You’ve heard us talk before about Part D premiums. Check out our 4 things to know about the 2016 Part D premium announcement here. And with the annual open enrollment period now underway, it is important to remember that plans change every year and this is the time for beneficiaries to shop around for a plan that works for them.
But you may wonder what goes into Part D premiums and how are they determined each year?
Part D premiums are determined through a competitive bidding process. Each year, plans submit bids to the Centers for Medicare & Medicaid Services (CMS) based on their expected costs for providing prescription drug coverage to Medicare beneficiaries. CMS calculates an average for all the Part D bids submitted, and beneficiaries pay a portion of this cost in the form of a monthly premium. We asked actuarial firm Milliman, Inc. to take a look at the 2016 bids and analyze the factors impacting bid and premium costs heading into next year.
Here are some of the key findings:
You can view the full Milliman memo here. Looking at the factors impacting premiums in 2016, it is evident that manufacturer rebates for prescription drugs continue to be substantial, demonstrating the success of
competition in the program to keep costs low for beneficiaries while providing access to important new treatment options.
For more on Medicare Part D, check out PhRMA.org/PartD.