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