Medicare Part D Premiums: National Average Premium Data Shows a 35% Increase for Plans with Comparable Benefits in 2024

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Dec 21, 2023, 08:37 ET

New HealthView Services Report Shows Biggest Increases for Basic Part D Plans in Advance of Inflation Reduction Act Provisions to Reduce Drug Costs

DANVERS, Mass., Dec. 21, 2023 /PRNewswire/ -- HealthView Services' new Medicare Part D National Data Report for all 50 states and Washington, D.C. shows actual Medicare Part D premiums for comparable plans offered across the U.S. by three large providers rising by an average of 35% in 2024. The national premium increases underscore the trend of rising costs detailed in the firms' Part D Interim Data Report, which showed average increases in five states with the largest over-65 populations of 43%.

Medicare Part D National Data Report 2024

The new report finds high-end plans increasing at an average of 33%, mid-level plans at 37%, and basic plans increasing at the highest rate of 41%. The data show average annual costs for high-end plans increasing by $289 a year, mid-level plans by $158 and basic plans by $83. The rise in Part D premiums will mean that drug-related premiums will account for a greater portion of total retirement healthcare costs both in dollar and percentage terms. Should high-end Part D premiums rise at a similar rate in 2025, they would account for around 13% of lifetime healthcare costs for an average 65-year-old couple.

The new report notes the primary driver of higher Part D premiums is believed to be the reduction in the catastrophic cap on drug-related out-of-pocket costs from $8,000 in 2024 to $2,000 in 2025. It details how the cost sharing methodology will change from the government currently picking up 80% of costs in excess of the 2024 limit, to carriers picking up 60-80% of costs above the new lower cap. This is expected to lead to a higher cost burden for carriers, which it appears is now being shifted to retirees in the form of higher premiums.

"The national data underscores the takeaway from our interim five state report: Medicare Part D premiums are significantly increasing in 2024 in advance of Inflation Reduction Act provisions designed to lower out-of-pocket drug costs," said Ron Mastrogiovanni, CEO HealthView Services. "Although, as we anticipated, the national average is lower than the average increase in the five states with the highest over-65 populations, retirees will overall have to pay significantly more for coverage in every state."

New York is the state with the biggest jump in high-end average plan premiums of 53%, and Oklahoma the state with the lowest average increase of 16% - approximately five times the 2024 Social Security Cost-of-Living Adjustment (COLA). Overall cost increases for premiums by carrier range from 77% more for a high-end plan in New York to a 2% decrease for a Part D plan offered by one carrier in Oklahoma. States with national average increases for high-end plans that are around one-third higher than 2023 include Pennsylvania, West Viginia, Utah, Ohio, and Kentucky.

"Although the Centers for Medicare and Medicaid had predicted lower basic Part D premiums earlier in the year, the actual Part D premiums carriers will be charging in 2024 reflect the changing economic realities of providing coverage above the annual cap of $2,000 beginning in 2025," added Mastrogiovanni. "CMS's guidance on basic premiums and what retirees will pay in practice are often very different and will vary significantly based on state and the level of coverage provided."

By comparing like-for-like plans provided by three large carriers across all 50 states and Washington, D.C., HealthView Services' data highlights increases that would otherwise be masked by changes to plans to reduce benefits to retirees.

"When it comes to prescription drug coverage, clients have choices that will impact how much they pay," said Mastrogiovanni. "Advisors can play a key role in helping clients understand the tradeoffs involved between desired coverage and potential out-of-pocket costs based on medication needs."

HealthView Services (http://www.hvsfinancial.com) is a leading provider of retirement healthcare cost, Social Security optimization, and long-term care retirement planning and portfolio management tools for the financial services industry. The firm provides planning apps with the goal of creating funding solutions today to cover future in-retirement healthcare expenses.