Medicare Advantage, Part D premiums remain relatively stable for 2017

In 2017, Medicare Advantage (MA) premiums will remain stable, and enrollment is projected to increase to an all-time high, according to CMS. Additionally, as a result of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), millions of seniors and people with disabilities enrolled in Medicare will continue to benefit from prescription drug discounts and affordable benefits.

Growth of Medicare Advantage

The MA monthly premium will decrease by $1.19 in 2017, from an average of $32.59 to $31.40. The lower premium is 13 percent less than the average MA premium prior to the passage of the ACA. For 67 percent of MA enrollees, premiums will not increase, and more than 94 percent of Medicare beneficiaries will have access to a $0 premium MA plan. MA plans will also offer enrollees more supplemental benefits, such as dental, vision, and hearing. MA enrollment will increase by more than 60 percent, for a record high of 18.5 million beneficiaries, representing 32 percent of Medicare beneficiaries. Access to the MA will remain nearly universal, with 99 percent of Medicare beneficiaries having access to an MA health plan in their area.

Part D access

The Medicare Part D prescription drug benefit will continue to provide beneficiaries to affordable drug coverage, with the average premium for 2017 remaining relatively stable at an average of $34 per month. This represents an increase of approximately $1.50 from the average Part D premium for 2016. From the enactment of the ACA through July 2016, more abilities benefitted from savings and discounts in the coverage gap, or donut hole, of more than $23.5 billion on prescription drugs—an average of $2,127 per beneficiary.

Medicare Part D premiums in 2017 remain relatively stable

The average Medicare Part D prescription drug benefit premium for calendar year (CY) 2017 is projected to be $34 per month. The projection is based on bids submitted by Part D drug and health plans for basic drug coverage for the 2017 benefit year and calculated by the independent CMS Office of the Actuary. The projection represents an increase of approximately $1.50 over the actual average premium of $32.56 in CY 2016. CMS anticipates releasing the premiums and costs for Medicare health and drug plans for CY 2017 in mid-September 2016.

This stability in average basic Medicare Part D premiums comes despite the fact that Part D costs continue to increase faster than other parts of Medicare, largely driven by high-cost specialty drugs and their effect on spending in the catastrophic benefit phase. For instance, the most recent 2016 Medicare Trustees report to Congress noted that Medicare Part D expenditures per enrollee are estimated to increase by an average of 5.8 percent annually through 2025, higher than the combined per-enrollee growth rate for Medicare Parts A and B (4.0 percent) (see Medicare Board of Trustees issues 51st report to Congress, Health Law Daily, June 3, 2016).

CMS simultaneously released the CY 2017 Part D national average monthly bid amount, base beneficiary premium, and information on the income-related monthly adjustment amounts for enrollees in prescription drug plans who have incomes above certain threshold amounts. For CY 2017:

  • The national average monthly bid amount is $61.08.
  • The Part D base beneficiary premium is $35.63.

The income-related monthly adjustment amounts for beneficiaries who file individual tax returns with the following incomes are as follows:

  • Less than or equal to $85,000 – $0.00.
  • Greater than $85,000 and less than or equal to $107,000 – $13.30.
  • Greater than $107,000 and less than or equal to $160,000 – $34.20.
  • Greater than $160,000 and less than or equal to $214,000 – $55.20.
  • Greater than $214,000 – $76.20.

For beneficiaries who file joint tax returns the income amounts above are doubled with the income-related monthly adjustments remaining the same. In addition, the monthly premium rates for beneficiaries who are married, but file separate returns, are as follows:

  • Income less than or equal to $85,000 – $0.00.
  • Income greater than $85,000 and less than or equal to $129,000 – $55.20.
  • Income greater than $129,000 – $76.20.

CMS also released the CY 2017 regional low-income premium subsidy amounts, the Medicare Advantage (MA) regional preferred provider organization benchmarks, and the MA Employer Group Waiver Plan (EGWP) regional payment rates.