As the government's prescription-drug plan enters its second year -- the 2007 enrollment deadline is December 31 -- one big surprise is the absence of big surprises. Most insurance companies that offered Medicare Part D coverage this year are still in the business, and average monthly premiums will remain about $24. Plus, now that insurers have been able to see what their competitors are offering, there will be fewer extremes in terms of price.
Similar to this year, the standard Part D plan will cover most prescription-drug bills up to $2,400 (that means the deductible, if any, your co-payments and the insurer's share of the cost). Then you are generally on your own until your out-of-pocket payouts total $3,850 -- the so-called doughnut hole. After that, the plan covers 95% of your prescription bills.
But in 2007, more companies are offering policies that cover the deductible and the doughnut hole. For example, UnitedHealth Group, which this year had only one plan under the AARP banner, is now offering three AARP plans. The most expensive, "enhanced" plan costs $39 to $51 per month (depending on the state), has no deductible, provides coverage for generic drugs within the doughnut hole, and covers several bonus drugs that typically aren't covered by Part D. The company has also introduced a bare-bones, "saver" plan that costs $10 to $26 per month and covers neither the deductible nor the doughnut hole. It's a good option for people who have few drug costs. The original AARP plan, which covers the deductible but not the coverage gap, will cost about the same as it did this year. To compare costs, go to Medicare.gov's prescription-drug plan finder at www.medicare.gov/mpdpf.
Humana, which charged unusually low premiums in 2006, announced some of the biggest price increases for 2007. For example, a Florida resident would have paid $10.35 a month for the company's least expensive plan this year. The same coverage will cost $15.90 a month in 2007, a 50% increase. But even at $15.90, Humana's standard plan is a good value. Humana's most expensive plan, which covered brand-name drugs in the doughnut hole in 2006, may not be such a good choice. It will cover only generic drugs in the gap in 2007 -- despite a $21 increase in the average monthly premium.
A number of companies that were on the high end have actually decreased some premiums for 2007. For example, Cigna's lowest-cost plan in New York was $36.61 per month for 2006; Cigna is charging $17.40 for nearly the same coverage in 2007 (co-payments for generic drugs are lower). And Aetna's basic plan will cost an average of 15% less than in 2006.