Medicare Drug-Plan Premiums to Rise
I see that insurance companies are starting to market their Medicare Part D prescription drug plans for 2008, and it looks like prices are quite a bit higher than they were last year. What can I expect when I get my renewal notice?
Expect your premiums to increase. The cost of health care and prescription drugs continues to rise, and the government made some changes to way the subsidy to insurers is calculated. So the average cost of basic coverage will rise 13% in 2008 to $25 per month, according to the Centers for Medicare and Medicaid Services.
That may sound steep, but, unfortunately, it understates the pocketbook pain that will be inflicted on many. Huge increases are on deck for some of the most-popular plans.
The average cost of Humana's standard plan, for example, will jump from $15.34 per month in 2007 to $25.88 in 2008 -- an increase of more than 68%. And prices are rising significantly in many of United HealthCare's AARP plans. In California, for example, the monthly cost of the bare-bones "saver" plan will more than double -- from $9.80 to $21 -- and premiums for the "enhanced" plan, which provides additional coverage, will rise by nearly 58%.
"The overall 13% increase is due to the fact that some smaller companies aren't hiking rates nearly as high -- the average rate for CIGNA's Plan Two (its middle-level plan), for example, is only increasing by 9%. And a few companies are actually decreasing prices in some areas. For example, premiums for Humana's enhanced plan are dropping by 40% in Alaska, from $24.60 to $14.70 per month.
The key thing to know now is that you don't have to be stuck with a big increase. Open enrollment for 2008 plans runs from November 15 to December 31, when you can switch plans before you're locked in for 2008.
And, remember, premiums are only part of the picture. The most important step you should take before picking a 2008 plan is to compare total costs -- including premiums as well as co-payments for the drugs you take and other out-of-pocket costs. When you add up premiums, deductibles, co-payments and your share of the cost within the doughnut hole coverage gap, a plan with higher premiums but more-comprehensive coverage for your medications could actually cost you less by the end of the year.
It's easy to compare those figures by using Medicare's prescription drug plan finder, and it's particularly important to do that this year. This tool becomes available with 2008 information today, October 10.
Another great feature on Medicare.gov is the plans' complaint and customer-service records, which is another key factor when choosing any policy -- especially if you're switching to a lesser-known company. You'll be able to look up this information for 2008 plans at Medicare.gov starting on November 15.
If you'd like individualized assistance, call (800) 633-4227 or get help from the State Health Insurance Assistance Program (SHIP) in your area.
Got a question? Ask Kim at firstname.lastname@example.org.