Medicare Drug Premiums Set to Go Up Next Year, But Still Lower Than Was Estimated

Many seniors and the disabled will need to shop around next year to avoid an increase in their monthly premiums for the Medicare drug benefit.

Medicare officials announced Monday that the average premium for basic coverage will increase from about $22 this year to $25 next year.

About 24 million elderly and disabled people are enrolled in the drug benefit or in more comprehensive health plans that include drug coverage. The federal government subsidizes the cost of the insurance coverage, with the poorest participants getting extra help.

Overall, the monthly premium is still much lower than the $41 that was anticipated when the drug benefit was established, said Herb Kuhn, acting administrator for the Centers for Medicare and Medicaid Services.

Kuhn credited a greater reliance on generic drugs as well as competition among insurance companies for the program's costs coming in lower than originally expected. His agency said that the premium increase for next year stems primary from technical adjustments required by law -- not because insurance companies projected that it would cost more to serve beneficiaries.

Not all beneficiaries will be subject to a premium increase next year. Typically, seniors and the disabled have dozens upon dozens of plans to choose from. By shopping around during the next open enrollment season, which begins Nov. 15, most can still access plans that cost the same or below what they paid this year, officials said.