Hundreds of insurers nationwide offer Medicare Part D plans, which provide prescription drug coverage for seniors who don’t get that coverage through an employer plan or a Medicare Advantage plan. While fewer Part D plans will be available this year, in each state there are about 22 plans, leaving plenty of options – perhaps an overwhelming number – for consumers to choose from. If you want to enroll in a Medicare Part D plan for 2017, you have through December 7, 2016 to do so. Here are the potential price increases you need to be aware of and some tips for minimizing or avoiding them.
Medicare Part D Deductible and Premium Increases
Most plans will see their deductible increase from $360 in 2016 to $400 in 2017. Customers must pay $400 out of pocket for prescriptions before insurance coverage kicks in. It may be possible to find a plan with a lower deductible or even no deductible, but the plan will likely make up for that benefit with higher costs elsewhere, in premiums or in drug co-pays or co-insurance. While this $40 increase will affect many seniors’ finances, it’s not the one they need to be most concerned about.
Premiums are a somewhat larger concern. If you already have a Part D plan that worked well for you in 2016, the easiest thing to do would be to keep it. But that might not be the best option because it could cost you in 2017. The Kaiser Family Foundation, a nonprofit health policy research and analysis organization, reports that two-thirds of Part D consumers will see higher premiums if they stay with their current plans. They’ll pay an average monthly premium of $42.17 in 2017 if they don’t switch, a 9% increase over 2016 premiums. And premiums are going up by more than 15% in some of the largest plans, while premiums are actually decreasing in others. Premiums range from $16.81 per month to $71.66 per month for the 10 most popular plans. Shopping around could mean significant savings in premiums.
Medicare Part D Drug Price Increases
But even premium increases aren’t what Medicare Part D customers need to be most concerned with – unless they don’t currently use any prescription medications. Instead, most customers should focus their energy on choosing the plan that offers the lowest out-of-pocket costs on the drugs they use regularly. AARP Bulletin found that there are huge price increases for some drugs, even generics, in some plans, as well as huge variations in the price of the same drug among different Part D plans. For example, among the 20 plans available in Florida, enrollees who use the drug Procrit for anemia could pay as much as $569 or as little as $27 for a 30-day supply, a $542 difference. This is the biggest reason you shouldn’t automatically re-enroll in the same plan you had in 2016. You should research what you’ll pay for your specific drugs first.
To find out what your actual costs could be for enrolling in a specific plan, use Medicare’s online Plan Finder tool. Then use the tool to add each prescription drug you take; it will ask about your dosage, how often you fill your prescription, and whether you use a retail or mail-order pharmacy. You can then view a list of drug programs available in your area, see your estimated annual drug costs for each and learn whether all of your drugs are on the plan’s formulary. You can also see if any of the drugs you use have limits, such as requiring prior authorization, step therapy or quantity limits. The plan finder also shows the premiums, deductibles and range of co-insurance and co-payments for each plan.
Enrollees also need to understand how a plan’s price tiers work. If you’re thinking about staying with the same plan because you’re comfortable with the premiums and what you’ve been paying for your drugs in 2016, don’t re-enroll until you find out whether any of your drugs have been moved into a more expensive tier, which can happen even with generics. A drug you use could even be removed from your current plan’s formulary altogether, meaning your insurance won’t cover it.
You’ll also want to make sure the plan’s in-network pharmacies are convenient for you, since going out-of-network could cost considerably more.
Switches from Co-insurance to Co-pays
In addition to knowing how much each plan available to you will charge for the drugs you use most, you need to know whether you’ll pay co-insurance or a co-pay for those drugs. Close to two-thirds of Part D drugs require customers to pay co-insurance, which is a percentage of the drug’s cost, instead of a co-pay, which is a flat dollar amount. It’s common for a plan to charge a co-pay for generics and co-insurance for preferred brands, nonpreferred drugs and specialty drugs.
Knowing that you have a $10 co-pay for a drug gives you certainty over what you’ll pay; knowing that you’re responsible for 10% co-insurance does not, if you don’t know what the drug’s full price is, and co-insurance doesn’t protect you against drug price increases. (To learn more about your responsibility for drug costs, read Coverage Gap Discount Program: How Does It Work?)
The Bottom Line
Make sure to shop around and get realistic estimates of what you can expect to pay for drugs in 2017 before you enroll in a Medicare Part D plan. If you don’t, you could find yourself paying more than you need to for your medications or having to stop taking a prescription drug because you can no longer afford it, potentially jeopardizing your health. (For related reading, see How to Avoid Penalties When Postponing Medicare.)