Big Changes Coming to Medicare Part D in 2024—Here’s What You Should Know

Lipitor tablets sit in a tray at a pharmacy in Chicago on July 23, 2008. (Scott Olson/Getty Images)

There are important changes coming to Medicare Part D plans in 2024, which enrollees should be aware of before this year’s open enrollment period, which runs between Oct. 15 and Dec. 7.

As Medicare health and drug plans can undergo several changes each year—affecting things like cost, coverage, and which pharmacies and providers participate in an enrollee’s networks—the U.S. Centers for Medicare and Medicaid Services (CMS) recommends that those enrolled in a Medicare health or prescription drug plan review all materials sent to them by their providers.

The changes to Medicare Part D are the result of provisions established by the Inflation Reduction Act (IRA) passed by Congress in 2022.

Medicare Part D is a federal program—enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003—to help Medicare beneficiaries cover the costs of prescription drugs.

Medicare enrollees have access to drug coverage through Part D regardless of income, age, or health status. With the new changes coming next year, it’s possible that millions of Americans could start saving money on their prescription drugs.

The Changes

Starting in 2024, the Health and Human Services (HHS) secretary will be allowed to negotiate drug prices directly with pharmaceutical companies on behalf of Medicare in a tiered method, beginning with up to 10 prescription drugs negotiated by 2026 and an additional 15 drugs per year until 2028.

Starting in 2029, the HHS secretary will be allowed to negotiate the prices for another 20 medications per year.

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Additional benefits to Medicare beneficiaries are that the maximum out-of-pocket cap will be set to $2,000 and insulin costs will be limited to $35 a month. Participants will no longer be obligated to pay out-of-pocket costs for covered drugs once they reach the catastrophic coverage level, which is when the policyholder’s out-of-pocket spending hits $7,400.

Part D enrollees currently pay 5 percent of the cost of covered drugs once they exceed the $7,400 threshold, amounting to copays of $4.15 for generics and $10.35 for brand-name drugs.

According to KFF, a health policy organization, about 1.5 million Medicare Part D participants had prescription drug costs that put them above the catastrophic coverage level in 2019.

Another change coming to Medicare Part D affects the Extra Help program, which provides assistance to low-income participants to help pay for “Medicare drug coverage (Part D) premiums, deductibles, coinsurance, and other costs.” Extra Help will also be expanded to cover those who meet predetermined resource limit requirements (currently $16,600 for individuals and $33,240 for married couples) and fall between 135 percent and 150 percent of the federal poverty line.

According to a June 16 press release, HHS predicts that “nearly 300,000 low-income people with Medicare currently enrolled in the Extra Help program stand to benefit from the program’s expansion.”

By allowing HHS to negotiate prices with drug companies, lower out-of-pocket expenses for Medicare enrollees, and put an inflation cap on the price of drugs, the IRA aims to lower prescription drug costs for Medicare beneficiaries.

In February, the Congressional Budget Office estimated that these provisions for prescription drugs would reduce the deficit by $237 billion from 2022 to 2031.

In July, CMS announced that the changes in the IRA will provide approximately $400 in out-of-pocket savings per enrollee.