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  • Part D Prescription Drug Plan Premiums to Increase for Wealthy Seniors

    As reported yesterday,  Medicare Part B premiums are tied to a seniior’s income history.  The most affluent seniors have been paying higher income threshold Medicare Part B premiums (doctor visits and outpatient services) since 2007. The surcharge was put in place by the Medicare Modernization Act of 2003

     This premium increase also  extends the income threshold formulas to Part D prescription drug enrollees for the first time. This will affect just 5% of Medicare enrollees this year, although that figure will rise to 14% by 2019 according to the Kaiser Family Foundation.

    High-income seniors who pay both Part B and Part D premiums could see their combined premiums rise anywhere from $300 to $700 per month by the end of the decade, according to Juliette Cubanski, associate director of Kaiser’s Medicare Policy Project.

    The new income thresholds also affect people who choose a Medicare Advantage plan (Part C), which often covers prescription drugs. Advantage enrollees typically pay the monthly Part B premium plus a supplemental premium to the Medicare Advantage plan; now, these premiums are being adjusted to factor in the higher-income amounts for Part B and Part D coverage, where applicable.

    The policy aims to help offset the cost of health-care reform by reducing taxpayer subsidies on Medicare services for seniors who don’t really need the help.  Kaiser estimates that the higher premiums will save taxpayers $25 billion for Part B from 2010 to 2019, and $10.7 billion for Part D.

    These changes will provide important new benefits to retirees that should at least take the edge off the higher expenses over time.

    The Medicare D prescription drug doughnut hole will be closed. That’s the coverage gap that starts when a beneficiary’s annual drug spending hits $2,830, and resumes at the catastrophic level ($4,550). This year, pharmaceutical companies are providing a discount of 50% on brand-name drugs to low- and middle-income beneficiaries who find themselves in the gap. Then, the doughnut hole itself will shrink a bit every year, ultimately disappearing entirely in 2020.

    These will also be important improvements to traditional Medicare aimed at boosting preventive care. Medicare patients now receive an annual wellness visit–with no co-payment or deductible–that includes a comprehensive health risk assessment and a long-term personalized prevention plan. Deductibles and co-payments also were eliminated for most preventive care services.

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