Medicare Part D Study: Overemphasizing Deductible in Plan Selection Can Lead to Higher Annual Costs
On Average Premium Increase More Expensive Than Deductible Savings
SUNNYVALE, Ca., Nov. 13, 2014 /PRNewswire-USNewswire/ -- HealthPocket examined 2015 Medicare Part D drug plans and found that deductibles tended to decrease as premiums increased. However, the extra premium cost is much more expensive on average than the deductible savings with which they were associated.
HealthPocket collected the premiums and drug deductibles for every stand-alone Medicare Part D plan in the United States and assigned each plan into one of three groups: plans whose premiums were in the lowest third of the premium range, plans whose premiums were in the middle third, and plans whose premiums were in the highest third. HealthPocket found the plans within the lowest third had a $36.08 average monthly premium and a $209.77 average deductible. Plans in the middle third had a $88.66 average premium and a $33.18 average deductible. Plans in the top third of premium expense averaged a $130.87 premium and a $0 deductible.
HealthPocket observed $176.59 average deductible savings between the least expensive plans and those in the middle group but that savings came with an average of $630.96 in additional premium expense annually. Between the least expensive plans and the most expensive plans, the average deductible savings was only 209.77 but the average increase in annual premium expense was $1,137.48.
HealthPocket also found that despite the deductible averages within the lowest premium group, there were still some plans with $0 deductibles. The deductibles within the lowest premium group ranged from $0 to $320 though the availability of low deductibles varied for this group depending on the region of the country.
Some Medicare Part D plans offer drug coverage that exceeds minimum requirements for the "donut hole" period. The donut hole is the name for the coverage period with higher out-of-pocket costs that begins after the initial coverage period ends and before the catastrophic drug coverage begins. Plans that had higher premiums were more likely to provide enrollees with donut hole that provided reduced out-of-pocket costs. 98% of plans in the most expensive premium group provided enhanced drug coverage in the donut hole as compared to 6% of plans in the least expensive premium group. Consumers should note that the meaning of enhanced drug coverage in the donut hole varies by plan with some plans offering slight improvements in donut hole cost-sharing while others extend their standard cost-sharing throughout the donut hole period.
Based on the results of the study, HealthPocket advised consumers not to overemphasize the deductible amount in their shopping but evaluate the deductible in context of other financial dimensions of Part D insurance such as premiums and co-payments. "Selecting a Part D plan based on a lower deductible could result in paying a higher premium than necessary for the coverage a senior needs," said Kev Coleman, Head of Research & Data at HealthPocket, "and this added premium expense could cost much more annually than the value of the deductible reduction."
The full results of the study along with its methodology can be reviewed at "Medicare Part D: Premium vs. Deductible."
HealthPocket.com is a free website that compares and ranks all health insurance plans, helping individuals, families, and small businesses to make their best health plan decisions. HealthPocket publishes health insurance market analyses and other consumer advocacy research. HealthPocket's research is nonpartisan and uses only objective data from government, non-profit, and private sources that carry no conditions that might restrict the site from serving as an unbiased resource. HealthPocket, Inc. is independently managed and based in Sunnyvale, California. Learn more at www.HealthPocket.com.
For more information, please contact Ryan Hughes, Shirley & Banister Public Affairs at [email protected] or 703-739-5920/800-536-5920.
SOURCE HealthPocket
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