Medicare Drug Premiums Will Be Lower Than Expected

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What's Happening with the new Medicare Prescription Drug Benefit?

The Epilepsy Foundation has been working with the Centers for Medicaid and Medicare Services about the implementation for each phase of the new prescription drug benefit mandated by the Medicare Modernization Act. This is the seventh part in our Medicare updates with information about the Medicare prescription drug benefit.

Medicare Drug Premiums Will Be Lower Than Expected

Beneficiaries can sign up for the new Medicare Prescription Drug Benefit beginning November 15, 2005. The premium each person with Medicare pays for standard coverage depends on whether the plan they choose is above or below the national average cost. The Centers for Medicaid and Medicare Services (CMS) anticipates that there will be a significant number of plans in each region with premiums below the national average of $32.20/month.

With robust competition among drug plans, prescription drug plans will offer coverage at a lower cost than independent experts had projected. As a result, the Medicare prescription drug coverage that begins January 1, 2006 will have:

An average monthly premium of $32.20, about $5 less per month than previously estimated.
A total cost to the government that is about $15 less per month for each beneficiary than previously estimated, amounting to billions of dollars in reduced costs to taxpayers in the first year of the program.

The average premium is lower than projected because the weighted average of the actual bids from stand-alone prescription drug plans, which work with traditional Medicare coverage, and from Medicare Advantage plans, are lower than had been predicted. Because of the competition, plans that do not offer low costs for high-quality benefits will have to charge higher premiums and will not attract beneficiaries.

In mid-October 2005, the list of approved plans will be made available to the public, so that beneficiaries can make informed choices when they sign up for the new prescription drug benefit beginning November 15, 2005.

The notice of the Part D national average monthly premium bid amount, the regional prescription drug plan benchmarks and the regional low-income premium benchmarks can be found on the CMS website. For other questions regarding the benefit please contact Julie Yannes, Director of Federal Relations, Epilepsy Foundation National Office at (301) 918-3766 or via email.

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