Modest premium increase for Medicare drug plans

WASHINGTON — Seniors will see a modest increase in their Medicare prescription premiums next year but benefits will also improve, federal health officials said Wednesday.

The average monthly premium charged by Medicare drug plans for standard coverage will rise to an estimated $30 in 2011, an increase of $1 over 2010, or about 3 percent, said Medicare administrator Don Berwick.

But since Medicare drug plans vary widely in coverage and costs, consumer advocates cautioned that seniors need to check their particular plan to avoid unpleasant surprises that may not be revealed in a such a broad estimate of average premiums.

Nonetheless, seniors with high drug costs can look forward to a noticeable improvement next year.

That's because the new health care law will begin to close the coverage gap known as the doughnut hole. Medicare recipients in the gap will get a 50 percent discount on brand name drugs, and 7 percent off on generics. The discounts will gradually increase until the gap finally closes in 2020.

"These very modest increases in premiums, along with the new discounts...are going to make medications more affordable to Medicare beneficiaries," said Berwick.

About 27 million beneficiaries are signed up for the prescription benefit, delivered through private insurance companies. The premium estimate released by Medicare on Wednesday represents only the broadest measure of pocketbook impact.

In practice, Medicare prescription plans vary widely in costs and benefits. Standard coverage that Medicare's premium estimates are based on remains the exception. Consumer advocates recommend that seniors and family members use Medicare's online plan finder to see which insurer provides the best deal for an individual's medications.

"It's always good news when premiums don't go up by leaps and bounds, but seniors in some of the most popular plans may see higher premiums," said Tricia Neuman, the top Medicare expert at the Kaiser Family Foundation. "They need to check their plans so they don't have unpleasant surprises."

Premiums can vary by tenfold or more.

In Baltimore, for example, 45 Medicare drug plans are currently available with premiums ranging from under $12 to more than $120 a month. And that doesn't take into account deductibles and co-payments, or whether a plan provides some coverage in the doughnut hole.