Retirees, brace yourself for higher Medicare Part D prescription drug premiums in 2024.
A new law, the Inflation Reduction Act, caps seniors’ prescription drug costs covered under Medicare, starting in 2025, to $2,000, and beginning next year allows no more than a 6% annual jump in Part D premiums.
But tell that to shocked seniors eyeing their Medicare Part D plan premiums starting next month, according to an analysis by HealthView Services, a provider of healthcare cost data.
The cost of the average premiums will rise between 42% and 57% in 2024 compared to 2023 in five states with the largest populations of individuals over 65 who are on Medicare: California, Florida, New York, Pennsylvania, and Texas. The report’s breakdown is based on three of the largest Medicare providers in those states.
“There are also significant increases in 2024 premiums not only in the five states detailed in the report,” Ron Mastrogiovanni, CEO of HealthView Services, told Yahoo Finance. “And,” he added, “There’s the potential for further increases in 2025 as costs are passed along to retirees … the Inflation Reduction Act’s provisions are designed to reduce drug out-of-pocket costs, but do not address premiums.”
HealthView isn’t alone in its assessment. Overall, average monthly premiums for Part D will be “substantially higher” in 2024, according to an analysis by KFF, a nonprofit provider of health policy research.
The national average monthly Part D premium, not as lofty as the HealthView Services calculation, is projected to increase 21% in 2024 to $48, up 21% from $40 in 2023, according to KFF.
Higher-income folks will pay even more.If you earn more than $103,000 as an individual or more than $206,000 if you’re a joint filer, you’ll pay an extra amount ranging from $12.90 to $81.00 per month in 2024, up from $12.20 to $76.40 for your Part D coverage aside from your premium. Most people have that extra charge taken from their Social Security check.
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How Medicare costs break down
People with traditional Medicare generally pay a monthly premium for physician coverage, Part B, and for prescription drug coverage, Part D. Those premiums vary by plan. Some people pay a monthly premium for inpatient hospital coverage, Part A.
Part D pays for outpatient prescription drugs, but not over-the-counter medication, and it covers some self-injected medicines, such as insulin for diabetes, now capped at $35 for each month’s supply. Under the new prescription drug law, annual increases in the “base premium,” as it’s called for Part D prescription drug plans, are capped at 6% from the prior year, starting in 2024.
It’s maddening in a way because, while the new law does cap annual growth in the Part D “base” beneficiary premium at 6% annually, insurers ultimately have plenty of leeway to tweak premiums, co-pays, and deductibles that consumers actually pay.
Here’s the link to learn the complicated details.
The change in the law “means Part D plan providers will pick up additional costs, which we believe are driving higher Part D premiums,” Mastrogiovanni said.
Higher costs for Medicare overall may eat up most of that bump.
The 2024 standard monthly premium for Medicare Part B enrollees, for instance, will be $174.70 for 2024, an increase of $9.80 from $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries will be $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023.
It’s not only premiums that will go up next year, said Philip Moeller, a Medicare and Social Security expert and principal author of the “Get What’s Yours” series of books about Social Security, Medicare, and healthcare. No Medicare drug plan may have a deductible more than $545 in 2024, up from $505 this year, plus “co-pays and what consumers pay for drugs inside their plans will also increase,” he added.
With Medicare open enrollment available through Dec. 7, you can shop for plans in your ZIP code to compare plan premiums, cost-sharing amount, and the prescription drugs they cover.
It’s possible that a plan with a higher premium could offer more comprehensive coverage of your medications and result in lower total costs than a plan with lower premiums. You can receive free one-on-one counseling via the State Health Insurance Assistance Program (SHIP).
“My Part D plan premium was scheduled to rise from $12.70 to $18.80 (an increase of 48%) which, of course, aggravated me,” Mary Johnson, a policy analyst for The Senior Citizens League, told Yahoo Finance.
One apparent solution for many Americans grappling with the rising costs is to enroll in a Medicare Advantage program.
“The numbers are striking, but it’s important to keep in mind that these premium increases are not related to Medicare Advantage plans,” said Moeller.
A big lure of Medicare Advantage plans is that they usually provide some coverage for benefits not included in traditional Medicare, such as Medicare drug coverage (Part D) eyeglasses, dental coverage, and fitness classes.
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“Because Medicare Advantage plans have the ability to use the rebates that they get as part of the Medicare Advantage payment system, these plans typically have very low premiums, if not no premium,” Juliette Cubanski, deputy director of the program on Medicare policy at KFF, told Yahoo Finance.
“We’ve already seen more enrollees shifting into Medicare Advantage and these premium trends could shift that more in that direction in the future,” she added.
In 2023, 30.8 million people are enrolled in a Medicare Advantage plan, accounting for more than half, or 51%, of the eligible Medicare population, up from 19% in 2007, according to KFF’s analysis, and it’s projected to grow to 60% over the next decade, according to Cubanski.
Johnson’s take on this year’s premium increases: “It’s safe to say that companies will pay more of the costs of medications when the Part D cap of $2,000 out-of-pocket expenses for prescription drugs goes into effect in 2025,” she said. “Insurers will take whatever measures they can to remain profitable.”
Kerry Hannon is a Senior Reporter and Columnist at Yahoo Finance. She is a workplace futurist, a career and retirement strategist, and the author of 14 books, including
Credit : Yahoo News
