Even though health problems forced Denise Scott to retire several years ago, she feels 鈥渧ery blessed鈥� because her medicine is still relatively inexpensive and a subsidy for low-income Medicare beneficiaries covers the full cost of her monthly drug plan premiums. But the subsidy is not going to stretch as far next year.
That鈥檚 because the premium for Scott鈥檚 current plan will cost more than her federal subsidy. The 64-year-old from Cleveland is among the 2 million older or disabled Americans who will have to find new coverage that accepts the subsidy as full premium payment or else pay for the shortfall. As beneficiaries explore options during the current Medicare enrollment period, there are only 227 such plans from which they can choose next year, 20 percent fewer than this year, and the lowest number since the drug benefit was added to Medicare in 2006, according to the Centers for Medicare & Medicaid Services.
It was only when Scott called a counselor at the Benjamin Rose Institute on聽Aging on Cleveland, a social service agency helping her with Medicare questions, that she learned she would have to pay the difference between the subsidy and new higher premium. So she switched to a different plan that will be premium-free.
鈥淚 would鈥檝e gotten into something I really can鈥檛 afford,鈥� Scott said. Because she has a limited income, she said any new expenses聽鈥渃an end up putting a strain on my budget.鈥�
Eight million people in traditional Medicare have drug plan subsidies, also called 鈥�.鈥� To qualify for the full subsidy,聽an individual must have an income below $17,655 in 2015 and less than $13,640 in assets.
Some beneficiaries who do not choose a new plan will be randomly assigned to one. It鈥檚 up to these beneficiaries to check if their new plan covers their drugs.
Even beneficiaries with drug plans that will continue to be premium-free next year may still want to switch, said Christina Dimas-Kahn, program manager for 聽in San Mateo, Calif., which is part of the California Department of Aging鈥檚 Health Insurance Counseling and Advocacy Program.聽 Like anyone else shopping for Medicare drug coverage, they their medicine and check whether there are restrictions that can make it more difficult to get the drugs their doctors prescribed. They also should confirm what pharmacies are in the plan鈥檚 network.
There used to be a dozen or more premium-free plans in most states in the early years of the program, said Juliette Cubanski, associate director for the Program on Medicare policy at the Kaiser Family Foundation. (KHN is an editorially independent project of the foundation.) But after insurance market consolidation and federal rules discouraging duplicative options, the number of drug plans has fallen, she said. In 2016, 22 states will have six or fewer premium-free plans, according to a .聽 Florida will have just three.
The subsidy is recalculated annually using the average of premiums for standard drug plans in a particular region.
Health insurers 鈥渟trongly support proposals to ensure low-income beneficiaries remain in their plans without facing additional costs,鈥� said Clare Krusing, a spokeswoman for the America鈥檚 Health Insurance Plans, a trade association. 鈥淗owever, the soaring price of prescription medications has resulted in an unprecedented increase鈥� in health insurance costs, which have led 鈥渢o higher premiums in many plans,鈥� she said.
Scott is concerned about how much Medicare will pay for her prescriptions in the future. Eight million people in traditional Medicare plans get help affording their prescription drugs. (Photo by Lynn Ischay/For KHN)
, the private insurance policies that are an alternative to traditional Medicare. After Jan. 1, most plan subscribers are locked into their plans for a year. But there鈥檚 an exception for subsidy beneficiaries.
Semanthie Brooks, Benjamin Rose鈥檚 director of community advocacy, said some people with low-income premium subsidies don鈥檛 know they can switch plans anytime, and 鈥渂elieve they are stuck paying a higher cost.鈥� And then there are others who are afraid to take a chance with a new insurance company even if they can鈥檛 afford the added expense.
鈥淭hey will pay more for peace of mind and give up something else.鈥�
KHN鈥檚 coverage of aging and long term care issues is supported in part by a grant from .