2024 Medicare Part D Premiums Spike Ahead of Drug Cost Cap Act
A new report by HealthView Services has highlighted a substantial hike in 2024 premiums for Medicare Part D prescription drug plans in five US states, contradicting earlier predictions by the Centers for Medicare & Medicaid Services that these would decline due to the Inflation Reduction Act. The report shows retirees using Part D plans from the three largest Medicare providers in California, Florida, New York, Pennsylvania, and Texas will pay between 42% and 57% more for plans in 2024 compared to 2023, while for high-end coverage, increases range from 21% to 77%. Despite around 25% of retirees expecting to see lower out-of-pocket costs for drugs because of Inflation Reduction Act provisions, the increase in Part D premiums will have a significant impact on the average $708 annual increase in Social Security benefits.
Report Reveals Surging Medicare Part D Premiums Despite Predicted Decline
A recent analysis by HealthView Services reveals a steep increase in 2024 premiums for Medicare Part D prescription drug plans (PDPs) in California, Florida, New York, Pennsylvania, and Texas. This spikes despite earlier predictions of a decrease by the Centers for Medicare & Medicaid Services due to the Inflation Reduction Act.
Over 18 million Americans are enrolled in standalone Part D plans. The Medicare Part D Premiums: Retirement Healthcare Costs Interim Data Report (2023-24) reveals that retirees will pay 42% to 57% more on average in 2024 for plans compared to 2023. This rise contrasts with a 5.9% increase in Medicare Part B premiums and a 3.2% Social Security cost-of-living adjustment.
HealthView Services founder & CEO, Ron Mastrogiovanni, suggests the Inflation Reduction Act’s changes have led to costs shifting from carriers to retirees. The impact of these changes extends to overall healthcare expenses for many retirees, including Part B premiums, supplemental insurance, and out-of-pocket costs for drugs, hospitalizations, doctors, tests, dental, vision, and hearing.
The report indicates that Part D premiums make up about 9% of lifetime retirement healthcare costs for a couple retiring in 2023, with an expected increase in 2024. If similar increases occur in 2025, Part D premiums could account for over 14% of total healthcare costs. These higher premiums will significantly reduce the average $708 annual increase in Social Security benefits.
About 25% of retirees may see offsetting reductions in out-of-pocket costs for drugs due to provisions in the Inflation Reduction Act, such as drug price negotiations, inflation-based price controls, and a decrease in maximum costs from $7,025 in 2024 to $2,000 in 2025. Caps on insulin prices are already benefiting retirees with diabetes.
Mastrogiovanni concluded that while everyone will experience higher premiums, many will benefit from a lower rate of increase in out-of-pocket expenses. He emphasized the need to plan for these higher healthcare costs, suggesting that the repricing of Part D coverage may continue into 2025 before a return to more normalized premium increases.
HealthView Services is known for providing retirement healthcare cost data, Social Security optimization, and long-term care retirement planning and portfolio management tools. In 2025, the company plans to launch Health Planner Plus, an industry-first automated retirement healthcare decumulation software.
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