Aug. 14, 2009

Advisory: New Calculation for Benchmark Premium

On August 13, CMS released the Part D premium averages as well as low-income subsidy premium benchmarks for 2010. The estimated average monthly Part D plan premium in 2010 will cost about $32.

CMS also announced that it will change the formula used to calculate the low-income subsidy (LIS) premium benchmarks for 2010 under a new demonstration program (Scroll to Page 2). Medicare advocacy groups had requested CMS consider a different approach to this calculation because of its serious implications on so many Medicare beneficiaries.

Under the formula used in past years, the benchmark premium has steadily gone down each year. This has led to fewer and fewer "benchmark plans" being available in many regions of the country. Under the new demonstration program, the benchmark premium in 2010 for each region is significantly higher than if it were calculated under the old formula. Therefore, more plans in 2010 will be available premium-free to beneficiaries with the low-income subsidy (LIS); CMS states there will be at least four or five benchmark plans available in each region.

CMS estimates that, because of this new formula, about 800,000 beneficiaries with LIS will require reassignment to new plans in 2010 (whereas 1.8 million beneficiaries would have required reassignment under the old calculation). CMS is developing outreach strategies for partners to assist the approximately 800,000 Medicare beneficiaries who are subject to reassignment.

We are glad to see CMS use its authority to make a change to the calculation of the premium subsidy and assist those beneficiaries affected by reassignment.

If you have any questions or if you'd like more information about the demonstration program, please be in touch at SHIPhelp@hapnetwork.org.

Sincerely,
The HAP Team

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