Medicare Plans in 2011: What You Need to Know

If you're in a health plan that's withdrawing, you'll need to choose another or return to traditional Medicare. There will be a choice of plans in almost every locality — scores of them in some large cities. But in a few rural areas — 28 counties in Colorado and one in Utah — no Medicare Advantage plans will be available in 2011. In those areas, you'll receive your medical benefits from traditional Medicare next year and must enroll in a drug plan to get prescription coverage.

Will my premiums go up? On average, premiums for stand-alone drug plans will rise by $1 a month, according to Medicare officials. But a more detailed analysis from Avalere Health, a consulting company that tracks Part D trends, finds some people will see their current premiums drop next year while others will see big increases.

Among the 10 drug plans with the most people enrolled, three will have lower premiums: On average, the AARP MedicareRx Preferred plan's premiums will drop by about 11 percent, and the CVS Caremark Value and Advantage Star plans by about 2 percent. Among the seven others, average premiums will rise by varying degrees, from nearly 3 percent in the Community CCRx Basic plan to nearly 20 percent in the First Health Part D Premier plan.

The lowest premium will be $14.80 a month for a new basic plan offered by Humana in all states. The lowest premiums for "enhanced" plans that offer some coverage in the doughnut hole will range from $32.90 in Arizona to $52 in Alaska.

In the Medicare Advantage program, people who stay in the same plan will see modest premium increases on average — a situation "quite different from 2010 when premiums rose rapidly," according to the Kaiser Family Foundation, a health research group. In 2011, about 97 percent of all beneficiaries will have access to at least one plan that includes drug coverage but charges no premium beyond the regular Part B premium.

One big change coming next year is a direct result of the new health care law: People who pay higher Part B premiums because of high incomes also will begin paying higher premiums for Part D. In both cases, the higher rates affect people with taxable incomes above $85,000 a year, or $170,000 for married couples filing joint tax returns.

Medicare officials say that the higher Part D premium surcharges will range from $12 to $69.10 a month, according to income level, regardless of whether a person has drug coverage through a stand-alone plan or a Medicare Advantage plan, in addition to the premium that plan normally charges.

Will I see higher copays? Most plans change their copayments every year, and 2011 is no exception. That's why it's always important to shop around, especially for drug coverage options. But this year there's good news on out-of-pocket expenses, all the result of the new law:

• As a first step in closing the Part D doughnut hole — which so far has meant paying 100 percent of drug costs if you fall into it — the law next year provides a 50 percent discount off brand-name drugs and 7 percent off generics to those in the gap. If, for example, your plan's full price for the cholesterol-lowering drug Lipitor is $96 a month this year, next year you'll pay $48 a month in the gap. The full price will still be credited toward your out-of-pocket expenses, so if they're high enough to take you to the low-cost catastrophic level of coverage, you'll reach it as quickly as you would have without the discount.
  

• Most Medicare Advantage plans, like traditional Medicare, will cover an annual physical and a wide range of preventive services, such as mammograms and colorectal cancer tests, for free.
  

• Out-of-pocket expenses in most Medicare Advantage plans — that means all your deductibles and copays but not your monthly premiums — will be capped by law at $6,700 for the year. Many plans, especially HMOs, have voluntarily set the limit lower, usually at $3,400. But traditional Medicare will still have no caps.