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As part of the annual review of the Medicare Supplement Plan, the TVARA Health Committee worked with TVA to help determine how to recover the projected increase in plan costs for 2016.
The drug portion of the plan continues to be the driver for necessary plan design and premium changes.   As shown in the Key Plan Components table on page 5, a combination of changes in the premium, generic copays, and drug-plan deductible are being made to help cover plan costs in 2016.
In general, the plan redesign recovers costs in ways that are more directly related to your out-of-pocket drug costs, rather than additional premium increases that do not.
We believe these plan changes minimize the premium increase and will also help more members benefit from coverage-gap and catastrophic-coverage savings:

• A $60 increase in the deductible  (to $160 from $100);
• A generic-drug copay increase of $5 retail/$10 mail order (to $20/$40 from $15/$30);
• Copays in the coverage-gap stage remain the same as in the initial stage;
• A $14 premium increase (to $290 from $276).

What Factors Are Considered in Deciding How To Recover Costs?

A major factor involves the plan’s coverage-gap and catastrophic-coverage sta
ges. The total costs of your covered drugs (what you pay and what the plan pays) accumulate as out-of-pocket costs toward reaching the coverage gap.  Once in the coverage-gap stage, only what you pay and the manufacturer’s discount on brand drugs accumulate as out-of-pocket costs toward reaching the catastrophic stage.  Your premium does not count as an out-of-pocket cost.  Your deductible and your copays do count, and can help you reach the coverage-gap stage where additional drug discounts apply.  If you reach the catastrophic-coverage stage, the plan pays most of the cost of your drugs.
In 2014 more than 4,000 members were in the coverage-gap stage by the end of the year, and more than 560 were in the catastrophic-coverage stage.  Monthly trends in 2015 were higher than in 2014, with more than 250 members in the gap by the end of January and some members already in the catastrophic-coverage stage.  For 2016, Medicare has increased the out-of-pocket cost threshold for the coverage gap to $3,310 from $2,960 and the catastrophic-coverage threshold to $4,850 from $4,700.  Hopefully, the decision to collect needed funds through the generic copay and deductible rather than through raising only the premium will help those with higher drug costs offset the higher thresholds.
Another consideration is trying to keep premiums lower for all those on the plan.  If no plan-design changes are made, all needed revenues would be collected through an even higher premium — a premium that would be paid regardless of plan usage and which would not count toward movement through plan stages.
Remember:  Some drugs cost less than your copay.   If so, you only pay the actual cost!  It’s easy to forget this and jump to the copay when you think about your drug cost.   For example, even though the generic copay is increasing in 2016, it doesn’t mean all of your prescriptions will cost more.  Many prescriptions cost less than the copay, so you will pay just the drug cost.  Generic blood pressure and cholesterol medications often fall into this category.
Remember your plan automatically accumulates your out-of-pocket costs (what you pay and what the plan pays) toward reaching the coverage-gap stage.  However, there may be times when these costs are not accumulated for you, such as when you purchase a covered drug without using your plan ID card or use a discount card.  To help Catamaran include all of your out-of-pocket costs, please read pages 43-44  (Chapter 4, Section 3) of your Evidence of Coverage booklet.  Each dollar is important to qualify for additional savings at the coverage gap level.