Average premiums could go down, but some could see large increases

The average monthly premium for Medicare Part D prescription drug coverage is expected to fall slightly in 2024, to $55.50, a 99-cent drop from the 2023 average of $56.49, the Centers for Medicare & Medicaid Services (CMS) announced on July 31.

The actual amount beneficiaries will pay in 2024 will vary depending on which prescription drugs they take, what plan they pick and where they live. In addition to premiums, deductibles and copays also vary by plan. CMS says more than 51 million Medicare beneficiaries currently have prescription drug coverage.

The projected 1.8 percent decrease in the average monthly premium will come as more aspects of the new prescription drug law are set to take effect next year.

Beginning in 2024, once a Medicare beneficiary with either a Part D prescription drug plan or medication coverage through their Medicare Advantage (MA) plan enters what Medicare calls “catastrophic” coverage, they won’t have to pay anything for their prescription drugs for the rest of the year. In 2024, the spending threshold for entering catastrophic coverage will be $8,000. The new law caps out-of-pocket prescription drug costs for plan members at $2,000 beginning in 2025.

Medicare beneficiaries will have an opportunity to review and change their prescription drug coverage for 2024 during the program’s annual open enrollment period that runs from Oct. 15 to Dec. 7, 2023. CMS is expected to announce this fall the premiums and deductibles for Medicare Part A (hospital, hospice and some home health coverage), Part B (doctor visits, diagnostic tests and other outpatient services) and final Part D financial information. CMS will also release average 2024 premium and cost-sharing information for Medicare Advantage plans in September.

Editor’s Note: This story has been updated to reflect new information. The new prescription drug law caps annual increases in the so-called base premium for Part D prescription drug plans at 6 percent, starting in 2024. But the base premium may not reflect the total monthly premium that a plan enrollee pays. That’s because plans’ costs can vary widely, so some enrollees could see a drop in their premiums while others see significant increases.