Find
out why prescription drug coverage could get more affordable next year.
Dan
Caplinger Sep 2, 2018 at 6:02PM
Tens of millions of
older Americans count on Medicare to help them with their
healthcare expenses after they retire and lose insurance coverage from their
employers. As with most healthcare costs, Medicare participants have gotten
used to the idea that over time, they'll likely see what they pay for premiums
go up.
Yet recently, the
Centers for Medicare & Medicaid Services (CMS) have announced that average
basic premiums for prescription drug coverage under Medicare Part D are projected to go down
in 2019 from current levels. That will mark the second straight year of
declines, which is highly unexpected given the general trend toward higher
premiums throughout most of the healthcare space.
What's happening to
Medicare Part D premiums?
According to CMS, basic
Part D premiums are expected to decline by about 3% from 2018 levels. New
monthly premiums of $32.50 will be about $1 less than the $33.59 per month in
premiums that the typical Medicare participant pays this year.
Other figures related to
Medicare's prescription drug coverage operations showed similar decreases. The
national average monthly bid amount, which reflects the average of standardized
bids submitted by all prescription drug plan providers weighted by the number
of participants each plan has, is projected to fall from $57.93 to $51.28.
Similarly, the base beneficiary premium under Part D, which reflects the
percentage of the average monthly bid amount attributable to Medicare
beneficiaries, is slated to drop from $35.02 to $33.19.
What's behind the
decline?
CMS attributed the price
drops as being a direct result of pressure that the federal government has put
on prescription drug manufacturers. By seeking to increase competition among
suppliers of prescription drugs by granting more bargaining power to
prescription drug plans under Medicare Part D, the Medicare program hopes to
get the best possible deals for seniors.
CMS has already made
progress in implementing some key reforms. For instance, new limits to the
amounts that low-income beneficiaries pay for biosimilar drugs have helped cut
costs, as has quicker substitution of generic drugs as they become available.
Medicare participants also now have more options for which pharmacies they use,
and greater competition among different Part D plans has made more plan options
available to people on Medicare.
Surcharges for many
high-income Medicare participants will drop too
Somewhat surprisingly,
Medicare participants who have high income levels will see a further break.
Under Medicare law, single taxpayers with incomes above $85,000 or joint filers
with $170,000 or more in income typically have to pay surcharges above the ordinarily
Medicare Part D monthly premium amount. In 2018, those amounts ranged from $13
to $74.80 per month depending on income level.
For 2019, those
surcharges will be generally lower, with one exception for the highest-income
participants. You can see below how the surcharge amounts will change depending
on income levels.
|
Income level for singles
|
Income level for joint filers
|
2018 surcharge
|
2019 surcharge
|
|
$85,000 to $107,000
|
$170,000 to $214,000
|
$13
|
$12.40
|
|
$107,000 to $133,500
|
$214,000 to $267,000
|
$33.60
|
$31.90
|
|
$133,500 to $160,000
|
$267,000 to $320,000
|
$54.20
|
$51.40
|
|
$160,000 to $500,000
|
$320,000 to $750,000
|
$74.80
|
$70.90
|
|
Above $500,000
|
Above $750,000
|
$74.80
|
$77.40
|
DATA
SOURCE: CENTERS FOR MEDICARE & MEDICAID SERVICES.
Law changes have added
an additional top bracket that didn't exist in 2018. Therefore, although those
making less than $500,000 if single or $750,000 if filing jointly will all pay
less in additional premium costs, top-earning Medicare participants above those
limits will see a slight increase in what they pay every month for their
prescription drug coverage under Medicare Part D.
Don't forget to look at your plan
The one wildcard that
CMS didn't really discuss was how coverage options will change among popular
Part D plans in 2019. For instance, one way that a plan provider can allow for
less expensive monthly premiums is by offering less comprehensive coverage. That
can include an increased deductible or copay or covering fewer prescription
drugs. If your old plan no longer meets your needs, you might end up having
to switch to another plan -- and paying more
for the level of coverage you need.
In general, though, any
trend toward lower healthcare costs is a good thing, especially for older
Medicare participants living on fixed incomes. Be ready to get the information
you need in order to get the right coverage for your needs when open enrollment
for Medicare begins in mid-October.
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