What’s the Difference Between Preferred and Standard Drug Costs?

May 19, 2020 | Todd Lewison

If you have Medicare Part D or other drug coverage, drug costs can be a concern. One way to save money on prescription drug costs is to know the difference between preferred and standard drug costs. This has to do with whether your pharmacy is preferred or standard under your Medicare insurance plan.

What’s the Difference Between Preferred and Standard Drug Costs?

Medicare plans from private insurance companies that provide prescription drug coverage, such as a Medicare Advantage Plan (MAPD) or a standalone prescription drug plan (PDP), will utilize a pharmacy network.

Read: Will Original Medicare Meet My Coverage Needs?

Pharmacies fall into one of three network categories:

Preferred in-network pharmacy: most often offer prescriptions at lowest cost-sharing amount.
Standard in-network pharmacy: typically, prescriptions will have a higher cost-sharing amount.
Out of network pharmacy: at an out of network pharmacy you will not be able to utilize your prescription drug coverage. You will pay for the cost of the prescription.

The network status of a pharmacy is dependent on a contract between the pharmacy and the insurance company. Preferred pharmacies tend to offer lower costs and have negotiated rates.

Here are a few examples that illustrate how preferred, standard and out-of-network ratings can impact what you pay out of pocket for prescription drugs:

chart comparing preferred pharmacy costs to out of network pharmacy costs — *This example demonstrates the cost differences of two medications on a specific Medicare plan at a preferred pharmacy and an out of network pharmacy.*

Although preferred pharmacies often have lower copays and co-insurance on prescriptions, this is not always the case. Additionally, you are not required to go to only preferred pharmacy locations. You can still utilize your plan benefits at a standard pharmacy. However, being aware of the potential cost differences may impact your choice.

When reviewing Medicare plan options and medication costs, our licensed agents will closely analyze this information to help you make the best decision for your needs.

Read: Insulin Coverage Through Medicare Part D

To find out what pharmacies are preferred, you can call or email Twin City Underwriters, or contact your insurance provider directly.

Find a Preferred Pharmacy

Most companies have an online resource you can use to find preferred pharmacies near you. Below are those resources for some of the insurance agencies we represent:

If you don’t see your Part D or Medicare Advantage Plan insurance company, contact our team and we’ll help you find a preferred pharmacy nearby.

Pharmacy networks can change year-to-year, and this is one of the many reasons our SurePlan® Medicare System provides you with a guaranteed annual review.

Choosing a Minnesota Medicare plan can be difficult. Working with an insurance broker can help you find a plan that fits your needs. Schedule a one-on-one meeting with one of our Minneapolis insurance brokers to get your insurance questions answered!

What’s the Difference Between Preferred and Standard Drug Costs?