Juliette Cubanski Follow @jcubanski on
Twitter and Anthony Damico Published: Oct 29, 2020
During the Medicare open enrollment period
from October 15 to December 7 each year, beneficiaries can enroll in a plan
that provides Part D drug coverage, either a stand-alone prescription drug plan
(PDP) as a supplement to traditional Medicare, or a Medicare Advantage
prescription drug plan (MA-PD), which covers all Medicare benefits, including
drugs. Among the 46 million Part D enrollees in 2020, 20.2 million (44%) are in
PDPs and 19.3 million (41%) are in MA-PDs (excluding the 7.0 million (15%) in
employer-only group PDPs and MA-PDs). This issue brief provides an overview of
Medicare Part D drug plans that will be available in 2021 and key trends over
time.
Part D Plan Availability
The Average Medicare
Beneficiary Has a Choice of Nearly 60 Medicare Plans with Part D Drug Coverage
in 2021, Including 30 Medicare Stand-alone Drug Plans and 27 Medicare Advantage
Drug Plans
Figure 1: The Average
Medicare Beneficiary Has a Choice of Nearly 60 Medicare Plans Offering Drug
Coverage in 2021, Including 30 Stand-alone Drug Plans and 27 Medicare Advantage
Drug Plans
A larger number of Part D plans will be
offered in 2021 than in recent years. The average Medicare beneficiary will
have a choice of 30 stand-alone PDPs in 2021, two more PDP options than in
2020, and eight more than in 2017, a 36% increase (Figure 1). Although the
number of PDP options in 2021 is half of what it was at the peak in 2007 (when
there were 56 PDP options, on average), this is the fourth year in a row with
an increase in the average number of stand-alone drug plan options.
In 2021, beneficiaries will also have access
to 27 MA-PDs, on average, a 71% increase in MA-PD options since 2017 (excluding
Medicare Advantage plans that do not offer the drug benefit and plans not
available to all beneficiaries; overall, an average of 33 Medicare Advantage plan options will
be available in 2021).
Based on September 2020 enrollment, 8 out of
10 PDP enrollees (80%) in 2021 are projected to be in PDPs operated by just
four firms: UnitedHealth, Centene (which acquired WellCare in 2020), Humana,
and CVS Health (based on PDP enrollment as of September 2020). All four firms
offer PDPs in all 34 PDP regions in 2021.
A Total of 996 Medicare Part D
Stand-Alone Prescription Drug Plans Will Be Offered in 2021, a 5% Increase From
2020 and a 34% Increase Since 2017
Figure 2: A Total of
996 Medicare Part D Stand-Alone Prescription Drug Plans Will Be Offered in
2021, a 5% Increase From 2020 and a 34% Increase Since 2017
A total of 996 PDPs will be offered in the 34
PDP regions in 2021 (plus another 11 PDPs in the territories), an increase of
48 PDPs (5%) over 2020, and 250 more PDPs (a 34% increase) since 2017 (Figure
2). This increase is primarily due to the Trump Administration’s elimination of the “meaningful
difference” requirement for enhanced benefit PDPs offered by
the same organization in the same region. Eliminating this requirement means
that PDP sponsors no longer have to demonstrate that their enhanced PDPs
offered in the same region are meaningfully different in terms of enrollee
out-of-pocket costs. In 2021, 62% of PDPs (618 plans) will offer enhanced Part
D benefits—a 60% increase in the availability of enhanced-benefit PDPs since
2017, when just over half of PDPs (387 plans) offered enhanced benefits.
The number of PDPs per region in 2021 will
range from 25 PDPs in Alaska to 35 PDPs in Texas and will be the same or higher
in 32 of the 34 PDP regions compared to 2020 (see map, Table 1).
Medicare Part D
Stand-Alone Prescription Drug Plan Availability in 2021, by State
Number of Medicare Part D Stand-alone Prescription Drug Plans in
2021
United States
996
Alabama
32
Alaska
25
Arizona
32
Arkansas
31
California
32
Colorado
27
Connecticut
27
Delaware
27
District of Columbia
27
Part D Premiums
The Estimated Average Monthly
Premium for Medicare PDPs Is Projected to Increase by 9% to $41 in 2021, Based
on Current Enrollment
Figure 3: The
Estimated Average Monthly Premium for Medicare PDPs Is Projected to Increase by
9% to $41 in 2021, Based on Current Enrollment
The estimated national average monthly PDP
premium for 2021 is projected to increase by 9% to $41, from $38 in 2020,
weighted by September 2020 enrollment (Figure 3). It is likely that the actual
average weighted premium for 2021, after taking into account enrollment choices
by new enrollees and plan changes by current enrollees, will be somewhat lower
than the estimated average. CMS reported that the average premium for basic
Part D coverage offered by PDPs and MA-PDs will be an estimated $30 in
2021. Our premium estimate is higher because it is based on PDPs only
(excluding MA-PDs) and includes PDPs offering both basic and enhanced coverage
(enhanced plans, which account for 62% of all PDPs in 2021, have higher
premiums than basic plans, on average).
Average Monthly Premiums for
the 21 National Part D Stand-alone PDPs Are Projected to Range from $7 to $89
in 2021, with Higher Average Premiums for Enhanced Benefits and Zero-Deductible
PDPs
Figure 4: Average
Monthly Premiums for the 21 National Part D Stand-alone Drug Plans Are Projected
to Range from $7 to $89 in 2021
PDP premiums will vary widely across plans in
2021, as in previous years (Figure 4, Table 2). Among the 21 PDPs available
nationwide, average premiums will range from a low of $7 per month for SilverScript
SmartRx to a high of $89 per month for AARP MedicareRx Preferred.
Changes to premiums from 2020 to 2021,
averaged across regions and weighted by 2020 enrollment, also vary widely
across PDPs, as do the absolute amounts of monthly premiums for 2021.
·
The 1.9 million non-LIS
enrollees in the largest PDP, CVS Health’s SilverScript Choice (which had a
total of 3.9 million enrollees in 2020, including those receiving low-income
subsidies) will face a modest $1 (2%) decrease in their average monthly premium, from $29 in
2020 to $28 in 2021.
·
In contrast, the 1.8
million non-LIS enrollees in the second largest PDP, AARP MedicareRx Preferred,
will face a $10 (12%) increase in their average
monthly premium between 2020 and 2021, from $79 to $89. This is the highest
monthly premium among the national PDPs in 2021.
·
The 1.3 million
non-LIS enrollees in the fourth largest PDP, Humana Premier Rx, will see a $7
(13%) increase in their monthly
premium, from $58 in 2020 to $65 in 2021.
Most Part D stand-alone drug plans in 2021
(62% of PDPs) will offer enhanced benefits for a higher monthly premium.
Enhanced benefits can include a lower (or no) deductible, reduced cost sharing,
or a higher initial coverage limit than under the standard benefit design. The
average premium in 2021 for enhanced benefit PDPs is $51, which is 55% higher
than the monthly premium for PDPs offering the basic benefit ($33) (weighted by
September 2020 enrollment).
In 2021, a large majority of PDPs (86%) will
charge a deductible, with most PDPs (67%) charging the standard amount of $445
in 2021. Across all PDPs, the average deductible in 2021 will be $345 (weighted
by September 2020 enrollment). The average monthly premium in 2021 for PDPs
that charge no deductible is $88, nearly three times the monthly premium for
PDPs that charge the standard deductible ($34) or a partial deductible ($31)
(weighted by September 2020 enrollment).
Nearly 8 in 10 Part D Stand-alone
Drug Plan Enrollees Without Low-income Subsidies Will Pay Higher Premiums in
2021 If They Stay in Their Current Plan
Figure 5: Nearly 8 in
10 Part D Stand-alone Drug Plan Enrollees Without Low-income Subsidies Will Pay
Higher Premiums in 2021 If They Stay in Their Current Plan
Most (78%, or 10 million) of the 13.4 million
Part D PDP enrollees who are responsible for paying the entire premium (which
excludes Low-Income Subsidy (LIS) recipients) will see their monthly
premium increase in 2021 if they
stay in their same plan, while 2.8 million (21%) will see a premium reduction
if they stay in their same plan (Figure 5).
Nearly 2 million non-LIS enrollees (13%) will
see a premium increase of $10 or more per month, while significantly fewer (0.2
million non-LIS enrollees, or 1%) will see a premium reduction of the same
magnitude. One-third (34%) of non-LIS enrollees (4.6 million) are projected to
pay monthly premiums of at least $60 if they stay in their current plans, and
more than 230,000 (2% of non-LIS enrollees) are projected to pay monthly
premiums of at least $100.
The Average Monthly Part D
Premium in 2021 for the Subset of Enhanced Stand-alone Drug Plans Covering
Insulin at a $35 Monthly Copay Is Substantially Higher Than Premiums for Other
PDPs
Figure 6: The Average Monthly Part D Premium
in 2021 for the Subset of Enhanced Stand-alone Drug Plans Covering Insulin at a
$35 Monthly Copay is Substantially Higher than Premiums for Other Plans
New for 2021, beneficiaries in each state will
have the option to enroll in a Part D plan participating in the Trump
Administration’s new Innovation Center model in
which enhanced drug plans cover insulin products at a monthly copayment of $35
in the deductible, initial coverage, and coverage gap phases of the Part D
benefit. Participating plans do not have to cover all insulin products at the
$35 monthly copayment amount, just one of each dosage form (vial, pen) and
insulin type (rapid-acting, short-acting, intermediate-acting, and
long-acting).
In 2021, a total of 1,635 enhanced Part D
plans will participate in this model, which represents just over 30% of both
PDPs (310 plans) and MA-PDs (1,325 plans) available in 2021, including plans in
the territories. Between 8 and 10 enhanced PDPs in each region are
participating in the model, in addition to multiple MA-PDs (see map). The average premium in 2021 for the subset
of enhanced PDPs participating in the insulin $35 copay model ($59) is nearly
twice as high as the monthly premium for basic PDPs ($33) and 61% higher than
the average premium for enhanced PDPs that are not participating in the model
($37) (weighted by September 2020 enrollment).
Medicare Part D
Stand-Alone Prescription Drug Plans Participating in the Insulin Demonstration
in 2021, by State
Number of Medicare Part D Stand-alone PDPs
Participating in the Insulin Demonstration in 2021
United States
310
Part D Cost Sharing
Part D Enrollees Will Pay Much
Higher Cost-Sharing Amounts for Brands and Non-preferred Drugs Than For Drugs
on a Generic Tier, and a Mix of Copays and Coinsurance for Different Formulary
Tiers
Figure 7: In 2021,
Part D Enrollees Will Pay Much Higher Cost-Sharing Amounts for Brands and
Non-preferred Drugs than for Drugs on a Generic Tier, and a Mix of Copays and
Coinsurance for Different Formulary Tiers
In 2021, as in prior years, Part D enrollees
will face much higher cost-sharing amounts for brands and non-preferred drugs
(which can include both brands and generics) than for drugs on a generic tier,
and a mix of copayments and coinsurance for different formulary tiers (Figure
7). The typical five-tier formulary design in Part D includes tiers for
preferred generics, generics, preferred brands, non-preferred drugs, and
specialty drugs. Among all PDPs, median standard cost sharing in 2021 is $0 for
preferred generics and $5 for generics (an increase from $4 in 2020), $40 for
preferred brands (a decrease from $42 in 2020), 40% coinsurance for
non-preferred drugs (an increase from 38% in 2020; the maximum allowed is 50%),
and 25% coinsurance for specialty drugs (the same as in 2020; the maximum
allowed is 33%).
Among the 21 national PDPs, 13 PDPs, covering
9.3 million enrollees as of September 2020, are increasing cost-sharing amounts
for drugs on at least one formulary tier between 2020 and 2021 (Table 3). Five
PDPs are increasing copayments for generics, with increases ranging from $1 to $4;
six PDPs are increasing copayments for preferred brands, with increases ranging
from $3 to $10; and 10 PDPs are increasing coinsurance for non-preferred drugs,
with increases ranging from 2 percentage points (e.g., from a 38% coinsurance
rate to 40%) to 14 percentage points (e.g., from a 35% coinsurance rate to
49%).
Low-Income Subsidy Plan Availability
In 2021, 259 Part D Stand-Alone
Drug Plans Will Be Premium-Free to Enrollees Receiving the Low-Income Subsidy
(Benchmark Plans)
Figure 8: In 2021, 259
Part D Stand-Alone Drug Plans Will Be Available Without a Premium to Enrollees
Receiving the Low-Income Subsidy (“Benchmark” Plans)
In 2021, a larger number of PDPs will be
premium-free benchmark plans—that is, PDPs available for no monthly premium to
Medicare Part D enrollees receiving the Low-Income Subsidy (LIS)—than in recent
years, with 259 premium-free benchmark plans, or roughly a quarter of all PDPs
in 2021 (Figure 8). Through the Part D LIS program, enrollees with low incomes
and modest assets are eligible for assistance with Part D plan premiums and
cost sharing. As of 2020, approximately 13 million Part D enrollees are
receiving LIS, including 6.7 million (52%) in PDPs and 6.1 million (48%) in
MA-PDs.
On average (weighted by Medicare enrollment),
LIS beneficiaries have eight benchmark plans available to them for 2021, or
about one-fourth the average number of PDP choices available overall. All LIS
enrollees can select any plan offered in their area, but if they enroll in a
non-benchmark plan, they must pay some portion of their chosen plan’s monthly
premium. In 2021, 10% of all LIS PDP enrollees who are eligible for
premium-free Part D coverage (0.6 million LIS enrollees) will pay Part D
premiums averaging $33 per month unless they switch or are reassigned by CMS to
premium-free plans.
The number of benchmark plans available in
2021 will vary by region, from five to 10 (see map). In 2020, 89% of the 6.6 million LIS PDP
enrollees are projected to be in PDPs operated by five firms: CVS Health,
Centene, Humana, UnitedHealth, and Cigna (based on 2020 enrollment).
Medicare Part D
Benchmark Plan Availability in 2021, by State
Number of Medicare Part D Benchmark PDPs in
2021
United States
259
Discussion
Our analysis of the Medicare Part D
stand-alone drug plan landscape for 2021 shows that millions of Part D
enrollees without low-income subsidies will face premium and other cost
increases in 2021 if they stay in their current stand-alone drug plan. There are
more plans available nationwide in 2021, with Medicare beneficiaries having 30
PDP choices during this year’s open enrollment period, plus 27 Medicare
Advantage drug plan options. Most Part D PDP enrollees who remain in the same
plan in 2021 will be in a plan with the standard $445 deductible and will face
much higher cost sharing for brands than for generic drugs, including as much
as 50% coinsurance for non-preferred drugs.
Some Part D enrollees who choose to stay in
their current plans may see lower premiums and other costs for their drug
coverage, but nearly 8 in 10 non-LIS enrollees will face higher premiums if
they remain in their current plan, and many will also face higher deductibles
and cost sharing for covered drugs. Some beneficiaries might find the best
coverage and costs for their specific medications in a plan with a relatively
low premium, while for other beneficiaries, a higher-premium plan might be more
suitable. Because Part D plans vary in a number of ways that can have a
significant effect on an enrollee’s out-of-pocket spending, beyond the monthly
premium, all Part D enrollees could benefit from the opportunity to compare
plans during open enrollment.
Juliette Cubanski is with KFF.
Anthony Damico is an independent consultant.
|
Methods |
|
This analysis
focuses on the Medicare Part D stand-alone prescription drug plan marketplace
in 2021 and trends over time. The analysis includes 20.2 million enrollees in
stand-alone PDPs, as of March 2020. The analysis excludes 17.4 million MA-PD enrollees
(non-employer), and another 4.6 million enrollees in employer-group only PDPs
and 2.3 million in employer-group only MA-PDs for whom plan premium and
benefits data are unavailable. Data on Part D plan availability,
enrollment, and premiums were collected from a set of data files released by
the Centers for Medicare & Medicaid Services (CMS): – Part D plan
landscape files, released each fall prior to the annual enrollment period – Part D plan and
premium files, released each fall – Part D plan crosswalk
files, released each fall – Part D
contract/plan/state/county level enrollment files, released on a monthly
basis – Part D Low-Income
Subsidy enrollment files, released each spring – Medicare plan
benefit package files, released each fall In this analysis, premium estimates are
weighted by September 2020 enrollment unless otherwise noted. Percentage
increases are calculated based on non-rounded estimates and in some cases
differ from percentage calculations calculated based on rounded estimates
presented in the text. |
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