Retirees Face Steep Hikes in Prescription Premiums in 2024
Retirees Face Steep Hikes in Prescription Premiums in 2024

By Amie Dahnke

Retired Americans enrolled in Medicare’s Part D prescription coverage could see their premiums increase by 42-57 percent in 2024, a new analysis by HealthView Services has found.

Early indicators show significant cost hikes for retirees in the five states with the largest senior populations. This is different from an earlier report projecting slight premium declines across Part D plans next year.

Major Discrepancy in Premium Outlooks

The HealthView report, published in November 2023, contrasts sharply with a July projection by the Centers for Medicare & Medicaid Services, the federal agency that administers the Medicare program, 

The CMS said there would be a 1.8 percent decline in Part D premiums for 2024, citing the Inflation Reduction Act’s reforms as the basis for stable or reduced costs.

However, HealthView tells a different story. It forecasts major hikes for retirees in states with large senior populations.

Projected 2024 premiums are $1,404 in California, $1,246 in Florida, $1,154 in Texas, $1,469 in New York, and $1,189 in Pennsylvania. This represents average increases ranging from $269 in Texas to $510 in New York.

What is Driving the Increase?

The key driver of projected premium hikes is a change in the Inflation Reduction Act lowering the maximum out-of-pocket spending cap for Medicare Part D prescription drugs from $7,050 in 2023 to $2,000 in 2025. This will reduce co-pays for some, especially those with chronic conditions.

However, financial liability will shift to insurers expected to cover 60-80 percent of costs once patients hit the new $2,000 cap.

With roughly a quarter of Medicare recipients exceeding this threshold, HealthView analysis suggests carriers will raise premiums to account for their increased coverage requirements. The higher premiums are a way for insurance companies to cover the expected increase in costs.

So, while the Inflation Reduction Act aims to lower overall healthcare costs for retirees, it may actually increase 2024-2025 Part D premiums for 75 percent of enrollees seeing no co-pay relief.

Why It Matters?

Americans pay for prescription drugs over 2.5 times more than other high-income nations. One in five seniors alter medication use due to high prescription costs, a May 2023 national survey found. They either skipped, delayed, took less medication, or took someone else’s medications.

Even small Part D premium hikes could strain budgets when combined with other costs. The Council of Aging reports the national average at $2,000 annually for Part B plus another $3,600 a year for supplemental coverage like Medigap Plan F.

With health costs a top concern for retiring Americans, the HealthView analysis shows 2024 increases could outpace the average retiree’s Social Security cost-of-living adjustment (COLA) by 70 percent. For those on fixed incomes, outpacing COLA adjustments poses real financial challenges.

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