Feds Release Part D 2007 Specifics

April 14, 2006 (PLANSPONSOR.com) - Federal officials have released guidance on the parameters of the standard Medicare Part D drug benefit for 2007.

Documents from the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) present not only the exact dollar figures, but also the methodologies for updating them and the updated cost threshold and cost limit for qualified retiree prescription drug plans.

According to a  CMS document , the standard 2007 benefit parameters are:

  • $265 for the deductible (a $15 increase from 2006)
  • $2,400 for the initial coverage limit (a $150 increase from 2006)
  • $3,850 for the out-of-pocket threshold (a $250 increase from 2006)
  • $5,451.25 for the total covered Part D drug spending at the out-of-pocket expense threshold (a $351.25 increase from 2006)
  • The updated minimum co-pays under the catastrophic coverage portion of the benefit are $2.15 for generic/preferred multi-source drugs (a $.15 increase from 2006) and $5.35 for all other drugs (a $.35 increase from 2006).
  • The retiree drug subsidy amounts for 2007 are $265 for the cost threshold (a $15 increase from 2006) and $5,350 for the cost limit (a $350 increase from 2006).

“It is important to note that these revised benefit parameters will have only a minimal effect for most beneficiaries, in part because the vast majority of beneficiaries are not enrolled in a plan with the Standard Benefit,” warned Tom Hutchinson, acting director, Medicare Plan Payments Group, in a  CMS memorandum.  “In 2006, over 90% of beneficiaries were not enrolled in the standard benefit design, but rather have enrolled in plans with low or no deductibles, flat payments for covered drugs, and in some cases, coverage in the coverage gap. (Beneficiaries eligible for the low-income subsidy have a very comprehensive benefit, with no coverage gap and usually no deductible.) Plans will continue to have flexibility to offer beneficiaries benefit designs with these popular features as benefit packages are developed for 2007.”