The average total monthly premium for Medicare Part D coverage is expected to fall to $55.50 in 2024, representing a 1.8% decrease from 2023 at $56.49, the Centers for Medicare and Medicaid Services (CMS) announced Monday.

“Stable premiums for Medicare prescription drug coverage in 2024 are supported by improvements to the Part D program in the Inflation Reduction Act (IRA), or the prescription drug law, that allow people with Medicare to benefit from reduced costs,” CMS said in a fact sheet.

The Medicare Part D program is intended to help Medicare enrollees pay for brand-name and generic drugs. More than 51 million people are enrolled in Part D plans. The average total Part D premium is made up of the average basic premium (for the basic benefit offered by Part D plans) and the average supplemental premium. Many Part D plans offer a “richer benefit” than the basic Part D plan — such as coverage of some non-Part D drugs — and therefore charge a “supplemental premium.”

Although the 2024 average total monthly premium for Part D plans is expected to be lower than 2023, it will still be higher than in 2020 ($43.29), 2021 ($46.69) and 2022 ($51.66).

The projected average total monthly Part D premium is calculated “based on plan bids submitted to CMS,” a news release stated. The agency released it “to help individuals understand overall Part D premium trends before Medicare Open Enrollment when they can select from plan options for the upcoming benefit year.” The Medicare Open Enrollment period begins October 15.

There are a couple of reasons why the average Part D monthly premium is expected to decrease, according to CMS. One reason is that starting in 2024, the Inflation Reduction Act limits premium increases for Part D enrollees.

“Specifically, the law limits the growth in the base beneficiary premium (used to calculate the plan-specific basic premium) to a 6% annual increase. … By capping the base beneficiary premium, the [Inflation Reduction Act’s] premium stabilization provision has moderated the growth in the average basic premium, which, when taken with a lower average supplemental premium, results in a lower average total premium,” CMS said in the fact sheet.

Additionally, the Inflation Reduction Act will limit annual out-of-pocket costs, limit cost-sharing for covered insulin products and remove cost-sharing for recommended adult vaccines in 2024. Starting next year, Part D plans also have to apply price concessions from pharmacies “to lower the price the beneficiary pays at the point of sale,” according to CMS.

“These changes enhance the basic Part D benefit for 2024, resulting in better coverage available to all Part D beneficiaries while reducing premiums for supplemental Part D coverage,” CMS stated.

CMS will release the 2024 premium and cost-sharing information for Medicare Advantage and Part D plans in September.

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