A higher premium may be only part of the problem when reviewing Medicare coverage, according to Jae Oh, CFP, author of Maximize Your Medicare. 

A medication you depend on could disappear from your plan’s approved list, and two preferred pharmacies could produce different costs for your prescriptions.

In an interview with me, Oh recommends looking closely at covered medications and pharmacy prices when comparing plans. For beneficiaries facing Medigap premium increases, he also cautions that changing policies can involve medical underwriting.

Below is a transcript of the interview with Oh, edited for brevity and clarity.

What should beneficiaries review when comparing drug plans?

Bob Powell, CFP, RMA: When it comes time for the annual enrollment period, should people price shop or look at something else?

Jae Oh: Absolutely. When the number becomes bigger, it becomes even more important. It’s no longer just a nuisance.

Your approved drug list, the formulary, may change. It’s not only that premiums could increase, but a medication you need and depend on may not be on the approved list.

If price alone wasn’t the reason, then certainly the price plus a possible change in formulary warrants a second look for everyone.

The bottom line is that some people will be stunned at the increases to Part D or the different types of coverage and choices made under Medicare Advantage plans.

How can pharmacy choice change prescription costs?

Powell: When you’re going through Medicare Plan Finder, figuring out which pharmacy to use can be confusing.

Oh: I would definitely squint at whatever results you have. Medicare.gov’s Plan Finder is a good place to start.

You’re going to want to look at your medications and make sure the pharmacy you want to visit to buy or pick up your medications is included.

One important nuance is that even within preferred pharmacies, based on your particular combination of prescriptions, your overall cost can be different from preferred pharmacy one to preferred pharmacy three. That is entirely possible.

Powell: The bar is high to find the right plan for yourself. Doing so without the help of a competent professional makes it harder, from where I sit.

Oh: The underlying issue is complicated, Bob. As a result, the solution can be difficult and very unsettling to people.

What premium increases is Oh seeing?

Powell: What are you seeing with prescription drug premiums heading into 2027?

Oh: The annual notice of change has gone out, and we are seeing anecdotal evidence.

Even in states where there were plans that cost zero dollars, there’s now going to be a premium. For people with expensive medications, where the premium may have been $60, for example, increases of more than 50%, to near or exceeding $100, can be found.

Why does Oh say drug premiums face pressure?

Powell: Why the increase in Part D premiums?

Oh: I think there are two dominant reasons. The first is the Inflation Reduction Act, which you and I have discussed multiple times. In 2027, that out-of-pocket maximum will be capped at $2,400.

The full cost of that is becoming realized. The carriers and drug manufacturers have to bear that additional cost.

The second factor is the end of a premium stabilization program for Part D. That program is ending. When you add these two together, that has contributed to higher Part D premiums and costs.

Powell: We’re often told to look for a generic, but in some cases the generic may not be in the first tier. That might surprise some people.

Oh: For people who have known conditions, this is not news. They’ve dealt with higher-tier medications in the past. It is certainly the case that the price of some generic medications has increased as well.

It’s not only that the premiums could increase, but a medication that you need and depend on may not be on the approved list. So if price alone wasn’t the reason, then certainly the price plus a possible change in formulary… warrants a second look for everyone.

Why can Medigap cost more with unchanged coverage?

Powell: We mentioned that Medigap premiums might be increasing as well. What should people know?

Oh: By sticker price, certainly you see very large increases. Four or five years ago, we were used to something like 6% or 8% increases. That number can easily be 25%, if not higher, year over year, even if your coverage doesn’t change.

You’re still on Plan N or Plan G, for example. Very large increases have been seen around the nation.

Can beneficiaries switch Medigap plans after an increase?

Powell: For people in Plan G or Plan N experiencing those increases, is one possible action to move to a lower-priced plan or one that offers fewer features?

Oh: If you’re on Plan G, for example, and considering moving to Plan N, that’s possible. But in most states, you need to pass medical underwriting, even if you are an existing policyholder.

Certain states have something called a birthday rule or anniversary rule. There are very few states that have unrestricted open enrollment.

What perspective should beneficiaries keep about Medicare costs?

Powell: What advice can we leave our listeners and viewers? I’m going to put the burden on you.

Oh: Thanks, Bob.

There are perhaps wrong ideas that Medicare was free or that it paid for everything. That has never been true.

Now there’s a bigger dollar price, making the decisions more consequential.

Related: Medicare Advantage lawsuit could affect 2027 benefits, plan choices