Understanding Medicare is often confusing and overwhelming for seniors, especially when their benefits differ from year to year. As a Medicare insurance agent, you need to offer them peace of mind by explaining their coverage and any upcoming changes in terms they’ll understand.
Demystifying Medicare coverage is easier said than done, as even the most seasoned insurance professionals can struggle to keep up with changes across benefit plans. What does this have to do with right now?
Well, you may have heard, there are some big changes to Medicare Part D in 2024! The differences are a result of provisions in the Inflation Reduction Act of 2022 aimed at lowering out-of-pocket costs for seniors nationwide.
Current Medicare Part D benefits
You’re probably well-versed in the phases of Part D, but just in case, we sharing a quick recap:
- Deductible phase: Seniors are expected to cover their entire drug cost—up to $505.
- Initial coverage phase: Once they meet their deductible, Part D covers 75% of drug costs, leaving seniors to pay the remaining 25%—up to $44,660 in 2023.
- Coverage gap phase: This is the donut hole, where beneficiaries pay 25% of drug costs, with some caveats. Part D covers 75% of the off-brand drug cost and 5% of the name-brand drug cost. And manufacturers offer a 70% discount on name-brand drugs to account for any remaining balance
- Catastrophic phase: Once a beneficiary’s out-of-pocket cost, combined with the manufacturer’s discount, reaches $7,400, Medicare pays 80% of drug costs. Part D pays 15% while beneficiaries pay 5%.
Understanding these existing phases and how they impact seniors’ out-of-pocket costs in 2023 is key to navigating the changes coming to Part D in 2024.
Changes to Part D benefits in 2024
The good news is, in most cases, these changes will bring out-of-pocket costs down for your clients. Here’s what you need to know about how these changes will impact (and benefit!) Medicare Part D beneficiaries.
1. Increase in catastrophic phase contribution
Beginning in 2024, Part D plans will cap the amount beneficiaries spend on prescription drugs. Part D plans will cover 20% of the total cost in the catastrophic phase rather than the current 15%. Eliminating the 5% coinsurance cost from the catastrophic phase should save enrollees thousands in 2024.
2. Increase in catastrophic phase threshold
There’s another change to the catastrophic phase that will likely help, but in some cases could slightly hurt, your clients. The catastrophic phase threshold, set at $7,400 in 2023, is increasing to $8,000 in 2024. Clients who hover just over the existing threshold may incur additional costs, although this change will save most seniors money.
3. Increase in LIS benefits
The Part D Low-Income Subsidy (LIS) Program will grant full benefits to individuals with incomes at or below 150% of the federal poverty line (FPL) who qualify for Medicare and meet partial LIS requirements. This change eliminates the current partial benefits granted to those with incomes falling between 135% and 150% of the FPL.
4. Base premium limits
Finally, 2024 will bring a limit on base beneficiary premium calculation adjustments. Starting next year, the base premium can’t increase more than 6% from the previous year. Despite this, individual Part D plan premium and annual plan-level premium increases will continue to vary.
The changes in 2024 are all good news. And rest assured, there will be even more changes coming in 2025. In the meantime, Financial Grade is here to answer questions or provide support for Medicare Part D changes.
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