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Each year, there are changes to the Part D Prescription Drug Coverage of Medicare.  We won’t have visibility to the actual Part D Plans until October 1, but there are some structural changes that occur each year with Part D.  Key updates for 2024 are below.

  • Annual Deductible Limit – increase of $40 from $505 in 2023 to $545 in 2024
  • Initial Coverage Level increase of $370 from $4,660 in 2023 to $5,030 in 2024
  • True-out-of-Pocket Limit increase of $600 from $7,400 in 2023 to $8,000 in 2024

Annual Deductible
The government sets a maximum deductible amount for the Part D Plans.  In 2023, the maximum deductible was $505.  In 2024, this is increasing $40 to $545.  On most of the Part D Plans, the deductible only applies to higher tiered drugs (e.g. Tiers 3, 4, 5).  Also, some Part D Plans have a $0 deductible, or other amounts lower than the maximum deductible.

Initial Coverage Level
The Initial Coverage Level will increase $370 from $4,660 in 2023 to $5,030 in 2024. This amount is based on the Retail Cost of the Medication for the year (Calendar Year).  Most people (about 85%) do not exceed the Initial Coverage Level and thus continue to pay their Copay/Coinsurance amount for the entire year.  However, for the people that have very expensive medications that exceed the Initial Coverage Level, they will reach the Part D Coverage Gap, aka Donut Hole where they have to pay 25% the cost of their medications.  The increase of $370 to the Initial Coverage level will have a minimal impact on Drug Costs in 2024.  Basically, for those 15% of people with expensive medications, there will be a slight delay to reaching the Part D Donut Hole.

True Out of Pocket Limit (Tro-oP)
The True Out of Pocket limit will increase $600 from $7,400 in 2023 to $8,000 in 2024. The Tro-Op is used to determine when someone exits the Part D Coverage Gap, aka Donut Hole, and moves into Catastrophic Coverage.

Big Change in 2024: In 2023 (and prior years), when you reached Catastrophic Coverage, you would still have to pay 5% the cost of your drugs for the rest of the year.  In 2024, if you reach Catastrophic Coverage, you will have $0 cost sharing for the rest of the year for your medications.

Click the link to the video for a more detailed explanation of these changes, including a detailed example for someone who reaches the Part D Donut Hole.

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