Medicare Part D Costs Rising, `Doughnut Hole` Gets Bigger In 2007

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Medicare Part D Costs Rising, `Doughnut Hole` Gets Bigger In 2007

Seniors and disabled beneficiaries are likely to pay more next year for Medicare Part D drug benefits. Even while Initial Enrollment for Part D was still underway, Medicare officials quietly announced the higher 2007 costs of the government "standard" drug benefit. Out-of-pocket costs before reaching the catastrophic level of coverage are expected to increase from $3,600 to $3,850. But that amount doesn’t include the increase in drug plan premiums. Beneficiaries will learn those costs soon, as drug plans notify enrollees this month of 2007 premiums and other coverage changes. Medicare’s Open Enrollment period starts November 15 and runs through December 31, 2006 for beneficiaries wanting to shop for, and switch, supplemental Part B health and Part D drug plans.

Here are the cost increase details of the 2007 "standard" Medicare drug benefit. Please note, that, if you are enrolled in a Medicare Part D drug plan, the details of your actual plan may vary. Insurers are allowed wide latitude to offer plans of their own design, as long as the value of the coverage is equal to or greater than the Medicare standard benefit.

Medicare Part D Standard Benefit 2006 2007
Deductible
Initial Coverage Limit*
Out-of-Pocket Maximum**
$250
$2,250
$3,600
$265
$2,400
$3,850

*Amount in retail drug costs, meaning the amount both you and your drug plan pay, not just co-pays, before you reach the "doughnut hole" gap in coverage.
** Total amount you pay out-of-pocket, before you reach catastrophic coverage when your plan covers 95% of your drug costs, and you pay 5%.

Source: Medicare Part D Benefit Parameters for Standard Benefit 2007, Office of the Actuary, Centers for Medicare and Medicaid Services, April 5, 2006.

October 2006