2021 Senior Savings Program Provides Relief on Insulin Costs

There are few diseases in the United States that match both the economic and health impact brought on by diabetes, especially in the older population.  One in 5 Americans aged 65 or older has been diagnosed with Type 1 or Type 2 diabetes.

The economic cost of diabetes in the United States totaled $327 billion in 2017, including $237 billion for direct medical costs and $90 billion in lost productivity.

The American Diabetes Association reports that the price of insulin has risen 250 percent since 2007. The Health Care Cost Institute noted a doubling of insulin costs between 2012 and 2016.  Unfortunately, rising costs forced many to ration their insulin, sometimes with deadly consequences.

The good news is that in March 2020, the Centers for Medicare and Medicaid Services made a proposal to decrease insulin costs for Medicare beneficiaries.  It is referred to as Part D Senior Savings Model and is open to participation from private insurers and pharmaceutical companies.

Under the voluntary model, participating Part D plans can offer coverage of insulin for a flat monthly copayment of no more than $35, in contrast to varying cost-sharing amounts during different phases of the Part D benefit under the current design.

Insurers would decrease insulin copays to $35 per month, saving an estimated 66% or more off current prices and pharmaceutical companies would adjust costs and contribute more towards the coverage gap known as the “Donut Hole.”  The Donut Hole refers to the time period when you hit your Medicare max costs

Paying a flat $35 copayment during the coverage gap phase could translate to meaningful savings on many insulin products, with typical list prices in the hundreds of dollars, which equates to out-of-pocket costs of $100 or more under the current benefit design where beneficiaries pay 25% coinsurance in the coverage gap phase.

This new insulin model will begin on January 1, 2021.  For enrollees who choose a participating plan, their insulin prescription will not be subject to a deductible or any coverage gap cost increases. (Whether it’s January or December, their monthly out-of-pocket cost for insulin will be $35 or less.)

In order to take advantage of this program, we recommend the following steps:

  1. Before October 15, 2020: Check on your current Part D Prescription Plan and what type(s) of insulin you are prescribed.
  2. Between October 15 and December 7, 2020: While your current health insurance plan may elect to participate in this program, not all do.  You may need to switch plans in order to get this new benefit, and you’ll need to switch before the end of the Medicare Annual Enrollment Period (October 15 to December 7, 2020).
  3. You’ll be able to review all available plans using the Medicare Enrollment Wizard, which will show you which plans will offer the new discounts for insulin. This will allow you to compare all Medicare Advantage and Part D to choose a plan that best suits your needs.
  4. There are 1,750 standalone Medicare Part D prescription drug plans and Medicare Advantage plans that have committed to participate in this model in the US.
  5. Look for insurance plans that offer this new insulin savings program and choose their Part D insurance plan carefully, making sure that the type of plan is an enhanced prescription plan that best fits their needs. Almost all types of insulins will be available through these plans, but each plan may choose different insulins on their formulary.