Some people may be picking pumpkins this fall (I know I will!), but I also encourage you to pick a Part D plan for 2024. With passage of the Inflation Reduction Act in 2022, there are many changes you need to understand that could affect how much you pay for your medications next year.

Changes to Part in 2024

Before you make a decision, you need to know what changes are coming to Part D in 2024. In addition to the free vaccines, the cap on insulin at $35 per month (per product), and inflation rebates for Part B drugs you got in 2023, this is what you can also expect.

Part D deductibles will be capped at $545 (up from $505 in 2023).

Plans may or may not choose to include a deductible. However, be on the lookout. Some plans may add a deductible even when they did not have one in previous years. Do not assume you won’t have a deductible because you didn’t have one last year.

Part D premiums are not capped this year.

There is quite a bit of misinformation going around about the Inflation Reduction Act (IRA). Some people are saying that Part D premiums cannot go up by more than 6% this year but that is misleading. Calculations for premiums can get very complicated. What you need to know is that one part of that calculation, the national base beneficiary premium (NBBP), is capped at a 6% rate hike. Because all the other parts of the calculation are not affected by the IRA, you could still see rates going up beyond that amount. In fact, premiums are all across the board for 2024. Shop around to pick a Part D plan that gives you the best deal for the medications you take.

Part D late fees won’t increase as much as they have in the past.

Part D late penalties are not calculated based on your plan’s premium in any given year. Instead, they are calculated using the national base beneficiary premium. Since the IRA capped how much the NBBP can increase from year to year, it curbs how much anyone gets stuck paying for late fees.

The initial coverage limit will be $5,030 (up from $4,660 in 2023).

The initial coverage limit is the first phase of your Part D coverage. After you pay your deductible for the year, this is when you take advantage of lower copays and coinsurance. The $5,030 is based on the retail cost of your medications and includes what you and your plan pays for them. This number goes up every year, so this is not really a surprise.

The out of pocket threshold will be $8,000 (up from $7,400 in 2023).

After the initial coverage limit, you hit what is known as the coverage gap — the dreaded donut hole. During this phase, you’ll pay 25% for all of your medications, even if you paid lower rates before then. To get out of the donut hole, you need to reach the out of pocket threshold for the year (this includes what you paid during the initial coverage limit too). Unlike the initial coverage limit, what your plan pays for your medications during the donut hole does NOT count towards your out of pocket costs.

EXCITING NEWS

In 2025, the out of pocket limit will be set at $2,000. Keep in mind this does not include what you pay for your premiums, IRMAA, or deductibles.

The coinsurance for catastrophic coverage goes away.

In 2022, 1.5 million people with Part D coverage (whether it was through a Medicare Advantage plan or a stand-alone Part D plan) spent so much on their medications they reached the third phase of Part D known as catastrophic coverage. During this phase, they paid 5% for their medications. In 2024, thanks to the IRA, they won’t pay anything at all. Yes, your medications will be free to you in the catastrophic phase.

More people will be eligible for the Part D Low Income Subsidy (LIS).

In 2023, more than 13.4 million people relied on the Part D Low Income Subsidy, also known as Extra Help, to help pay for their prescriptions. The IRA has decreased the eligibility requirements so that even more people may be able to benefit from the program. Specifically, the income limit will include anyone with income up to 150% of the federal poverty limit (previously only up to 135%) and is expected to help an additional 3 million people. If you qualify, you will not have to pay Part D premiums or a deductible. You will also get a discount on your prescriptions.

How to Pick a Part D Plan in 2024

Be proactive. Too many people sit back and just keep the same plan from year to year. It’s easier that way but it can cost you in more ways than one. Do not assume your current plan is going to be the best one for you next year. Give yourself some time to do research.

Check your Annual Notice of Change (ANOC). Any health plan run by an insurance company is required to send you an update on any changes to their plan for the coming year. This usually comes out in the fall, right before Medicare Open Enrollment season (October 15 to December 7). Make sure the medications you take are still covered. Also, check to see if they are moving to a higher tier, which would make them more expensive.

Shop around. Do not assume your current plan is going to be the best plan for you next year. I encourage you to check Medicare Plan Compare to compare different plans side by side. You can enter the medications you take and your preferred pharmacies to see how much you would spend out of pocket. This will help steer you toward the best plan at the most affordable price.

CMS Releases 2024 Projected Medicare Part D Premium and Bid Information. (2023). CMS.gov. https://www.cms.gov/newsroom/news-alert/cms-releases-2024-projected-medicare-part-d-premium-and-bid-information

CMS Projects 2024 Medicare Part D Premiums Will Fall by 1.8%. (2023). HealthPayerIntelligence. https://healthpayerintelligence.com/news/cms-projects-2024-medicare-part-d-premiums-will-fall-by-1.8

Find a Medicare plan. Medicare.gov. https://www.medicare.gov/plan-compare/

H.R.5376 – 117th Congress (2021-2022): Inflation Reduction Act of 2022. (2022). Congress.gov. https://www.congress.gov/bill/117th-congress/house-bill/5376/text

Key Facts About Medicare Part D Enrollment and Costs in 2023. (2033) KFF. https://www.kff.org/medicare/issue-brief/key-facts-about-medicare-part-d-enrollment-and-costs-in-2023/

Saving money with the prescription drug law. (2023). Medicare.gov. https://www.medicare.gov/about-us/prescription-drug-law