Medicare Part D: A First Look at Plan Offerings in 2016
During the Medicare open enrollment period, which runs from October 15 to December 7 each year, beneficiaries have the opportunity to enroll in a plan that provides Part D prescription drug coverage, either a stand-alone prescription drug plan (PDP) as a supplement to traditional Medicare, or a Medicare Advantage drug plan (MA-PD), which provides all Medicare-covered benefits including prescription drugs. Of the nearly 40 million beneficiaries enrolled in Part D plans, about 6 in 10 are in PDPs and the rest in MA-PDs.1
This issue brief provides an overview of the 2016 PDP marketplace, focusing on key changes from 2015, based on our analysis of data from the Centers for Medicare & Medicaid Services (CMS).2,3 In 2016, the typical Medicare beneficiary will have a choice of more than two dozen PDPs. Many will see higher premiums and deductibles if they remain in their current plan. As in the past, Part D enrollees need to consider that their plan may require coinsurance, rather than flat copayments, for brand-name and specialty drugs, and differential cost sharing for prescriptions depending on their choice of pharmacy. These factors, as well as which drugs are included on a plan’s formulary, may affect out-of-pocket costs as much as premiums. Other highlights include:
- In 2016, beneficiaries in each region will have a choice of 26 PDPs, on average, down by 4 from 2015.
- The average PDP premium (weighted by 2015 plan enrollment) is projected to increase by 13 percent from 2015 to 2016, from $36.68 to $41.46 per month. Even if a number of beneficiaries switch or are reassigned to lower-premium plans, the average premium increase for 2016 is likely to be the largest since 2009.
- More than one-third of the 11.2 million PDP enrollees who do not receive Low-Income Subsidies (LIS) would pay premiums of $60 or more per month in 2016 if they stay in the same plan.
- Nearly 4.4 million of these enrollees not receiving the LIS face a premium increase of at least $10 per month in 2016 if they stay in the same plan.
- Two-thirds of all PDPs will have deductibles in 2016, a higher share than in previous years. A growing share of PDPs will impose the maximum deductible allowed by law, which increased from $320 in 2015 to $360 in 2016, the largest increase in the deductible since the start of the program.
- Most PDPs charge coinsurance, rather than flat copayments, for non-preferred brand-name and specialty drugs, which could lead to higher out-of-pocket costs for those who use high-cost drugs.
- Nearly all PDPs (84 percent in 2016) use tiered pharmacy networks, with lower cost sharing in selected network pharmacies and higher cost sharing in other network pharmacies, a significant increase from just a few years ago when only a small share of plans used this type of preferred pricing (7 percent in 2011).
- Beneficiaries receiving the LIS will have access to 7 plans for no monthly premium in 2016, on average, fewer than in any past year. About 1.9 million LIS enrollees who are slated to be in PDPs where they will pay premiums must switch plans or be reassigned by CMS in order to have premium-free coverage in 2016.