Medicare fall enrollment: It pays to shop as drug plan premiums surge

Seniors have received some unpleasant news in their mailboxes in recent weeks: premiums for many Medicare prescription drug insurance plans will rise at double-digit rates next year.

Premiums for the ten most popular Medicare Part D prescription drug plans (PDPs) will rise an average of 8 percent next year – the fastest clip in five years, according to Avalere Health, a consulting and research firm. And five of the top plans will boost their average premiums anywhere from 16 percent to 26 percent.

Seniors got the bad news in the annual notices that plan providers must send to enrollees by Sept. 30 each year ahead of the annual fall enrollment period. Enrollment runs from Oct. 15 to Dec. 7 – and it is the time when seniors can shop for new drug plans, which are optional add-ons to Medicare.

Many seniors don’t bother to re-shop their coverage annually – but they should. Premiums for prescription drug plans (PDPs) can jump sharply from year to year, along with the level of coverage provided for medications. Premium hikes haven’t been a big issue in Medicare Advantage, the all-in-one managed care alternative to traditional Medicare. But their networks of health care providers can change from year to year, along with quality ratings.

This year’s big premium increases should motivate enrollees to shop for new coverage during the fall enrollment. A key question for shoppers this year will be whether to buy a basic or enhanced plan.

Basic plans come with a gap in coverage, often called the “donut hole,” where the beneficiary must pay out of pocket after reaching a cap. In 2016, the gap starts when you and your insurance company have spent a combined $3,310, and coverage resumes when total spending reaches $4,850.

The largest basic plan, SilverScript Choice, will charge an average of $22.56 per month next year. Humana Walmart RX will charge $18.49 per month.

Most enhanced plans offer some coverage in the so-called donut hole, but also come with higher premiums. For example, AARP MedicareRX Preferred, which is the largest of the top 10 plans, will see its average premium jump 21 percent next year to $60.79, according to Avalere.

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