The fourth quarter of 2023 is approaching, and Medicare beneficiaries are going to face a series of changes that are projected for 2024. Specially, those covered by Medicare Part D. Jae Oh, a Medicare specialist, elucidates that these modifications predominantly benefit recipients of Medicare Part D.
Additionally, a report made by the Kaiser Family Foundation unveiled that a mere ten drugs were responsible for a staggering $48 billion in expenditure within the Medicare Part D program during the year 2021. Now, the program is undergoing several changes to be applied from 2024, and here they are. The Social Security Administration (SSA) is actively working to reduce the costs of prescription medications in response to the escalating expenses caused by inflation.
Get Ready for 2024: Important Insights into Medicare Part D Changes
First, the Medicare Part D Extra Help Program is set to expand in 2024 in an effort to enhance the affordability of prescription drugs. This expansion involves raising the income-based cutoff, which will enable a larger number of individuals to qualify for the program.
The National Council on Aging reports that almost 3 million people who meet the eligibility criteria are not currently enrolled. Given the impending expansion, Oh encourages readers to assess their eligibility and seize the opportunity if they qualify.
Furthermore, changes are on the horizon for Catastrophic Coverage within Medicare. The Catastrophic phase is reached once an individual’s out-of-pocket expenses exceed $7,400. In the past, Part D beneficiaries were still responsible for covering 5% of the costs during this phase.
However, in 2024, this financial burden is set to decrease to 0%, marking a significant reduction in payment responsibilities. For a more comprehensive understanding of the upcoming alterations to Medicare Part D in 2024, viewers are encouraged to watch the full video.
Medicare Part D in 2024: What Every Beneficiary Needs to Know
In 2024, there will be significant changes to the cost structure of the Part D program’s catastrophic phase. One notable measure will be the removal of the 5% co-payment requirement for Part D beneficiaries during this phase. Instead, Part D plans will cover 20% of the total drug costs at this stage, an increase from the current 15%. Additionally, by 2024, a catastrophic threshold of $8,000 will be introduced. This threshold will encompass both what Part D beneficiaries spend from their own pockets and the value of the manufacturer’s price discount on branded drugs in the coverage gap phase.
These changes will have a profound impact, particularly on low-income unsubsidized Part D beneficiaries who require expensive medications, such as specific cancer treatments. They stand to save thousands of dollars in medical expenses. Currently, these beneficiaries often face substantial costs for high-priced drugs, with annual out-of-pocket expenses ranging from over $11,000 to nearly $15,000 for the top five drugs with the highest per capita expenses in 2021. Within the catastrophic phase alone, costs for each drug range from about $8,000 to almost $12,000.
The elimination of the 5% co-payment requirement in the catastrophic phase in 2024 will bring significant financial relief to these beneficiaries, resulting in substantial cost savings for their healthcare needs.
Understanding Medicare Part D Catastrophic Coverage
This stage of the Medicare system offers an extra payment for, precisely, catastrophic events related to high-cost medication, in specific treatments. This phase comes in action once an individual has spent a significant amount of money on prescription drugs in a given calendar year.
When beneficiaries reach the catastrophic stage, they experience a significant reduction in their out-of-pocket expenses for covered prescription drugs. During this stage, they are responsible for paying only a small coinsurance or co-payment for their medications.
In 2023, the catastrophic coverage threshold is set at $7,050. This means that once a Medicare Part D beneficiary has personally spent this amount on covered prescription drugs within a calendar year, they move into the catastrophic stage. But, for 2024, the threshold will be raised to $8,000, including certain payments made by other people or entities, including Medicare’s Extra Help program, on your behalf.
At the end of each calendar year, the Medicare Part D catastrophic coverage resets. Beneficiaries start anew with their prescription drug costs, and they must once again reach the threshold to enter the catastrophic stage.
Medicare Part D Premiums to Drop Slightly in 2024
In 2024, Medicare Part D prescription drug coverage is anticipated to witness a slight decrease in the average monthly premium, as per an announcement by the Centers for Medicare & Medicaid Services (CMS) on July 31. The projected average premium for 2024 is set at $55.50, which represents a modest 99-cent reduction from the 2023 average of $56.49.
The actual expenses beneficiaries will incur in 2024 will be subject to several variables, including the specific prescription drugs they require, their choice of plan, and their main residence within the US and its territories. Alongside premiums, deductibles, and co-payments, which can differ significantly from one plan to another, these factors will contribute to the overall cost.