What You Need to Know About the New Changes to Medicare Part D

There will be an increase in premiums, a larger deductible, and fewer prescription drug plans. There will also be more out-of-pocket costs, changes in preferred pharmacy networks, and a smaller coverage gap.

What this means for you is to make sure to evaluate your plan and make changes during your initial enrollment, annual enrollment, or alternative enrollment period.

Gina Savage of The Ahlbum Insurance Group says, “Each year drug plans change and one can overpay substantially if not monitored annually. Preferred pharmacies change and the deductibles [rise].”

Make sure you evaluate your plan regularly so you’re not stuck with hidden fees.

Medicare Part D

Medicare Part D is a subset of the federally funded Medicare program. It subsidizes the cost of prescription drugs, making them more affordable for people over 65.

To get Medicare Part D, you need to have Original Medicare (Parts A and B), or Medicare Advantage (Part C).

Changes

You may be wondering how exactly these changes will affect you. Well, we’ll lay out the groundwork for you using data collected from the Centers for Medicare & Medicaid Services (CMS).  

Higher Premiums-Medicare premiums are different than your standard car or homeowner’s insurance payments. Your monthly premiums are based on your tax bracket, and how much income you make per year.

On average, people pay $10-$100 on their Part D monthly premiums. But in 2016, the average monthly premium will be about $41.46. This is 13% more than what it was in 2015.

And for people in the top bracket, single beneficiaries making $85,000 and married retirees making $170,000, they will have an increase in the surcharge they pay on top of their premiums.

Larger Deductible- Although people will pay different prices for their deductibles, there is a cap on how much insurers can charge. The limit in 2016 will rise to $360. This is a $40 increase from $320 in 2015.

Copayments and Coinsurance- A copayment is where you pay a certain amount for drugs of a specific tier, every time you pick up a prescription. Coinsurance is where you pay a percentage of the cost of the prescription.

According to U.S. News and World Report, more people are switching to coinsurance plans. And because the cost of prescription drugs are rising, they will have to pay a larger percentage for their medications. Especially if the ones they need are expensive.   

Fewer Options-There will be an 11% decrease in the number of prescription drug plans from 2015 to 2016. But, specific limitations on medication plans will vary by state, so check with your provider for more information.

More Preferred Pharmacies- If you go through a preferred pharmacy to get your prescription drugs, you’ll deal with lower-out-of-pocket costs, compared to using one outside of your network.

As of 2016, about 85% of prescription drug plans will have preferred pharmacies.

Smaller Coverage Gap- Most Part D plans have coverage gap or “doughnut hole”. You enter the coverage gap once you spend a certain amount of money on prescription drugs. In 2015 it was $2,960 and in 2016, it’s $3,310.

You’ll then be paying 45% of the cost of covered brand name drugs and 65% for generic ones. And once you pay up to $4,850 in out of pocket costs as of 2016, you can get out of the gap, and into catastrophic coverage. Then you’d pay a low copayment or coinsurance for the rest of the year.

Of course, if you are not happy with how your plan is changing, you’re not stuck. You can always switch plans.

You can switch plans during the annual enrollment period, from October 15 to December 7. And if you miss that period, there might be special circumstances that allow you to switch during the few alternative enrollment periods. You can check the Medicare.gov website for further information.

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