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Medicare Blog | Medicare News | Medicare Information

Medicare Part D Price Increase for High Income Seniors

Posted by Lauren Hidalgo on Fri, Feb 11, 2011 @ 09:55 AM

Medicare SupplementsStarting in January more affluent seniors have begun to pay higher premiums for their prescription drug benefits. Since 2007 high income beneficiaries have paid more on a sliding scale for Medicare Part B but this is the first year that scale has included Medicare Part D as well. Additionally, the provision in the health care law froze the income threshold that determines their costs, and it will not be adjusted for inflation through 2019. Senior advocates warn that requiring high-income seniors to pay more for their Medicare premiums might encourage them to look elsewhere for their insurance coverage. This could be significant, as wealthier seniors also tend to be healthier, thus affecting the lower-income seniors left behind with increases. Still, supporters believe it makes sense to require seniors with higher incomes to pay more for their Medicare benefits because it is guarantee issue and community-rated. Switching to private insurance is risky and they doubt that seniors could get a better deal. At this time, James Blum, deputy of the Center for Medicare and Medicaid Service, is not aware of anyone leaving the program because of higher prices for their Part B coverage. Blum is confident more affluent seniors will continue to stay in the Part D program as well, citing that the Part D plan is generous and the 50% discount (beginning this year) on prescription drugs once they reach the doughnut hole. In the past, roughly 5% of Medicare beneficiaries had been paying the higher premiums; however, with the sliding scale no longer in place this will increase to 10% by 2019 raising approximately $36 billion for Medicare.

How do you feel about affluent seniors having to pay higher premiums for their Medicare Part D coverage as well?

The Diminishing Medicare Doughnut Hole

Starting in 2011 seniors who hit the doughnut hole will have substantial discounts on their prescription drugs, increasing over time and completely closing the gap by the year 2020. This is a significant part of the health care law because in the past those who reached the gap often stopped filling their prescriptions due to the financial burden. Previously, Medicare beneficiaries were responsible for 25% of their prescription drug cost and their drug plan paid the extra 75% until they reach a total of $2530 at which time the senior entered the doughnut hole. However starting this year after reaching the doughnut hole beneficiaries will get a 50% brand-name and 7% generic drug discount until they have spent $3607.50. At that time the senior will be out of the doughnut hole and the drug plan will cover approximately 95% of the prescription drugs for the remainder of the year. By 2020 Medicare beneficiaries will only be responsible for 25% of their bill, no matter how large. This year alone the new plan will save approximately 4 million low-income seniors up to $1800 each. However critics believe this will result in drug companies raising the price on their drugs, to cover the difference. A price increase would affect all of those on Medicare not just those in the doughnut hole, creating another problem needing a solution.

What do you think of the new Medicare Part D benefit? Do you think drug companies will raise their prices to cover the difference?

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Sources: KHN

Tags: Medicare Supplement, health insurance industry, health care reform, Forethought Medicare Supplement, United of Omaha Medicare Supplement, Medicare Select

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