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.
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.