The Centers for Medicare and Medicaid Services (CMS) announced today that average monthly Medicare Part D premiums will decrease slightly in 2018.  Based on the Medicare Part D plan carrier bids, the 2018 average base monthly premium is estimated to be around $33.50 per month, a decrease of around $1.20 from the $34.70 actual average premium reported in 2017.

However, as noted in the CMS Press Release: "The decline in the average premium comes despite the fact that spending for the Part D program continues to increase faster than spending for other parts of Medicare, largely driven by spending on high-cost specialty drugs."

As a reminder:  The average monthly Medicare Part D premium figure released by CMS may not reflect the actual changes in your 2018 Medicare Part D prescription drug plan premiums - or overall coverage.  Instead, everyone with a Medicare Part D or Medicare Advantage plan should be prepared to research other, more economic forms of health and prescription coverage during the annual Open Enrollment Period (AEP) that begins Sunday, October 15th and continues through Thursday, December 7, 2017.

As reference, here are the weighted average monthly premiums for a standard or basic Medicare Part D prescription drug plan reported by HHS or CMS since 2007 (with links to past blogs).  (We do not have a base premium figure from the 2006 beginning of the Medicare Part D program.)

Please note: You may notice that the average basic Medicare Part D premiums reported by CMS are usually lower than the average Medicare Part D premiums we show in our PDP-Facts area.  In our average premium calculations, we only consider stand-alone Medicare Part D prescription drug plans (PDPs).  We usually do not group the premiums for Medicare Advantage plans offering prescription drug coverage (MAPDs) with stand-alone Medicare Part D plans for several reasons.

First, Medicare Part D plans are offered on a state-wide (or regional) basis and Medicare Advantage plans are offered within much smaller service areas (Zip Code or county basis), so Medicare Advantage plans may not be widely available to all Medicare beneficiaries in a state (or in the case of Alaska, there are usually no Medicare Advantage plans available).

Also, we find that the many of MAPDs have a low or $0 premium and these low premiums tend to skew the average monthly premium for prescription drug coverage toward lower values that are not reflective of the stand-alone Medicare Part D plan (PDP) landscape.

At any rate, here are our calculations of average Medicare Part D plan premiums from the past several years along with a chart showing the variation with CMS estimated premium figures:

• We calculated the 2018 average monthly premium across all stand-alone Medicare Part D plans (not considering Medicare Advantage plans offering prescription drug coverage or MAPDs) to be $52.69 - or $43.69 when weighted by stand-alone Medicare Part D plan enrollment.  Please note that "enrollment weighting" can change throughout the plan year as Medicare plans are sanctioned (and plan members leave the plan) or CMS lifts Medicare plan sanctions and the plan resumes enrollment or plan members use a Special Enrollment Period (SEP) to change Medicare plans mid-year. (updated 09/29/2017)
  
  
• We calculated the 2017 average monthly premium across all stand-alone Medicare Part D plans (not considering Medicare Advantage plans offering prescription drug coverage or MAPDs) to be $51.96 or $42.70 when weighted by stand-alone Medicare Part D plan enrollment. Please note that "enrollment weighting" can change throughout the plan year as Medicare plans are sanctioned or removed from sanctions. (updated 08/02/2017)
  
  
• We calculated the 2016 average monthly premium across all stand-alone Medicare Part D plans (not considering Medicare Advantage plans offering prescription drug coverage or MAPDs) to be $53.83 or $39.08 when weighted by stand-alone Medicare Part D plan enrollment (note: the "enrollment weighting" can change throughout the plan year as Medicare plans are sanctioned or removed from sanctions).
  
  
• We calculated the 2015 average monthly premium across all stand-alone Medicare Part D plans (not considering Medicare Advantage plans offering prescription drug coverage or MAPDs) to be $53.14 or $36.75 when weighted by stand-alone Medicare Part D plan enrollment.
  
  
• We calculated the 2014 average monthly premium across all stand-alone Medicare Part D plans (not considering Medicare Advantage plans offering prescription drug coverage or MAPDs) to be $53.80 or $41.23 when weighted by stand-alone Medicare Part D plan enrollment.
  
  
• We calculated the 2013 average monthly premium across all stand-alone Medicare Part D plans to be $53.26 or $40.63 when weighted by all stand-alone Medicare Part D plan enrollment.
  
  
• We calculated the 2012 average premium across all stand-alone Medicare Part D plans to be $53.99 or $39.62 when weighted by plan enrollment.
  
  
• In 2011, we calculated the average monthly premium across all stand-alone Medicare Part D plans as $53.77 -- or $41.05 when weighted by Medicare Part D plan enrollment.
  
  

Common question:  Does the CMS average premium increase mean that I will pay only slightly more for my 2018 Medicare Part D plan?

No.  The 2018 average premium reported by CMS suggests that you should be able to shop around and find a stand-alone 2018 Medicare prescription drug plan with about the same monthly premium as you currently have now, or you may want to consider changing enrollment to a Medicare Advantage plan that includes prescription drug coverage (MAPD).

Key Point:  Even if your Medicare Part D plan premium remains stable – this does not mean that your 2018 plan’s drug coverage will not change. Your Medicare drug plan's prescription coverage (which drugs are covered and at what cost) can change every year, even if your monthly Medicare plan premium remains the same. So be prepared to review your 2018 Medicare plan options starting in early October 2017.

The full text of the August 02, 2017 CMS Press Release is included below:

This week, the Centers for Medicare & Medicaid Services (CMS) announced that the average basic premium for a Medicare Part D prescription drug plan in 2018 is projected to decline to an estimated $33.50 per month. This represents a decrease of approximately $1.20 below the actual average premium of $34.70 in 2017.

“We are committed to making prescription drug plan premiums affordable so that seniors and people with disabilities in Medicare can access the prescription drugs that they need,” said CMS Administrator Seema Verma. “This projection is a step forward in fulfilling the Trump Administration’s promise to lower the cost of prescription drug coverage, particularly for Medicare beneficiaries.”

The decline in the average premium comes despite the fact that spending for the Part D program continues to increase faster than spending for other parts of Medicare, largely driven by spending on high-cost specialty drugs. As the recent 2017 Medicare Trustees reported noted, growth in Medicare spending on prescription drugs continues to exceed growth in other Medicare spending and in overall U.S. healthcare spending.

The projection for the average premium for 2018 is based on bids submitted by drug plans for basic drug coverage for the 2018 benefit year and calculated by the independent CMS Office of the Actuary.

The upcoming annual Medicare open enrollment period begins on October 15, 2017, and ends on December 7, 2017. During this time, Medicare beneficiaries can choose health and drug plans for 2018 by comparing their current coverage and plan quality ratings to other plan offerings or choose to remain in traditional Medicare. CMS anticipates releasing the premiums and costs for Medicare health and drug plans for the 2018 calendar year in mid-September.

To view the 2018 Part D base beneficiary premium, the Part D national average monthly bid amount, the Part D regional low-income premium subsidy amounts, the de minimis amount, the Part D income-related monthly adjustment amounts, the Medicare Advantage employer group waiver plan regional payment rates, and the Medicare Advantage regional PPO benchmarks, visit: www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Ratebooks-and-Supporting-Data.html and select “2018.”

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Contact: CMS Media Relations press@cms.hhs.gov

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