website:  Please click on the “Contact Us” tab. Submit a list of your prescriptions to us using this website.


As stated above, we strongly encourage you to use our website as a way of submitting of list of your current prescriptions. We thank you for your patronage and wish you the best for the upcoming 2024 season. End.

Medicare ‘boiler room’ Scams Prey on Senior Citizens Ahead of Open Enrollment

by Brett Arends

Hard-sell Tactics Target People with Lower Incomes in Particular

To read this article it its original online locations, please click here.

It’s probably just coincidence that the AEP (aka Medicare open enrollment) happens to coincide with traditional hunting season. But it sure doesn’t feel like it.

A new study shows how senior citizens are being effectively hunted by ruthless private insurance companies and brokers during the AEP, which runs from October 15 to December 7.

Aggressive marketing operations, comparable to infamous Wall Street “boiler rooms,” are subjecting people to a hard sell to try to get them to switch to a private Medicare advantage plan.

This includes torrents of cold calls, which are expressly forbidden under Medicare regulations, and offers of “time sensitive” deals and discounts that are actually illegal.

Three quarters of senior citizens say they received cold calls trying to get them to switch to a Medicare Advantage plan during last year’s AEP, according to a groundbreaking survey conducted by the Commonwealth Fund, a nonpartisan think-tank.

Half of those surveyed, or 51%, told researchers that on these cold calls, the caller falsely claimed to be from Medicare.

“America’s seniors and people with disabilities … should be protected from bad actors who engage in misleading advertising and marketing tactics,” said Dave Allen, a spokesman for America’s Health Insurance Plans, the trade association and lobby group that represents private-sector insurers, in a statement. “Health insurance providers strongly agree: Americans should have clear, accurate, easy-to-understand information about Medicare advantage plans, so they know what they are buying.”

Allen added that the industry will be subject to tougher regulations this year. “AHIP will continue to engage with [the federal Centers for Medicare and Medicaid Services] and other stakeholders to assess Medicare marketing requirements including addressing certain elements to ensure they do not hamper the ability of agents and brokers to assist Medicare enrollees in choosing the best coverage option for them,” he said.

Medicare Advantage, in which Medicare is outsourced to for-profit insurance companies, is big business. It has been growing rapidly for more than a decade and this year for the first time exceeded the size of traditional, government-run Medicare. Last year, taxpayers paid Medicare Advantage insurers just over $400 billion, in addition to money paid through the Medicare Part D prescription-drug program, according to the government’s Medical Payment Advisory Commission.

Hard-sell tactics are being focused especially on seniors with lower incomes, the Commonwealth Fund reports. Those with incomes of less than $25,000 a year were twice as likely as those with higher incomes to be asked for their Social Security or Medicare numbers before being given any plan details, the survey reports. That’s against Medicare rules, Jacobson noted. And 28% of those with lower incomes said they’d been exposed to marketing or advertising that claimed something about a private Medicare Advantage plan that they later found out wasn’t true — a much higher percentage than among other income groups.

Jacobson said people with low incomes are often especially profitable to Medicare Advantage providers, because they are eligible for both Medicaid and Medicare.

Seniors are struggling with the bewildering complexity of the Medicare program as well as hard-sell tactics. MedPac reports that last year, Medicare Advantage included 5,261 plan options offered by 182 organizations. According to the survey, the choice is so overwhelming that many seniors choose to simply stay with their existing plan.

My Comments: Every year Medicare advantage agent/brokers must complete an annual recertification. Included in this training is Medicare’s myriad of marketing rules, and one of them is that COLD CALLING is prohibited! And it has been prohibited since the dawn of Medicare advantage plans.  The tele-marketers blatantly ignore these rules.

If you receive a cold call from a tele-marketer, you can do the following.

  • Some people screen all calls before picking up. They only pick up calls from family and friends.
  • Others have a recording that tells the tele-marketer to hang up and put them on their do not call list.

If you pick up and start hearing the obvious tele-marketing spiel, you can do the following:

  • Hang up immediately.
  • Tell the caller you have an agent, say good-bye, and disconnect the call.
  • Ask the tele-marketer for her/his name, phone number, and insurance license number of the state you’re in. Suggest that you will report him/her to your state insurance department for making illegal tele-marketing calls.
  • Take the info as above and tell the caller you’ll get back with him after checking him out.
  • Whatever you do, take control of the conversation by refusing to answer ANY questions about your current coverage. If a stranger calls you and asks how much money you make, how much you have in your checking account and other personal details, do you answer him? I hope not. Likewise, don’t give them any information such as what plan you have, your Social Security, Medicare, or bank account numbers. Be a brick wall and find out how fast the tele-marketer flies the coop.

There are two things to remember. Medicare or the Social Security Administration never calls you. They communicate via U.S. Postal mail. Lastly, these boiler room tele-marketers are 100% commission chasers. If they screw up your plans and cause you grief, they could care less.