Time for Senior Citizens to Review Medicare Drug
Coverage: Center for Medicare Advocacy
Changes cause beneficiaries to shoulder more of the
cost of their prescription drug coverage - private companies change
plans every year
By Center for Medicare Advocacy
Oct. 12, 2009 - In some parts of the country,
October brings changing leaves, but throughout the country, October also
brings information about changing Medicare prescription drug coverage.
While the October 1st announcement of the 2010 Prescription Drug Plans (PDPs)
and Medicare Advantage (MA) plans by the Centers for Medicare & Medicaid
Services (CMS) continues to tout the wide array of offerings, the number
of plans that are available does not tell the entire story.
Medicare's Annual Open Enrollment is from Nov. 15 -
Dec. 31
Each year drug and other plans change what they cost and what they
cover. The next general open enrollment starts on November 15, 2009.
During this time, people with Medicare can add, drop or change their
prescription drug coverage. They can also select a health plan for their
2010 coverage.
You'll find helpful Medicare tools and information
on this page. Use these resources to compare the cost or benefits of
Medicare health plans in your area.
Get answers to your Medicare
questions. Learn how to lower health care costs and stay healthy.
Private insurance companies make changes in
premiums and benefit packages every year. The Part D benefit, by
statutory design, includes annual increases in beneficiary cost-sharing,
even when Social Security and other benefits do not increase
accordingly.
As in previous years, the changes cause
beneficiaries to shoulder more of the cost of their prescription drug
coverage.
The full extent of the additional costs will not be
known until drug formularies and tiering structures are made available
later in October. (Plans that do not offer the standard drug benefit
generally put drugs on different cost-sharing tiers, with generic drugs
on the tier with the lowest co-payment and high- cost brand name drugs
on the tier with the highest co-payment.)
These additional costs will be particularly
burdensome to beneficiaries since the Social Security Administration
projects that there will not be a Social Security cost-of-living
adjustment (COLA) in 2010. A COLA would have provided a modest increase
in resources that beneficiaries could use to offset increased drug
prices.
Beneficiaries and their advocates, therefore, need
to review their drug coverage carefully; the drug plan that worked for
an individual in 2009 may not be the best option in 2010.
The Standard Prescription Drug Benefit for 2010
The benefit design for the standard benefit changes
each year. The standard benefit for 2010 is:
● Annual Deductible Maximum - $310
● Member pays 25% of the next $2,520, which will
equal $630 ($2520x25%=$630)
● Initial Benefit Period Maximum (what the
member AND the plan have spent) - $2,830 ($310+$2520)
● DONUT HOLE: Member pays 100% of the next
$3,610
● Catastrophic Coverage Begins when member (NOT
plan) has spent a total of $4,550
● Cost sharing during Catastrophic Coverage is
$2.50 generic/$6.30 brand or 5% (whichever is higher)
The chart at <www.medicareadvocacy.org/PartD_09_10.08.2010Review.htm#standardbenefit>
shows the increases in the deductible, initial benefit limit,
catastrophic coverage limit, and cost sharing from 2006 to 2010.
The Standard Prescription Drug Benefit for 2010
The benefit design for the standard benefit changes
each year. The following chart shows the increases in the deductible,
initial benefit limit, catastrophic coverage limit, and cost sharing
from 2006 to 2010.
Part D Standard
Benefit 2006 2010
2006
2007
2008
2009
2010
Annual Deductible Maximum
$250
$265
$275
$295
$310
Member pays 25% of the next
$2,000
(25% = $500)
$2,135
(25% = $533.75)
$2,235
(25% = $558.75)
$2,405
(25% = $601.25)
$2,520
(25% = $630)
Initial Benefit Period Maximum(what the member AND the plan have spent)
$2,250
($250 + $2000)
$2,400
($265 + $2,135)
$2,510
($275 + $2,235)
$2,700
($295 + ($2,405)
$2,830
($310 + $2,520)
DONUT HOLEMember pays 100% of the next ("TrOOP")
$2,850
$3,051.25
$3,216.25
$3,453.75
$3,610
Catastrophic CoverageBegins
when member (NOT plan) has spent a total of
One of the ironies in all of this is that the
strongest critics of health care reform, and those most worried about
government involvement in health care, are seniors, who are satisfied
with their Medicare-provided health care
(Information about drug plan availability,
premiums, and benefit design comes from Medicare Part D Spotlight: Part
D Plan Availability in 2010 and Key Changes Since 2006 (Kaiser
Family Foundation, Oct.1, 2009),
Even though the total number of plans offered will
be slightly less in 2010 than in 2009 (1,510 PDPs in 2010 instead of
1,689 PDPs in 2009), beneficiaries will continue to have an overwhelming
number of plans from which to choose in 2010.
Those who live in the regions with the fewest plans
(Alaska and Hawaii) will still have 39 different PDP options to review.
Once again, the largest number of PDPs (53) will be offered in the
region that includes Pennsylvania and West Virginia.
The number of Benchmark plans (for which
individuals who are eligible for the full Low-Income Subsidy (LIS) pay
no premium) also continues to decline. According to Kaiser Family
Foundation, there will be 212 fewer Benchmark plans in 2010 than when
Part D went into effect in 2006; 11 regions will lose between 3 and 6
plans, while 8 regions will lose 1 or 2 Benchmark plans.
Unlike last year, however, there will be at least
three (3) Benchmark plan options in every state, making it more likely
that all full LIS-eligible beneficiaries will have a choice of plans for
which they pay no premium.
No new organizations have chosen to offer a PDP in
every state and the District of Columbia. Furthermore, none of the
twelve parent organizations that sponsor a national plan offers a
Benchmark plan in all 34 PDP regions.
Three organizations that offered national plans in
2009, Envision Insurance Company, Munich American Holding Company
(Sterling Life Insurance Companies), and Wellcare, will no longer do so
in 2010. (2010
Medicare Part D National Stand-Alone Prescription Drug Plans)
Costs to Beneficiaries
● Premiums: Kaiser Family Foundation
reports that Part D premiums, once again, will increase in 2010, meaning
that average monthly premiums weighted by enrollment have risen every
year since the drug benefit began.
Kaiser cites average weighted monthly PDP premiums
as ranging from $26.18 in the New Mexico region to $46.54 in the Idaho
and Utah region.
Overall, the weighted average monthly premium will
increase by 11% in 2010. Premiums will increase by at least $10 per
month for about 1.2 million beneficiaries if they remain in their
current PDP.
● Deductible: Sixty-one percent (61%) of PDPs
will charge a deductible in 2010, up from 45% in 2009 and 42% in 2006.
Of these, 36% will charge the standard deductible of $310.
The largest growth has come in the percentage of
plans that charge a lower deductible than the standard, 25% in 2010 as
compared to 11% in 2009.
● Gap coverage: Eighty percent (80%) of
PDPs will provide no coverage for prescriptions in the coverage gap
known as the donut hole. Again, no plan that provides gap coverage
offers coverage of brand name drugs.
● Tiered pricing and cost-sharing: Information
about drug price tiering and cost-sharing will not be made available
until CMS activates the Medicare Plan Finder tool on www.medicare.gov on
or around October 15.
Loss of Prescription Drug Coverage through
Medicare Advantage Plan Termination
Some Medicare Advantage (MA) plan sponsors have
made the business decision not to renew their contract with Medicare for
2010. Enrollees in a terminating MA plan that offers drug coverage
(MA-PD) will have to enroll either in a PDP by the end of December if
they return to traditional Medicare or in another MA-PD within that
timeframe in order to have drug coverage on January 1, 2010.
LIS-eligible individuals who are enrolled in
terminating MA plans will be automatically enrolled in a PDP if they do
not choose a PDP or an MA-PD plan for themselves.
(People enrolled in a Medicare Advantage plan or
PDP that is not renewing its contract should receive notice of their
rights from both the plan and from CMS. The Center will describe those
rights in a future Alert.)
Marketing of PDPs and MA-PDs
The start of October also means that Medicare
Advantage and prescription drug plan sponsors may begin marketing their
plans to Medicare beneficiaries. CMS continues to remind both
beneficiaries and plan sponsors that the agency has strengthened its
oversight of marketing activities, and that it will focus on areas where
beneficiaries may be affected by non-renewal of plan contracts.
Conclusion
October marks the beginning of the annual Medicare
enrollment period. Beneficiaries need to look at the information
available to them about their prescription drug options. In the next
few weeks they will receive information from their current drug plan,
the Medicare & You Handbook, and marketing materials.
Beneficiaries are urged to use the Medicare Plan
finder tool on www.medicare.gov
and to seek assistance from their State Health Insurance Assistance
Program (SHIP) (www.shiptalk.org)
to ensure that they have the best Medicare prescription drug coverage
available to them starting on January 1, 2010.
