As reference, a chart comparing the standard Medicare Part D benefit parameters from 2013 through 2017 is available at on this site. (For a little history, the following link leads to a chart of the standard Medicare Part D benefit parameters from 2006 through 2017 on this site.)
The following summarizes the standard 2017 Medicare Part D prescription drug coverage as published in the finalized CMS Announcement:
- The
standard Initial Deductible will increase $40. The 2017 standard Initial
Deductible will increase $40 to $400. The current 2016 standard Initial Deductible is
$360 and the 2015 Initial
Deductible was $320.
This means: If you enroll in a Medicare Part D prescription drug plan with a standard initial deductible, you will pay slightly more in 2017 before your drug plan coverage begins to pay.
- The
Initial Coverage Limit will increase $390. The 2017 Initial
Coverage Limit will increase to $3,700. In other words, Medicare beneficiaries will enter the 2017 Donut Hole or Coverage
Gap when the total negotiated retail value of their prescription drug purchases
reaches the Initial Coverage limit of $3,700, a $390 increase over the
2016 Initial Coverage Limit of $3,310. The 2015 Initial Coverage Limit was
$2,960.
This means: You will be able to buy slightly more medications before reaching the 2017 Donut Hole or Coverage Gap. Please note, if you purchase medications with an average retail value of more than $309 per month, you will enter the 2017 Donut Hole.
- The
Donut Hole discount will increase for generic drugs. Next year, if you reach the Donut Hole or
Coverage Gap phase of your Medicare Part D plan coverage, the 2017 generic drug
discount will increase from 42% to 49%.
This means: If you reach the 2017 Donut Hole, and your generic medication has a retail cost of $100, you will pay $51 - and the $51 that you spend will count toward your 2017 out-of-pocket spending limit or TrOOP of $4,950. In 2016, you will receive a 42% discount and pay 58% of your generic drug's retail price.
- The
Donut Hole discount will increase for brand-name drugs. The 2017 brand-name
drug discount will increase to 60% (from the 2016 discount of 55%) and you will receive credit
for 90% of the retail drug cost toward meeting your 2017 total out-of-pocket
maximum or Donut Hole exit point (the 40% you spend plus the 50% drug
manufacturer discount).
This means: If you reach the 2017 Donut Hole and purchase a brand-name medication with a retail cost of $100, you will pay $40 for the medication (60% discount), and receive $90 credit toward meeting your 2017 out-of-pocket spending limit – or Donut Hole exit point of $4,950. - Total
Out-of-Pocket Costs or TrOOP will increase $100. TrOOP is the dollar figure
you must spend to get out of the Donut Hole or Coverage Gap, excluding monthly
premiums. The 2017 TrOOP threshold will
increase by $100 to $4,950 from the current 2016 value
of $4,850. As reference, the 2015 TrOOP threshold value
was $4,700. As noted above, brand-name medication purchases in the Donut
Hole are discounted by 60%, but you will receive credit of 90% of the retail
drug price toward meeting the 2017 TrOOP threshold.
This means: You will have to spend slightly more to get out of the 2017 Donut Hole than you did in 2016. If you purchase only generic medications while in the Donut Hole, you would be able purchase medications worth a retail cost of $7,425 before reaching your TrOOP or exiting the Donut Hole and entering Catastrophic Coverage. Based on past drug purchases, CMS estimates that most people will use a mix of 12.1% generics and 87.9% brand name drugs during the Donut Hole, and so following with these estimates, you would have to purchase $8,071.16 worth of prescriptions before existing the 2017 Donut Hole. So, on average, if a person purchases medications with a total retail cost of over $673 per month, they will exit the Donut Hole and enter the Catastrophic Coverage phase of their Medicare Part D plan. If you only purchase generic medications, you would need to purchase generic medications with an average retail value of $619 per month before exiting the 2017 Donut Hole.
- The minimum cost-sharing in the Catastrophic Coverage phase will increase slightly.
Once someone has exceeded their TrOOP, they will enter the 2017
Catastrophic Coverage phase and pay $3.30 (up from $2.95) for generics
(or a preferred drug that is a multi-source drug) and $8.25 (up from
$7.40) for all other drugs - or 5% of the retail drug cost, whichever is
higher.
This means: If you exit the 2017 Donut Hole and purchase a generic drug with a retail price of $100, you will pay the greater of $3.30 or 5% of $100 (in this case, you will pay $5 since this is greater than $3.30). If you exit the 2017 Donut Hole and purchase a brand name drug with a retail price of $100, you will pay the greater of $8.25 or 5% of $100 (in this case, you will pay $8.25 since this is greater than $5). If you exit the 2017 Donut Hole and purchase a brand name drug with a retail price of $5,000, you will pay the greater of $8.25 or 5% of $5,000 (in this case, you pay $250 since this is greater than $8.25).
- No
2017 Medicare Advantage plan can have an in-network Maximum Out-of-Pocket
(MOOP) spending limit over $6,700. CMS sets a limit on
how high a Medicare Advantage plan can set their Medicare Part A and Medicare Part B Maximum Out-of-Pocket limit
(MOOP) and, as in 2016 and 2015, no Medicare Advantage plan can have a MOOP
higher than $6,700 for in-network eligible medical cost-sharing (and mandatory MOOP limits might range from $3,401 to $6,700). Please note that local and regional PPO (Preferred Provider Organization) Medicare Advantage plans can have a combined maximum MOOP of $10,000 (in-network and out-of-network).
The 2017 CMS Notice states: "... MOOP limits are based on a beneficiary-level distribution of Parts A and B cost sharing for individuals enrolled in Original Medicare. The mandatory MOOP amount represented approximately the 95th percentile of projected beneficiary out-of-pocket spending. Stated differently, five percent of Original Medicare beneficiaries are expected to incur approximately $6,700 or more in Parts A and B deductibles, copayments and coinsurance. The voluntary MOOP amount of $3,400 represents approximately the 85th percentile of projected Original Medicare out-of-pocket costs." [as quoted from the 2012 Call Letter]
This means: Although your Medicare Advantage plan can raise your maximum out-of-pocket spending limit (MOOP) in 2017, you can expect that your Medicare Advantage plan covered healthcare expenses will not exceed $6,700 for in-network cost-sharing. (Key Point: Be prepared to read your October 2016 Annual Notice of Change Letter to see if your MOOP increased - this may help you determine how much you need to budget in 2017 for in-network Medicare Part A and Medicare Part B coverage.)
Our 2017 on this site Donut Hole Calculator
To help you visualize how these 2017 plan changes may impact your prescription drug spending next year, we have launched our 2017 on this site PDP-Planner or Donut Hole calculator found at PDP-Planner.com/2017. Our PDP-Planner allows you to enter your estimated retail prescription drug costs (based on your current spending) and preview what you can expect to pay throughout the different phases of your 2017 Medicare Part D plan coverage. To get you started, you can click here to see an example of the 2017 Medicare prescription drug plan phases for someone with $800 per month retail medication expense.
Will all 2017 Medicare Part D prescription drug plans follow these new plan limits?
No. The Medicare Part D defined standard benefit parameters are released each year by Medicare and set minimum standards for next year’s Medicare Part D prescription drug plan coverage. However, Medicare Part D providers are allowed to deviate from the defined standard benefits and offer Medicare Part D prescription drug plans with more enhanced features such as a $0 initial deductible, Initial Coverage Limit, or additional coverage in the Donut Hole or Coverage Gap.
When will be able to see the actual 2017 Medicare Part D and Medicare Advantage plans?
CMS will publish the 2017 Medicare plan information in late-September or early October. Some Medicare Part D and Medicare Advantage plan providers have their 2017 Medicare Part D and Medicare Advantage plan information prepared and these providers often share a basic overview of their upcoming plan information with their agents and brokers. However, 2017 Medicare plan information will not be released until late September or early October. You can watch your mail in late-September for a printed copy of the 2017 Medicare & You Handbook that includes information about the Medicare Part D and Medicare Advantage plans offered in your service area.