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A new law is poised to cap seniors’ prescription drug costs covered under Medicare, starting in 2025.
But retirees may be in for a shock next year — significantly higher Medicare Part D premiums for prescription drug coverage.
The cost of the 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, according to a new analysis by HealthView Services, a provider of health care cost data.
That represents an increase ranging from $128.32 to $380.96 from 2023 to 2024, according to the firm. The calculations are based on three of the largest Medicare providers in each state.
The five states include California, Florida, New York, Pennsylvania and Texas.
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.
Other changes put into place with the legislation — such as a $35 monthly cap on insulin and access to free vaccines — have already gone into effect.
Insurers may pay higher costs due to the higher out-of-pocket limits, and higher premiums is a way of getting beneficiaries to share that burden, according to Ron Mastrogiovanni, founder & CEO of HealthView Services.
Today, the federal government picks up 80% of the more than $7,000 maximum spent on Part D prescription drugs, while insurers cover the remaining 20%, Mastrogiovanni said.
When the out-of-pocket max drops to $2,000, insurers will cover 60% to 80% of the costs, with the federal government picking up the difference.
About a quarter of Medicare Part D beneficiaries are expected to go over that $2,000 limit.
“The insurance company has to do to do something to make up for that loss, given the number of people that may go over,” Mastrogiovanni said.
“Therefore, we who are on Medicare Part D are going to be sharing in that cost,” he…
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