Last week, the Centers for Medicare & Medicaid Services (CMS) announced that they project the average Medicare Part D prescription drug premium to decrease. This announcement comes on the heels of other proposed changes to Medicare Part D and prescription drug costs that could potentially save beneficiaries money in the future.
Beneficiaries should keep in mind that this is a projection for the average prescription drug plan premium. Medicare Part D plans are privately offered — meaning their premiums may differ from carrier to carrier and plan to plan.
2023 Medicare Part D Premium Projections
The following details are from CMS’ “CMS Releases 2023 Projected Medicare Basic Part D Average Premium” and “Annual Release of Part D National Average Bid Amount and Other Part C & D Bid Information” press releases unless linked elsewhere.
While CMS projected a slight increase in Part D premiums for 2022, they’re reversing course for 2023. The organization predicts there will be a modest 1.8 percent drop from 2022’s average Part D premium of $32.08 to $31.50. This is moving back toward 2020’s projected average Part D premium of $30, which was the lowest since 2013. These numbers are based on plan bids from insurance carriers that are submitted to CMS for approval ahead of the Annual Enrollment Period (AEP), beginning October 15 and running until December 7.
With more than 49 million beneficiaries enrolled in Medicare Part D, it remains one of the most popular programs run by CMS. While many of these beneficiaries won’t have premiums that are exactly $31.50, it is a sign that premiums may be lower on average than last year. Without seeing the plan data, which isn’t available to the public yet, we can’t say for certain, but it’s a good sign overall.
What About Other Part D Costs?
The following figures can be found on page 68 of “Announcement of Calendar Year (CY) 2023 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies” in Table V-2 on page 68.
Of course, premiums aren’t the only costs associated with Medicare Part D. If you’re enrolled in a Part D plan, you’ll also encounter drug copays and a deductible. There are also various coverage limits, like the Initial Coverage Limit and the Donut Hole. Each plan can differ on copays, depending on networks and other factors; however, CMS sets the cost-sharing for drugs during the catastrophic coverage portion of your Medicare insurance coverage. In 2022, you owe $3.95 for preferred or generic drugs and $9.85 for all others. In 2023, these costs will be $4.15 for generic or preferred drugs and $10.35 for others.
As you utilize your Part D plan, you may eventually reach your deductible limit, the initial coverage limit, and the True Out-of-Pocket Limit (TrOOP limit). These limits can change each year to reflect the current market and expected costs. In 2023, the average deductible will be $505 (up from $480 in 2022). Keep in mind that each plan can set their own deductible, so your plan may differ. The initial coverage limit for 2023 will be $4,660 (up from $4,430), while the TrOOP limit will be $7,400 (up from $7,050 in 2022).
The Proposed Inflation Reduction Act of 2022
On top of the announced premium average, we may be seeing historic changes to the Medicare Part D program and the prescription drug industry in general. On July 27, 2022, Senator Joe Manchin made an agreement with Senator Chuck Schumer on a spending bill to combat inflation, which is now called the Inflation Reduction Act of 2022. After a marathon voting session last weekend, the bill passed the Senate, meaning it will receive a vote from the House of Representatives this week. We won’t go too in depth about what’s covered in the bill right now, as we’ll have a full write-up should the act pass, but some of the provisions are expected to lower drug costs by allowing the Medicare program to negotiate costs and cap out-of-pocket costs for prescription drugs. Some of these details may change if the bill is passed and signed into law, so stay tuned!
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All told, this could be an exciting year for Medicare Part D coverage. Not only are we seeing lower average premiums, but there could be majors changes to the industry and Medicare program that could benefit consumers. It’s definitely worth keeping an eye out for updates as we learn more. Sign up for our the Shop & Enroll newsletter to stay up to date on developments.