How Are Medicare Prescription Drug Plans Changing in 2024?
Key takeaways:
In 2024, Medicare Part D plans will have higher deductibles, higher initial coverage limits, and higher out-of-pocket spending threshold.
All insulins covered by your Medicare Part D plan will be capped at $35 out of pocket for a month’s supply.
The average Medicare Part D plan is adding and dropping medications from its coverage at nearly the same rate when comparing 2023 plans that will also exist in 2024.
Many drug coverage plans will have quantity limits in 2024. The average plan has a quantity limit on nearly 40% of its covered drugs.
Table of contents
Medicare open enrollment for the 2024 coverage year lasts from October 15, 2023 to December 7, 2023. During open enrollment, you can select your Medicare Part D prescription drug plan for 2024.
Before you make a decision, you might want to read up on cost-sharing and coverage changes for Part D plans. GoodRx Research dug into the 2024 plans, and here are the changes we found.
How do Medicare Part D plans change drug coverage from year to year?
Medicare Part D plans can make the following changes to prescription drug coverage:
First, Medicare can stop covering a medication and drop it from its formulary. A formulary is the list of drugs a plan will cover, divided into tiers. However, Medicare requires plans to cover at least two medications in each commonly prescribed category (such as antidepressants and insulins).
Second, Medicare can change a medication’s tier on its formulary, which can affect its out-of-pocket cost. In general, a higher tier means higher costs.
Third, Medicare can add a restriction to a medication, such as prior authorization, quantity limits, or step therapy. These restrictions can create another barrier to patients being able to pick up their prescribed medication at the pharmacy counter.
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Every fall, Medicare requires plans to send an Annual Notice of Change (ANOC) to enrollees. The document includes any high-level changes in coverage and costs that will be effective in the next coverage year. Be sure to review your ANOC to learn more about how your plan will be changing in 2024. This can help you decide whether you should enroll in a new plan.
How will Medicare Part D coverage change in 2024?
GoodRx Research analyzed publicly available Medicare prescription drug plan data to evaluate changes to plan coverage in 2024. In 2024, there will be over 5,600 plans, and 87% are Medicare Advantage plans. However, the Medicare plans available to an enrollee depend on where they live.
Here are the changes we found in plan drug coverage for 2024.
The average plan’s overall drug coverage is nearly unchanged from 2023 to 2024
GoodRx Research looked at all Medicare Part D plans’ drug coverage in 2023 and 2024. We defined drug coverage as the share of medications covered by a plan relative to the best plan in each year. We found that the average plan in both years covered a similar share of medication: around 54% of all drugs.
However, just because the overall share of covered drugs is staying flat doesn’t mean your plan will keep the same coverage. For example, several of Network Health’s Medicare plans will see a 27 percentage-point decrease in their share of covered drugs from 2023 to 2024. These plans cover more than 61,000 enrollees in 2023.
This underscores how important it is to check your plan’s ANOC and formulary to see if your medication will be covered in the new year.
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On average, plans are adding and dropping medications at the same rate
To observe patterns of plans adding and dropping medications, we looked at plans that were available in 2023 and renewed in 2024. Overall, we found that plans were adding and dropping drugs at nearly the same rate: 4.8% of medications the average plan covered in 2023 were dropped in 2024, and about 4.7% of medications covered in 2024 were newly added.
Dropping drugs is not always an indication of poorer coverage. Formulary changes can happen for many reasons. A medication may have a new generic available or a drug may be removed for safety reasons.
For example, over 3,500 plans dropped the brand-name drug Latuda, which is used to treat schizophrenia and depression related to bipolar disorder. However, those same plans also added its generic version, lurasidone, to their formularies. This makes sense given that lurasidone was approved by the FDA in 2019 but was only able to be sold starting in 2023.
Quantity limits remain the most popular form of restriction on plan formularies
Drug restrictions limit which medications can be filled at the pharmacy counter or the quantity that can be filled. We found that the average plan’s share of medications that have any restrictions is 49% in 2024 — and individual drugs can have multiple restrictions.
In both 2023 and 2024, quantity limits were the most popular form of drug restriction used in formularies. This restriction limits the amount of the medication that can be filled in a period of time.
Are there any changes to the cost-sharing structure of Medicare Part D programs?
The cost-sharing structure of a plan outlines what you will pay out of pocket in the different phases of Medicare Part D. Plans can have different structures, which can impact how much you will pay at the pharmacy counter.
Adjustment to Medicare plans’ standard benefit
Each year, the Centers for Medicare & Medicaid Services (CMS) sets a benchmark for the cost-sharing structure of all Medicare plans (known as the standard benefit). All Part D plans must choose to provide the standard benefit (or an equivalent benefit) or an enhanced benefit.
A standard benefit plan will use Medicare’s required baseline cost-sharing structure. An enhanced benefit plan will usually charge a higher premium for a wider range of benefits.
Some notable price changes to the standard benefit in 2024 are:
Higher standard deductibles: Prescription drug plans use benefit phases to determine what costs you are responsible for. In the deductible phase, you are responsible for 100% of costs. After paying the full deductible, you are then in the initial coverage phase, where you pay a copayment or coinsurance, and the plan will pay the rest. The standard deductible is increasing $40, which means your deductible cannot exceed $545 in 2024.
Increased initial coverage limit: When the amount that you and your plan have paid reaches a certain threshold, you reach the initial coverage limit and enter into the coverage gap phase (also called the “donut hole”) of your plan. In this phase, you pay no more than 25% of the cost of your medication. The initial coverage limit is increasing $370 and will be $5,030 in 2024.
Higher out-of-pocket spending threshold: The out-of-pocket spending threshold is increasing $600 and will be $8,000 in 2024. Once you (and other entities on your behalf, such as Extra Help) have spent that amount out of pocket in 2024, you leave the coverage gap and enter into the catastrophic phase, where you won’t pay anything for your covered Part D medications for the rest of the year. The 5% coinsurance enrollees previously paid in the catastrophic coverage phase has been eliminated. As a result, people who use covered high-cost medications but don’t have a low-income subsidy for Part D are expected to save thousands of dollars.
Coverage returns to the deductible phase every year on January 1.
Insulin costs limited at $35 for a month’s supply
Similar to 2023, the Inflation Reduction Act will continue to cap out-of-pocket costs for insulins covered under all Medicare prescription plans at $35 for a month’s supply.
What should I do next?
Here’s what you need to know as you evaluate Medicare prescription drug plans:
Review your Annual Notice of Change to check for any changes made to your Medicare Part D plan and to ensure that the plan will meet your needs for the 2024 coverage year.
Compare plans in your area using the Medicare Plan Finder and see whether you need to switch plans.
Read the Medicare & You Handbook to get more information about how Medicare coverage works.
If you have questions, call the State Health Insurance Assistance Program SHIP is a network of free, unbiased local counselors who help people sort through their Medicare choices.
If you miss the Medicare open enrollment period, which ends on December 7, 2023, you still have opportunities to switch prescription drug plans:
If you have a Medicare Advantage plan, there is a Medicare Advantage open enrollment period from January 1 to March 31 each year. During this time, you can either switch to a different Medicare Advantage plan (with or without drug coverage) or go back to original Medicare.
In certain cases, Medicare allows you to change your plan outside of an open enrollment period. This option could give you another opportunity to switch to a plan with better coverage of your medication.
Medicare allows you to switch plans one time outside of the open enrollment period if you choose a plan rated 5 stars on the Medicare Plan Finder tool. You can do this once annually between December 8 one year and November 30 the following year.
If you qualify for Extra Help, you can take advantage of special enrollment periods and switch your prescription drug coverage.
The bottom line
GoodRx Research finds that Medicare prescription drug plans have few coverage changes from 2023 to 2024.
However, your plan may no longer cover the medications you need. That’s why it’s important to review your prescription drug plan for 2024 and make any needed changes before the end of open enrollment on December 7, 2023. Remember that individual plans can make substantial changes to their drug coverage — which is why you should carefully consider your options.
Why trust our experts?
Methodology
All Medicare analyses used the Centers for Medicare & Medicaid Services (CMS) Prescription Drug Plan Formulary, Pharmacy Network, and Pricing Information files. These data include specific formulary structures, benefits, plans, and networks, and they are updated monthly and quarterly. We used October 2022 and October 2023 files in our analysis for data reflecting plan structures for 2023 and 2024, respectively. Our analysis does not include National PACE plans, employer-sponsored plans, and demonstration plans per Medicare’s documentation. In addition, information about plans’ enrollment was obtained from the enrollment files. We tracked plans from 2023 to 2024 using the CMS plan crosswalk files.
In this analysis, we defined a plan by unique contract-id and plan-id combinations. We excluded any plans that did not have any formulary information in the formulary files. We also excluded observations from the formulary file if the National Drug Code (NDC) did not map to the GoodRx internal drug database.
Enrollment: To determine enrollment, we matched plans in each year with their respective enrollment numbers.
Drug coverage: We calculated the drug coverage for each plan in each year by taking the number of drugs covered on that plan as a proportion of the drugs covered on the “best plan.” We deemed the “best plan” the total unique number of drugs covered across all Medicare Part D plans in each year for drugs in the GoodRx database. To summarize, we took the average of all plans’ drug coverage proportions in each year.
Added/dropped drugs: We observed the number of dropped and added drugs by first only keeping renewal plans, which are 2024 plans that link to 2023 plans and retain the same service areas in both years. For each plan in both years, we mapped the plan’s formulary to the GoodRx drug database and compared what drugs the plans had available in each year. For each plan, we counted all drugs covered in 2023 but not covered in 2024 as a proportion of drugs in 2023 (dropped drugs). Similarly, we counted all drugs covered in 2024 that were not covered in 2023 as a proportion of all drugs in 2024 (added drugs). To get an average across all plans, we took the enrollment-weighted average of the proportion of added and proportion of dropped drugs.
Drug restrictions: We determined the drug restrictions proportions by looking at plans’ formularies in each year, determining which drug had which restriction. Then, for each plan, we calculated the proportion of drugs that had each type of restriction and the proportion of drugs that had any restriction. To roll it up for each year, we took the average proportion of each restriction across all plans.
References
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