By law, a person with Medicare cannot use a drug discount coupon with their prescription drug plan. However, they can choose to use coupons instead of their Medicare drug coverage.
This article discusses drug discount coupons and services, as well as the associated rules for people enrolled in Medicare. It then looks at the Medicare drug plans and when a person might want to use coupons instead. Finally, it considers alternative ways to reduce prescription drug costs.
Glossary of Medicare terms
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Some manufacturers and pharmaceutical companies may offer discount coupons on drugs, particularly for new medications.
However, an individual enrolled in a Medicare prescription drug plan cannot use drug coupons to help them pay for their prescription medications while using their Medicare coverage.
This rule comes from the Social Security Amendments of 1972, which includes the Anti-Kickback Statute (AKS). It makes it illegal for pharmaceutical companies to offer discounts on medications purchased through Medicare.
These discounts include drug coupons and rebates because they could encourage people to choose more expensive drugs, which would increase Medicare costs. In addition, such coupons tend to be temporary and have limits, leaving the person and Medicare responsible for the remaining costs.
People enrolled in the following plans cannot use manufacturer drug coupons with their Medicare coverage.
However, Medicare beneficiaries can choose to use a drug discount coupon instead of their Medicare coverage. A person would need to compare the coupon prices with their Medicare Part D plan’s formulary to decide which is cheaper.
In some cases, using a coupon without Medicare might make the drug more affordable than it would be with plan coverage.
In addition, a drug coupon could reduce the cost of drugs not covered by Medicare and help pay for drugs with restrictions, such as quantity limits or prior authorization requirements.
That said, using Medicare coverage to pay for drugs could also reduce costs in several ways:
- A person could get a generic version through their plan that is cheaper than the cost of the brand-name medication, even with a coupon.
- Certain pharmacies, including mail-order pharmacies, may offer better pricing to people with Medicare coverage.
- The Medicare coverage gap discount program allows pharmaceutical companies to provide lawful discounts on drugs for people enrolled in Medicare Part D.
- In some states, patient assistance programs (PAPs) may be available to Medicare Part D enrollees with limited incomes. These programs may include free medications or financial assistance.
- A person may qualify for Extra Help, a program specifically designed to help Medicare enrollees with drug costs. To be eligible for Extra Help, a person must be enrolled in Medicare and have limited income and assets.
- A person may also enroll in the Medicare prescription payment plan, which does not lower overall drug costs but allows a person to pay less a month over time.
Other considerations
The Centers for Medicare & Medicaid Services (CMS) has also implemented certain measures to help make prescription drugs more affordable through Medicare.
On January 1, 2023, a new prescription drug law went into effect that can help people with Medicare save money on drugs. This law improves access to affordable treatments and helps strengthen the overall Medicare program.
This law helps people with Medicare save in various ways:
- A person will not pay more than $35 a month for insulin.
- Medicare negotiates the price of certain high cost, brand-name drugs that do not have generic competition. The negotiated prices for the following medications will become effective in 2026:
Manufacturers and pharmaceutical companies may provide discount coupons for new medications, but individuals enrolled in Medicare prescription drug plans cannot use them due to the Anti-Kickback Statute from the Social Security Amendments of 1972.
This law prohibits drug discounts through Medicare, as it could increase costs by encouraging the choice of more expensive drugs. Medicare beneficiaries can, however, opt to use drug coupons instead of their Medicare coverage if this lowers their costs more.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.