Rising deductibles for Part D beneficiaries

Medicare Part D beneficiaries can look forward to increases in deductibles come 2009 for standard benefit plans, i.e., the minimum plan that may be offered by insurers.

Participating Part D plans must offer beneficiaries a statutorily defined standard benefit or an alternative actuarial equivalent.

The Medicare Modernization Act (MMA) directs the Centers for Medicare and Medicaid Services (CMS) to update the statutory elements for the standard Part D drug benefit each year.

These elements include the standard deductible, initial coverage limit, and catastrophic coverage threshold, along with other related factors.

The 2008 standard benefits generally had a $275 deductible and coinsurance of 25 percent after the deductible to the coverage limit of $2,510.

This is followed by a coverage gap in which beneficiaries pay 100 percent — up to an out-of-pocket spending limit of $4,050.

Once the out-of-pocket spending reaches this level, the plan pays 95 percent of drug costs for catastrophic coverage.

The graphs on the right show highlights from standard benefit plans for 2006 to 2009. Of note, for 2008 to 2009:

  • The initial deductible will increase from $275 to $295
  • Initial coverage limit increases from $2,510 to $2,700
  • Out-of-pocket threshold increases from $4,050 to $4,350
  • Minimum cost sharing in the catastrophic coverage portion of the benefits increases from $2.25 for generic or preferred drug that is a multisource drug and $5.60 for all other drugs in 2008 to $2.40 for generics and $6 for other drugs in 2009

Source: Centers for Medicare and Medicaid Services and www.Medicare-PartD.com

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