New Law Set to Limit Seniors’ out-of-pocket Drug Costs in 2025, but Higher Medicare Premiums Expected in 2024
A new law is poised to cap seniors’ prescription drug costs covered under Medicare, starting in 2025. On the contrary, retirees may be in for a shock next year — significantly higher Medicare Part D premiums for prescription drug coverage. According to a recent analysis by HealthView Services, a provider of health care cost data, the cost of average premiums will rise between 42% and 57% in 2024 compared to 2023 in five states with the largest populations of individuals over 65 who are on Medicare.
The increased costs come as new changes put into law through the Inflation Reduction Act will lower the out-of-pocket maximum drug costs for seniors to $2,000 in 2025, down from more than $7,000 in 2023. Also, monthly premiums for Part D will be “substantially higher” in 2024, with the national average monthly Part D premium projected to increase 21% in 2024 to $48, up from $40 in 2023, according to KFF.
These changes have prompted a concern that the premiums may increase again in 2025 when the new limits on out-of-pocket costs take effect. Insurers may cover between 60% to 80% of the costs, with the federal government picking up the difference, while about a quarter of Medicare Part D beneficiaries are expected to go over the $2,000 limit.
“We [who are] on Medicare Part D are going to be sharing in that cost,” said Ron Mastrogiovanni, the founder & CEO of HealthView Services.
Amidst these changes, the rising Medicare Part D premiums come as retirees are said to receive a much smaller Social Security cost-of-living adjustment in 2024 — 3.2% compared to the 8.7% boost to benefits they received in 2023. As such, Medicare beneficiaries are advised to seek better coverage during this open enrollment period through December 7th to avoid a cutback on prescription drugs or doctors’ visits.