| On April 1st, the Centers for Medicare and Medicaid Services (CMS or Medicare) released the final 2014 Medicare Part D prescription drug plan defined standard benefit parameters for Medicare Part D prescription drug plan coverage, providing us with a preview of next year’s plan designs. These final 2014 values are now online and show how the plan parameters such the standard initial deductible, initial coverage limit, and total out-of-pocket threshold have changed each year since 2006.
As a departure from past years, most of the 2014 defined standard benefit plan parameters have actually decreased and more closely resemble the values from the 2011 plan year. You can click here to view the 2014 information or you can just type Q1Medicare.com/2014 into your browser.
Here are a few highlights of the 2014 standard Medicare Part D prescription drug plan:
(1) The 2014 standard Initial Deductible will decrease by $15 from the current 2013 amount of $325 to a value next year of $310.
What does this mean to you? Next fall, if you enroll in a 2014 Medicare prescription drug plan with a standard Initial Deductible, you will pay less for your prescription medications before your Medicare Part D plan begins to pay a portion of the medication costs – and that is good news.
(2) The Initial Coverage Limit (or Donut Hole entry point) will decrease $120 from the current value of $2,970 to $2,850 in 2014.
What does this mean to you? If the retail value of your 2014 prescription medication remains about the same as this year, you can expect that your 2014 Medicare prescription drug plan will provide a little less coverage before you enter the 2014 Coverage Gap or Donut Hole. In other words, if you are using medications with an average monthly retail value of over $238, you can expect to enter the Donut Hole sometime in 2014 (as compared to an average monthly retail value of $248 this year) – which is not really good news.
As a reminder, your Initial Coverage Limit is calculated using the total retail value of your prescription drug costs. For example, if you purchase a $100 medication and your plan’s co-payment is $30, you have the $100 retail cost applied toward meeting your Initial Coverage Limit.
(3) The Out-of-Pocket Threshold (or Donut Hole exit point) will also decrease $200 from $4,750 this year to $4,550 in 2014.
What does this mean to you? If you have no changes in your medications next year, you will find that you spend less money in 2014 before exiting the Coverage Gap or Donut Hole and entering into the Catastrophic Coverage portion of your 2014 Medicare Part D plan.
(4) The 2014 Donut Hole discount for brand-name medications will remain the same as in 2013 at a 52.5% discount off your Medicare plan’s negotiated retail drug cost. The 2014 Donut Hole discount for generic medications will increase to 28% as compared to the 21% generic drug discount this year. Like this year, you will also get credit toward reaching your Donut Hole exit point for the 50% of your brand-name drug Donut Hole discount paid by the brand-name drug manufacturer.
What does this mean to you? If you purchase brand-name medications while in the Donut Hole, you will reach the out-of-pocket threshold by spending less money. For example, if you are in the Donut Hole and purchase a brand-name medication with a $100 retail cost, you will get a 52.5% discount and pay $47.50 for the medication. However, in addition to the 47.5% you paid, you will get an additional 50% of the retail drug price counted toward meeting your out-of-pocket threshold for a total of $97.50 credited toward meeting the 2014 Donut Hole exit point of $4,550. You can read more about how the Donut Hole is changing in our Closing the Coverage Gap Blog.
To help you visualize how the 2014 plan changes might impact your prescription drug spending next year, we have also launched our 2014 Q1Medicare.com PDP-Planner or Donut Hole calculator found at PDP-Planner.com/2014. 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 2014 Medicare Part D plan coverage. To get you started you can click here for a PDP-Planner example.
Question: Will all 2014 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 limits for next year’s standard Medicare Part D prescription drug plan coverage. However, Medicare Part D plan providers are allowed to deviate from the defined standard benefits when designing their 2014 plans and, with Medicare’s approval, offer Medicare Part D prescription drug plans with more enhanced features such as $0 initial deductibles or coverage in the Donut Hole. Never-the-less, these recently released standard Medicare Part D plan parameters still can provide you with an idea of what to expect when planning your 2014 budget.
Question: When do we get to see the actual details of the Medicare Part D plans that will be available in 2014?
October 1st. The 2014 annual Open Enrollment Period will begin on October 15th and continues through December 7th. However, the marketing period for 2014 Medicare plans will begin on October 1st and actual plan details will become available around this time.
Do you have other questions about this 2014 information? Click here and to let us know.