Premiums rising, enrollees to pay 40-49 percent of costs in donut hole

The average monthly premium for prescription drug plans (PDPs) will increase to $42.17 for 2017, a 9 percent hike from the previous year. The Kaiser Family Foundation (KFF) found that the 10 most popular PDPs will have average premiums ranging from $16.81 to $71.66 per month. The average beneficiary will be able to choose from 22 PDPs. Enrollees will have some assistance while in the coverage gap, but will still be required to pay nearly half of their drug costs.

Options and cost. In 2016, 886 PDPs were available, which will be reduced to 746 in 2017. Five new PDPs are entering the market, while 134 are leaving. Accordingly, the number of plans available in each region is lower than 2016 availability. Eight plan sponsors account for 86 percent of all PDPs, covering 93 percent of enrollees.

Premiums were essentially flat for several years, but they are increasing for the second year in a row. Even if beneficiaries switch or are reassigned to a different plan, their average premium will probably be higher. The low-income subsidy (LIS) will allow 46 percent of all PDP enrollees to pay less than $20 per month (assuming no plan changes). Over one-third of enrollees that do not receive the LIS will pay at least $60 per month.

Every region will experience average premium increases. Florida, New York, New Jersey, and California will have average premiums above $45, while only three regions are projected have an average of less than $35.

Design. The standard Part D deductible will increase by $40 for the second year in a row, to $400. About 62 percent of PDPs are charging deductibles, but only 51 percent of Part D enrollees are in these plans. All PDPs will have tiered cost sharing, with typical copayments at $2 for preferred generic and $7 for non-preferred generic. Coinsurance for preferred brand tiers are becoming less common, from 39 percent of PDPs in 2016 to 20 percent in 2017, but 98 percent are charging coinsurance for non-preferred drug tiers (ranging between 24 to 50 percent). The threshold for a drug to qualify on the specialty tier will be $670 for a one-month supply, and coinsurance for these drugs is usually either 25 or 33 percent.

The donut hole will continue to shrink as the changes implemented by section 3301 of the Patient Protection and Affordable Care Act (ACA) continue to take effect. In 2017, manufacturer prices for drugs purchased in the coverage gap will be discounted by 50 percent, with enrollees paying 40 percent. Plans will be responsible for 49 percent of the costs for generic drugs in the coverage gap. About 72 percent of PDPs will offer no additional gap coverage.


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