On February 1^st, the Centers for Medicare and Medicaid Services (CMS) released the 2018 Advance Notice and Draft Call Letter that included proposed defined standard benefits for 2018 Medicare Part D prescription drug plan coverage. For an overview of past changes, you can click here for a chart comparing Medicare Part D standard benefit parameters from 2006 through 2018. CMS will release the finalized version of the 2018 Medicare Part D standard parameters in early April.

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 here: https://Q1News.com/618.html 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.