Medicare Part D Premiums and Out-of-Pocket Limits for 2024

As we head into the Annual Election Period (AEP), there are several big changes to the Medicare Part D prescription drug program that you will want to make sure your clients know about.

Lower Average Part D Premium

The first change isn’t much of a change at all, and that’s why it’s big news: instead of the average Part D premium increasing next year, as it normally does, it’s actually going down a little. In a July 31 press release, the Centers for Medicare & Medicaid Services (CMS) announced the Medicare Part D premium and bid data for 2024, which is important for both Part D plan sponsors and for Medicare beneficiaries. 

The average total monthly Part D premium will drop from $56.49 in 2023 to $55.50 in 2024. This rate stability is largely due to the Inflation Reduction Act (IRA), which introduces enhancements to the Part D program. Over the next few years, Medicare beneficiaries will enjoy wider coverage at decreased costs. 

Information concerning 2024 Medicare Advantage (MA) premiums will be released in September.

Lower Out-of-Pocket Costs

As Medicare.gov explains, a new prescription drug law that went into effect January 1, 2023 will reduce the costs for vaccines and insulin while also significantly lowering beneficiaries’ total out-of-pocket exposure. Here's a breakdown of its key provisions:

1. Vaccination Coverage: Medicare Part D beneficiaries now benefit from zero out-of-pocket costs for an expanded list of vaccines recommended by the Advisory Committee on Immunization Practices, including shingles and whooping cough vaccines. 

It’s possible your clients have already heard about this new benefit, as it was promoted in a recent email to Medicare beneficiaries.

The email began by saying that “It's easier to stay up to date with your immunizations now that people with Medicare Part D pay nothing out of pocket for even more vaccines. This means more people with Medicare can get protection against disease and severe illness.”

2. Insulin Affordability:

• Under Part D, a one-month supply of each covered insulin product is capped at $35, with no deductible applied. For a 3-month supply, the maximum cost is $105.
• Under Part B, if beneficiaries use an insulin pump or acquire insulin through a Medicare Advantage Plan, the monthly cost for covered insulin is limited to $35. For those with Part B and Medicare Supplement Insurance, this cost is typically covered by the plan. A 3-month supply will generally not exceed $105.

3. Reduced Drug Costs:

• Beginning April 1, 2023, certain drugs under Part B may have lower coinsurance if their prices rise above inflation rates. This list is updated quarterly.
• Starting in 2024, beneficiaries reaching the catastrophic coverage phase in their Medicare drug plan won't have copayments or coinsurance. This is significant. As the Kaiser Family Foundation (KFF) explains, “once Part D enrollees without low-income subsidies (LIS) have drug spending high enough to qualify for catastrophic coverage, they will no longer be required to pay 5% of their drug costs, which in effect means that out-of-pocket spending for Part D enrollees will be capped” at about $3,300 in 2024.
• By 2025, annual Part D out-of-pocket expenses will be limited to $2,000, with an option for beneficiaries to distribute these costs monthly across the plan year according to Medicare.gov.
• Additionally, the Part D Low-Income Subsidy (LIS) program will also be expanded in 2024 to help more individuals earning below 150% of the federal poverty level.

Drug Price Negotiations

One other big announcement is that Medicare will soon begin negotiating drug prices with pharmaceutical companies. While this won’t benefit Medicare recipients in 2024, it is definitely worth sharing with your clients. Here’s a quick summary of the rollout from the Medicare.gov article:

Final Thoughts

This is good news to share with clients, so be sure to take advantage of this opportunity. Letting your clients know not only what their plan options are for 2024 but also what changes they can expect going forward will reinforce the fact that you plan to be their trusted advisor for years to come.