Hold on to your wallets, Medicare drug plan participants. With Medicare open enrollment running through Dec. 7, seniors are in for a financial shock.
Current enrollees who have a stand-alone Medicare Part D plan are facing an average 9 percent increase in premiums if they stay with their plan, according to an analysis released by the Kaiser Family Foundation. That’s bad news for older adults who will be getting a measly 0.3 percent cost-of-living raise in Social Security benefits.
Kaiser projects the average monthly premium to rise to $42.17 in 2017, from $38.57 this year. Of course, average premiums are expected to vary across plans and states. They range from $16.81 to $71.66 per month for 2017 plans. And monthly premiums across states go from a low of $31.27 in New Mexico to a high of $50.95 in New Jersey, on average.
Stand-alone prescription plans, known as PDPs, are offered as a supplement to Traditional Medicare. Of the 41 million Americans enrolled in Medicare drug coverage plans, 60 percent are in these stand-alones. Beneficiaries usually have a choice of 22 PDPs, on average, which is fewer than in any year since 2006.
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Yet, the the variety of choices can be substantial, prompting experts to urge enrollees to carefully study their choices.
“With rising prescription drug costs looking like a near-certainty moving forward,” writes one advocate in The Motley Fool, “seniors need to be diligent in their efforts to pick out a PDP that suits their needs best.”
- Shop around and don’t limit yourself to PDPs. Depending on your circumstances, Medicare Advantage plans might be the better deal. Visit Medicare.gov’s Plan Finder for guidance.
- Make sure to research what tier your prescription drugs fall into. A five-tier system is used by most PDPs, and the higher tier for more specialized and costly drugs costs more out of pocket.
- Always ask your doctor for generics. They can be considerably cheaper and as effective.
- Pay attention to co-pay and co-insurance provisions in your drug plan. Co-payments are flat fees per prescription, while co-pays are a percentage of the total prescription cost. If you tend to take prescription drugs in the upper-cost tiers, you could be on the hook for a lot more money. And there are no annual out-of-pocket limits with Medicare.