Medicare premiums expected to face sharp increase

Those who enroll in Medicare and buy the optional Part D drug coverage could see their premiums increase by as much as $50 a month when they look for next year’s plans.

What’s Part D?

Part D drug plans provide prescription drug coverage to millions of people enrolled in original Medicare, the federal program that started in 1965 and added a drug benefit decades later in 2006. These plans are only offered by private insurers, and those enrolled must pay additional premiums each month. Premium prices for next year are expected to be released around October 15, so it’s unclear whether insurers will raise premiums to the maximum.

Who’s affected?

The increases are most likely only impacting the stand-alone Part D plans, rather than drug coverage included in Medicare Advantage. More details surrounding the raise in price are expected to be released soon. As enrollees wait for more details, others are wondering what’s the driving force behind the increase.

Why prices are going up

Experts warn premiums are likely to rise for several reasons. First, more people are using higher-cost prescription drugs, which drives up spending. Second, Medicare has introduced a $2,000 limit on out-of-pocket drug costs for enrollees. This latest change differs from previous years when people paid more and had to cover 5% of drug costs even after reaching their limit. The cap helps consumers, but because insurers cover more costs, they may raise premiums for all members to make up the difference. Third, it seems a federal program that helped keep premium increases low has become less generous. This program, started under the Biden administration, provided more than $6 billion to insurers this year to help them adjust to new rules from the Inflation Reduction Act. Following this support, average monthly premiums for Part D plans dropped from $43 last year to $39 this year, even as some plans raised prices by up to $35.

What to expect

Many experts advise beneficiaries not to automatically stick with their current plans. “Everyone should shop plans in open enrollment,” said Stacie Dusetzina, a professor at Vanderbilt University Medical Center. With the new out-of-pocket cap and changes to the federal support program, beneficiaries are being warned to prepare for higher premiums and consider their options carefully during open enrollment.

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