Update: In early April, CMS released the 2018 Rate Announcement and Final Call Letter with the finalized defined standard benefits for 2018 Medicare Part D prescription drug plan coverage (or "Final Updated Part D Benefit Parameters for Defined Standard Benefit"). You can read more about the finalized parameters on this site or continue to read more about the proposed 2018 changes.
Based on the CMS information we have at this time, here are a few proposed changes to the standard 2018 Medicare Part D prescription drug coverage:
- The standard Initial Deductible is proposed to
increase slightly: The 2018
standard Initial Deductible is proposed to increase by only $5 to $405 from the current 2017 standard Initial Deductible
of $400. As reference, the 2016
standard Initial Deductible was $360 and the 2015 Initial Deductible was
$320. The Initial Deductible is the
amount that you pay yourself before your Medicare Part D plan begins to
share in the cost of coverage. The
Initial Deductible will not
affect when you enter the
Donut Hole or Coverage Gap, but will impact when you leave the Donut Hole and enter Catastrophic Coverage.
This means: If you enroll in a Medicare Part D prescription drug plan with a standard Initial Deductible, you will spend slightly more out-of-pocket in 2018 before your plan coverage begins. But, as we see in 2017, many popular Medicare Part D plans exclude lower-costing Tier 1 and Tier 2 drugs from the deductible, providing immediate coverage for some lower costing medications.
- The
Initial Coverage Limit may increase: The 2018 Initial
Coverage Limit (ICL) is proposed to increase $50 to $3,750 from the current 2017 ICL of $3,700. Medicare beneficiaries enter the Donut
Hole or Coverage Gap when the total negotiated retail value of their
prescription drug purchases exceeds their plan’s Initial Coverage limit. As reference, the 2016 Initial Coverage
Limit was $3,310 and the 2015 Initial Coverage Limit was $2,960.
This means: If this proposal is finalized in April, you will be able to buy slightly more medications before reaching the 2018 Donut Hole or Coverage Gap. Please note, if you purchase medications with an average retail value of less than $312 per month, you will not enter the 2018 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
2018 generic drug discount will increase from 49% to 56%.
This means: If you are in the 2018 Donut Hole and your generic medication has a retail cost of $100, you will pay $44. And the $44 that you spend will count toward your 2018 out-of-pocket spending limit or TrOOP.
- The
Donut Hole discount will increase for brand-name drugs: The 2018 brand-name drug discount will increase from 60% to 65% and you will receive
credit for 85% of the retail drug cost toward meeting your 2018 total
out-of-pocket maximum or Donut Hole exit point (the 35% of retail costs you
spend plus the 50% drug manufacturer discount).
This means: If you reach the 2018 Donut Hole and purchase a brand-name medication with a retail cost of $100, you will pay $35 for the medication, and receive $85 credit toward meeting your 2018 out-of-pocket spending limit – or Donut Hole exit point.
- Total
Out-of-Pocket Cost (TrOOP) is proposed to increase: The
2018 TrOOP threshold will increase by only $50 to $5,000 from the current 2017 TrOOP limit of $4,950. TrOOP is the dollar figure you must spend (or someone else spends on your behalf) to
get out of the Donut Hole or Coverage Gap and into the Catastrophic
Coverage phase of your Medicare Part D plan. As
noted above, brand-name medication purchases in the Donut Hole are
discounted by 65% (you pay 35%), but you will receive credit of 85% of the
retail drug price toward meeting the 2018 TrOOP threshold. But, TrOOP does not include monthly
premiums. As reference, the 2016 TrOOP
limit was $4,850 and the 2015 TrOOP threshold value was $4,700.
This means: You will have to spend just slightly more to get out of the 2018 Donut Hole than you did in 2017.
Not sure how the Donut Hole or Coverage Gap functions?
To help you visualize how your drug spending relates to your Medicare Part D plan coverage, we have our updated 2017 Donut Hole calculator found at PDP-Planner.com/2017. Our Donut Hole calculator helps you estimate what you can expect to pay throughout the different phases of your 2017 Medicare Part D plan coverage. As a default we use the CMS assumption that you will use 87.9% brand drugs and 12.1% generic drugs. You can change your mix of prescriptions to be 100% generic or 100% brand. 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 brand drug retail cost.
- Catastrophic Coverage
costs could change slightly: The Catastrophic Coverage portion of your
Medicare Part D plan begins when you leave the Coverage Gap or Donut
Hole. In the 2018 Catastrophic
Coverage phase, you pay a minimum of $8.35 for brand drugs or $3.35 for
generics (or 5%, whichever is higher). In 2017 Catastrophic Coverage you pay a minimum of $8.25 for brand
drugs or $3.30 for generics.
This means: Based on CMS drug purchase estimates, if your monthly retail costs are over $702 per month, you will exit the 2018 Donut Hole and enter Catastrophic Coverage portion of your Medicare Part D plan.