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June, 2007:
:: A Preview of Medicare Part D 2008
:: A Good Medicare Part D / Medicare Advantage Question
:: Closing Notes
A Preview of Medicare Part D 2008
As we begin to enjoy the summer, most of you are also probably becoming accustomed to your current 2007 Medicare Part D prescription drug plan. So you may be surprised to hear that the new 2008 Medicare Part D plans have already been designed and submitted to the Centers for Medicare and Medicaid Services (CMS) for approval. However, details surrounding these newly designed 2008 Medicare Part D plans will not be released until later in 2007.
What do we know about the 2008 Medicare Part D plans?
Each year CMS is required to provide a standard or model Medicare Part D plan and the yet unreleased 2008 Medicare Part D plans must meet or exceed the features of this standard or model CMS Part D plan.
So, although the 2008 CMS model Medicare Part D plan is not an actual prescription drug plan that is offered for sale, the CMS model Part D plan does give us an idea of the trends for 2008. Also, some plan providers have offered a duplicate of the CMS Model plan in 2006 & 2007, and may once again in 2008. Let’s take a look at how the 2008 model plan compares to 2007:
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Changes in the Standard or Model CMS Medicare Part D Plan:
First, as a quick review, there are four phases to the standard Medicare Part D coverage.
(1) The Deductible - You pay 100% of prescription costs.
(2) The Initial Coverage - The prescription coverage after the deductible and up to the Doughnut Hole or Coverage Gap.
(3) The Doughnut Hole or Coverage Gap - You pay 100% of your prescription costs.
(4) The Catastrophic Coverage - You pay only very small part of your prescription costs.
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Changes in the Deductible: increased from $265 in 2007 to $275 in 2008
If you have a Medicare Part D plan that follows the 2008 CMS model plan, you will pay the first $275 before your medications are covered by your Medicare Part D benefit.
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Changes in the Initial Coverage Limit: increased from $2,400 in 2007 to $2,510 in 2008
The beneficiary with a plan that exactly follows the 2008 CMS model Part D plan will have prescription drug coverage after their deductible ($275) up to the point where the retail costs of their covered prescriptions reach a total cost of $2,510. At this point, the Coverage Gap (or Doughnut Hole) begins and unless the beneficiary has a Medicare Part D plan that provides coverage through the Doughnut Hole**, the beneficiary will be responsible for 100% of their prescription costs. The coverage gap continues until the beneficiary enters the area of Catastrophic Coverage, where the costs of medications are greatly reduced (see the section below).
** Please note: Only a very limited number of Medicare Part D plans offered complete Doughnut Hole coverage in 2007. Most 2007 Part D plans offering Doughnut Hole coverage only included generic medications.
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Co-Insurance or Co-Payment for Prescriptions: 25% of the covered Medications
This is the Part D coverage area between your deductible of $275 and up through your Initial Coverage Limit of $2,510, the beneficiary will pay 25% of the costs of their medications - the Part D plan provider will pay the other 75%.
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Changes in the Out-of-Pocket Threshold: increased from $3,850 in 2007 to $4,050 in 2008
So when does the Coverage Gap or Doughnut Hole end? When a beneficiary has spent a total of $4,050 in actual out of pocket costs, then the beneficiary will exit the Doughnut Hole and enter the Catastrophic Coverage phase. See the example calculation under Out-of-Pocket Threshold in the chart at:
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:: http://www.medicare-partd.com/PartD-The-2008-Medicare-Part-D-Outlook.php
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Exiting the Doughnut Hole: increased from $5,451.25 in 2007 to $5,726.25 in 2008
Persons with very high medication costs will go though the Doughnut Hole and will exit this Coverage Gap when their total retail prescription costs for 2008 reach $5,726.25. (In other words, the Doughnut Hole starts when retail costs reach $2,511 and continues until retail costs exceed $5,726.25.)
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Changes in the Minimum Cost-Sharing in the Catastrophic Coverage Portion of the Benefit: increased from $2.15 for generics or preferred drugs that are multi-source drugs and $5.35 for all other drugs in 2007 to $2.25 for generics and $5.60 for other drugs in 2008
Again, once in Catastrophic Coverage (after the Doughnut Hole is satisfied), the cost of medications will be reduced to $2.25 for generic prescriptions and $5.60 for other prescriptions. As noted, these prescription prices come into effect after your total out of pocket costs reach $4,050.
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Lastly, here are a few notes on Medicare beneficiaries who are eligible for both Medicare and Medicaid (or Dual-Eligible)
- Part D Full Benefit Dual Eligible (Medicare and Medicaid) - Co-payments for Institutionalized Beneficiaries - remains at $0 in 2008
- Maximum Co-payments for Non-Institutionalized Full Subsidy Dual Eligible up to or at 100% of the Federal Poverty Level (FPL): increased from $1.00 for generic or preferred drug that is a multi-source drug and $3.10 for all other drugs in 2007 to $1.05 for generics and $3.10 for other drugs in 2008 (the same as 2007) (The costs falls to $0 when the fully Dual-Eligible beneficiary exceeds the Out-of-Pocket Threshold.)
- Maximum Co-payments for Non-Institutionalized Full Subsidy Dual Eligible over 100% of the Federal Poverty Level (FPL): increased from $2.15 for generic or preferred drug that is a multi-source drug and $5.35 for all other drugs in 2007 increased to $2.25 for generics and $5.60 for other drugs in 2008 (The costs falls to $0 when the fully Dual-Eligible beneficiary exceeds the Out-of-Pocket Threshold.)
(Source: Department of Health and Human Services, Centers for Medicare and Medicaid Services - April 2, 2007)
Still need more details or another view?
If you wish to see the details of the CMS Model Medicare Part D Plan as a table or see how 2008 compares to 2006 and 2007, please take a look at:
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:: http://www.medicare-partd.com/PartD-The-2008-Medicare-Part-D-Outlook.php
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Making a budget estimate for 2008? Try our 2008 Model Medicare Part D Expense Estimator.
Would you like to estimate your out-of-pocket costs for 2008? We have a simple online calculator that will let you estimate your total out-of-pocket prescription costs based on the 2008 CMS model Medical Part D plan. Remember to add the cost of your monthly Part D plan premiums to this number to get an idea of how much you may spend in 2008.
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:: http://www.medicare-partd.com/PartD-PHPPartDCalculator08MedPartDXphp.php
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A Good Medicare Part D / Medicare Advantage Question
Reader Question: I enrolled in a Medicare Advantage Plan with Prescription Drug Coverage (MA-PD) in 2006. Then in January, 2007, I heard about another MA plan with more benefits (dental and hearing) and decided to switch to this other MA plan. I don’t use many medications, so I am flexible as to my prescription coverage. Unfortunately I was not allowed to switch plans. - Why?
As you may recall, each year we have more than one enrollment period. The Medicare Part D enrollment period for eligible beneficiaries closed December 31, 2006 (this is called the Annual Coordinated Election Period or AEP). The Medicare Advantage plan enrollment period continued through March, 2007. (This was called the Open Enrollment Period or OEP). However, this enrollment period was limited specifically to Medicare Advantage plans - beneficiaries were not allowed to switch prescription plans, nor were beneficiaries allowed to switch to a Medicare Advantage Plan that did NOT HAVE a prescription benefit, when their existing Medicare Advantage plan HAD a prescription benefit.
In general, CMS allowed beneficiaries to switch only to "like Medicare plans" from January 2007-March 2007. Since your existing plan was a Medicare Advantage plan WITH prescription benefit (MA-PD) you were not allowed to switch to a stand-alone Medicare Advantage Plan (MA) WITHOUT picking up prescription coverage and since you were outside the enrollment period for Medicare Part D plans, you were not able to enroll in a separate stand-alone Medicare Part D plan. So, CMS did not allow you to change your MA plan - and thereby losing your prescription drug coverage.
To summarize: if you wish to switch from a Medicare Advantage plan with prescription coverage (MA-PD) to a stand alone Medicare Advantage plan (MA) plus a separate Medicare Part D plan (PDP) you can only do so during the first of the two enrollment periods which is November 15 - December 31 of each year.
Please note: If you are eligible for Medicare and Medicaid (dual-eligible) you have the ability to move between Medicare Part D plans on a Monthly basis - even outside of the normal enrollment periods.
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Closing Notes
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Last updated on: 07/18/2008
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