Medicare Premiums to Remain $24 – Donut Hole is Still Problem For Some Seniors

Medicare Premiums to Remain $24 – Donut Hole is Still Problem For Some Seniors

The Bush administration announced that the average monthly premium for the Medicare Part D Drug Plan will remain about $24 per month. The cost of the program is low because Medicare pays about three quarters of the cost of drugs, while the participants pay the rest.

The premium will remain about $24 because of market competition. CMS Administrator, Mark McClellan says "Bids are down because of strong competition. If beneficiaries once again choose less costly plans, we will actually see premiums go down on average in 2007."

The average total premium this year was about $92 per month. This number includes what Medicare pays. According to Associated Press reporter, Kevin Freking, the bids show the average total per month will drop to about $80 next year.

The Medicare Part D program started January 1st with much confusion and controversy. Critics said it was an attempt to stop seniors from buying less expensive drugs from Canada. They claimed this would allow drug companies to charge full price for their medication.

The drug plan supporters said the plan would bring competition into the market. Some studies have suggested that most seniors actually pay less than before.

After January 1st there was a lot of confusion on the part of pharmacies and participants. Neither seemed to know how the program worked. Most of those problems have been solved. The latest complaints have been coming from seniors who have reached what has become labeled the “donut hole”. This has put some recipients in a bind because they must pay the full amount of the drugs cost.

Many Medicare beneficiaries were unaware of this doughnut hole. Even if patients were aware of the doughnut hole, many of them were only keeping track of their out-of-pocket expenses and not the total cost of the drugs. The donut hole is reached when the total cost of the drugs reaches $2,250, not when the recipients out of pocket expense reach $2,250.

After the total cost of the drugs used by the patient reaches $2,250, the recipient is completely responsible for the cost of the drugs. The beneficiary is responsible for 100 percent of the drug coverage until the total cost of the drugs reaches $5,100. After that, Medicare will pick-up 95 percent of the bill. This means participants could end up paying $2,650 ($5,100 - $2,250) inside the donut hole.

By Dan Wilson



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