Here’s the good news: there’s a law slated to cap prescription drug costs in 2025. The bad news? Next year, part D prescription drug coverage will drastically increase before many retirees will benefit from the drug cost cap.
Let’s talk about what that means for you.
Which Medicare Part D Subscribers Will This Affect?
California is not the only state that will be affected by an increase: Medicare Part D subscribers in four other states will feel the pinch too.
It’s important to note that the cost increase will not impact everyone in the same way. According to a report released by HealthView Services (HVS), the percentage that plans will increase depends on the type of plan.
Here’s the breakdown of plan increases (keep in mind, this is averaged between all five states):
- High-end plans – increasing by 42% ($380.96 more a month)
- Mid-level plans – increasing by 46% ($203.60 more a month)
- Low-end plans – increasing by 57% ($ 128.32 more a month)
Those who have Medicare Part D and fall into the “catastrophic” category in 2024 (spending above $11,206 in total costs or $7,400 in out-of-pocket costs) will be relieved to learn that, in 2024, Medicare Part D will pay 20% of the total drug costs, or 5% more, due to the elimination of coinsurance costs.
How Much Will My Part D Prescription Drug Premiums Increase?
So how much will California retirees have to spend on their prescription drug premiums? Looking at the highest-cost Medicare Part D premiums for three leading providers, HVS found that the increase could range from 38% to 68% for Californians, with an average of 52%.
In other words, San Luis Obispo retirees can expect to pay anywhere from an additional $35.50 a month to $46.90 a month. The average Californian will pay $40.20 on top of their existing prescription drug premium costs.
Why Are Medicare Part D Premiums Increasing?
The increase in premiums is likely because of the Inflation Reduction Act, which was signed into law in August 2022 to prevent pharmaceutical companies from charging over a certain amount. As it stands, the catastrophic coverage cap is $7,050, but in 2025, it will be reduced to $2,000, and about a quarter of those with Medicare Part D will benefit.
However, lower costs for those with catastrophic coverage may be driving the increase in premiums for everyone else, since the Inflation Reduction Act does not address premiums.
Will Social Security Help Offset These Costs?
In 2024, the average Social Security beneficiary can expect an extra $700 a year for their cost-of-living adjustment (COLA). It only takes a quick scroll to the top of this page, though, to see that over half of that amount will go toward paying the premiums for Medicare Part D.
With the cost of groceries expected to rise another 7.1% in the coming year, this means that many California seniors on fixed incomes will have to start thinking outside the box about their Medicare plans.
Let’s Talk About Your Medicare Coverage
Are you a senior who’s already struggling to make ends meet, and want to know where you can save some money without losing the coverage you need? We can help! If you would like to change your Medicare Part D prescription drug coverage, you may be eligible for a special enrollment period. You can review your Medicare your plan yourself, or you can reach out to us and let us help you think through your options.