Modest Premium Increase Coming for Medicare Drug Plans
The average monthly premium charged by Medicare drug plans for standard coverage will rise to an estimated $30 in 2011, an increase of $1 over 2010, or about 3 percent, said Medicare administrator Don Berwick.
But since Medicare drug plans vary widely in coverage and costs, consumer advocates cautioned that seniors need to check their particular plan to avoid unpleasant surprises that may not be revealed in a such a broad estimate of average premiums.
Nonetheless, seniors with high drug costs can look forward to a noticeable improvement next year.
That's because the new health care law will begin to close the coverage gap known as the doughnut hole. Medicare recipients in the gap will get a 50 percent discount on brand name drugs, and 7 percent off on generics. The discounts will gradually increase until the gap finally closes in 2020.
"These very modest increases in premiums, along with the new discounts...are going to make medications more affordable to Medicare beneficiaries," said Berwick.
About 27 million beneficiaries are signed up for the prescription benefit, delivered through private insurance companies. The premium estimate released by Medicare on Wednesday represents only the broadest measure of pocketbook impact.
In practice, Medicare prescription plans vary widely in costs and benefits. Standard coverage that Medicare's premium estimates are based on remains the exception. Consumer advocates recommend that seniors and family members use Medicare's online plan finder to see which insurer provides the best deal for an individual's medications.
"It's always good news when premiums don't go up by leaps and bounds, but seniors in some of the most popular plans may see higher premiums," said Tricia Neuman, the top Medicare expert at the Kaiser Family Foundation. "They need to check their plans so they don't have unpleasant surprises."
Premiums can vary by tenfold or more.
In Baltimore, for example, 45 Medicare drug plans are currently available with premiums ranging from under $12 to more than $120 a month. And that doesn't take into account deductibles and co-payments, or whether a plan provides some coverage in the doughnut hole.
Then there's another factor to consider: Medicare Advantage plans that combine prescription and medical coverage may be a better deal overall for some people than traditional Medicare. Nationally, about 9 million beneficiaries are getting their drug coverage through such plans.
The administration's estimate of $30 a month seems to acknowledge that some seniors will get sticker shock. Paul Spitalnic, with the Medicare's costs estimates office, said the figure is based partly on an assumption that seniors will be enrolling in lower cost plans.
If seniors stay in their plans and don't shop for bargains, the average premium will be somewhat higher -- $32.34 a month -- Spitalnic said.
Details on coverage for 2011 will be available on Medicare's plan finder during open enrollment season this fall. Medicare covers 47 million elderly and disabled people. The government pays part or all of the premiums for many low-income beneficiaries.