Benchmark Premium
New Process in 2010

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 be 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. 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 the past, the benchmark premium has gone down steadily 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 benchmark plans available in each region.

CMS estimates that, because of this new formula, about 1,000,000 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 has released more details and statistics about the reassignment process in a fact sheet.