Medicare Prescription Drug Coverage Is Changing: But Seniors Still On The Hook For High Out-of-Pocket Costs In 2024

Medicare Prescription Drug Coverage Is Changing: But Seniors Still On The Hook For High Out-of-Pocket Costs In 2024

Prescription drug provisions in the Inflation Reduction Act of 2022 make major changes to Medicare Part D prescription drug costs. The legislation caps spending on out-of-pocket costs for covered drugs at $2,000 starting in 2025.

Meanwhile, one early change that Medicare beneficiaries saw in 2023 is the capping of insulin costs purchased at pharmacies at $35 per prescription per month. Although that change is saving older diabetics hundreds of dollars on insulin costs this year, to get the savings, Medicare plan enrollees need to check and make sure their drug or health plan covers their insulin.

Tip: If your health or drug plan does not cover your insulin, find out which insulin your plan does cover. Then ask your doctor if you can try insulins covered by your plan, or you can check for better coverage options during Medicare Open Enrollment starting October 15th and running through December 7th.

Until 2025, Medicare beneficiaries need to be prepared for another year of steep out-of-pocket spending requirements for prescription drugs. Here’s how Part D costs are changing in 2024:

  • Part D deductible: Up to $545 (up from $505 in 2023). Medicare health and drug plans have a great deal of leeway about cost sharing and what they charge as deductibles and out-of-pocket costs. The deductible is the amount that must be paid before the initial coverage starts. It’s often a major barrier for lower-income beneficiaries or those on a tight budget. But many drug plans cover preferred generics and even preferred brands “before” the deductible. Tip: Drug plans are most likely to impose the deductible on the more expensive drugs found on higher tiers on the drug plan formulary. Watch for the notice from your health and drug plan and check with your insurers to learn if any of your drugs have been kicked to a higher formulary tier, where they will cost more in 2024. Be ready to compare plans during the October 15 – December 7, 2023, Medicare Open Enrollment period.
  •   Out-of-pocket threshold required before catastrophic coverage: $8,000 (up from $7,400 in 2023). This threshold refers to the amount individual beneficiaries must spend before reaching the “catastrophic phase of coverage.” In 2023, if that phase of coverage is reached, Medicare will pay 80% of total drug costs, Part D plans pay 15%, and the Part D enrollee must pay 5%. There is no cap on beneficiary spending. But in 2024, for the first time, Part D enrollees will have no cost sharing during the catastrophic coverage phase.

Have you ever gone without prescription drugs or medical services due to costs? Please take TSCL’s 2023 Retirement Survey, and let us know!


Sources: “CMS Announces 2024 Medicare Part D Benefit Parameters Used For Creditable Coverage Disclosures,” Fact Sheet, Thompson Reuters, April 20, 2023.

Changes to Medicare Part D in 2024 and 2025 Under The Inflation Reduction Act and How Enrollees Will Benefit, Juliette Cubanski, Tricia Neuman, Kaiser Family Foundation.