On this site, I consistently encourage Medicare enrollees to comparison shop each year, rather than allowing their existing Medicare coverage to automatically renew. And this year, I’ve been seeing significant changes in the stand-alone Medicare Part D prescription drug plan (PDP) market that should give consumers additional incentive to review their coverage options.
Nationwide, the enrollment-weighted average premium for PDPs is projected to increase by 21% for 2024. PDPs debuted in 2006 and this is the first time in the program’s history that the average annual premium increase percentage has been in the double digits.
Carriers will also market fewer PDPs for 2024, with some existing plans terminating at the end of 2023. People enrolled in these plans need to select replacement coverage for 2024. If your PDP is terminating, the insurer will have already notified you that you need to pick a new plan.
During the Medicare annual election period in the fall of 2023, I took a closer look at stand-alone Medicare Part D prescription drug plans (PDPs) in five regions: California, Colorado, Florida, New York, and Texas. My analysis looked at how premiums, deductibles, and plan availability were changing from 2023 to 2024, for stand-alone PDPs that are available to Medicare beneficiaries.
You can see my analysis of each market at the end of this article.
Read more about the data I used and my analysis methodology below.
EDITOR’s NOTE: A stand-alone prescription drug plan (PDP) is Medicare Part D prescription drug coverage that Medicare beneficiaries can purchase to supplement Original Medicare. This is different from a Medicare Advantage prescription drug plan (MAPD) – a Medicare Advantage plan that includes Part D benefits. As of mid-2023, there were 22.5 million people enrolled in PDPs nationwide.
2024 PDP premiums will be much higher in some areas
PDP premiums vary by plan and by region. The Centers for Medicare & Medicaid Services divides the country into 34 regions. Most regions are a single state (including all five of the states in my analysis), but some encompass multiple states. Within a region, a given PDP will have the same price for anyone who enrolls in it – with the caveat that some enrollees have additional amounts added to their premiums, either due to a late-enrollment penalty or a high-income surcharge.
Nationwide, the enrollment-weighted average PDP premium for 2024 is projected to be about $48/month for enrollees who keep their existing coverage. (This average may end up lower than $48/month due to plan changes made by consumers during Medicare open enrollment). For the last several years, the weighted average PDP premium has hovered around $40/month, so the overall increase for 2024 – about $8/month, or 21% – is fairly significant.
Across the five states I analyzed, the weighted average premium increase (based on current enrollment) ranged from $9/month to $16/month, so those five states do tend to have slightly larger-than-average premium increases for 2024, compared with the $8/month national average.
But there’s also a lot of variation in premiums – and premium changes – from one plan to another.
On the low end of the price spectrum, PDP premiums for 2024 start at under $1/month in the majority of the states, with $0-premium PDPs available in quite a few states. For comparison, the lowest-priced plans in most states in 2023 tended to be priced between $3.50 and $8/month.
On the high end of the price spectrum, all of the states I analyzed had some plans available for 2024 with premiums in excess of $100/month. And a KFF analysis of the 14 national PDPs found average premiums that vary from a low of $0.40/month to a high of $108/month. (National PDPs are available in all 34 regions, with premiums that can vary by region.)
The overall takeaway is that there may be more significant premium volatility (both increases and decreases) for 2024 than seen in previous years. And if consumers simply let their current coverage automatically renew for 2024, a significant number of people may see their premiums increase by larger amounts than they’ve been accustomed to in prior years.
PDP plan deductibles are changing
Deductibles for PDPs cannot exceed $545 in 2024, but they can be as low as $0.
The majority of the plans in each of the five states I analyzed have $545 deductibles for 2024 (and for 2023 had $505 deductibles – the maximum allowable amount). But there are some plans available in all five states for 2024 with deductibles below $545.
PDP plans are terminating in some states
For 2024, the total number of PDPs available for sale nationally and the average number of PDPs available to each Medicare beneficiary are the lowest they have ever been. The average Medicare beneficiary could choose from among 24 PDPs in 2023, and that has dropped to 21 for 2024.
In each of the states where I analyzed plans, two or more plans are terminating at the end of 2023: Five are terminating in Texas, four in New York, three in California, and two each in Colorado and Florida.
People who are enrolled in these plans in 2023 need to select a new plan for 2024. Unless a person is enrolled in Extra Help, there is no provision for the government to automatically reassign an enrollee to a new PDP when their existing plan terminates.
If you’re in a PDP plan that is terminating, you can pick a new plan during the annual election period, but the plan termination also makes you eligible for a special enrollment period that begins December 8 and continues through February 29. And your new plan will take effect on January 1 as long as you enroll by December 31. (If you enroll in January or February, your new plan will start the first of the month after you sign up.)
If you haven’t picked a new plan by early 2024, you will likely receive a letter like this from the Centers for Medicare & Medicaid Services, reminding you that you need to select a plan by the end of February.
Stand-alone PDP findings for five states
California:
- There are 23 PDPs available for 2024, down from 26 in 2023.
- Premium changes for 2024 range from a decrease of nearly $8/month to an increase of more than $72/month.
- The weighted average premium for 2024 is about 39% higher than it was in 2023, rising from $40/month to $56/month.
- Deductible changes for 2024 range from a decrease of $300 to an increase of $200. (For most plans, it’s an increase of $40.)
- 23,796 Californians are enrolled in plans that are terminating, and need to select a new plan for 2024.
Colorado:
- There are 21 PDPs available for 2024, down from 23 in 2023.
- Premium changes for 2024 range from a decrease of more than $5/month to an increase of more than $42/month.
- The weighted average premium for 2024 is about 28% higher than it was in 2023, rising from $37/month to $48/month.
- Deductible changes for 2024 range from a decrease of $225 to an increase of $200. (For most plans, it’s an increase of $40.)
- 1,838 Coloradans are enrolled in plans that are terminating, and need to select a new plan for 2024.
Florida:
- There are 21 PDPs available for 2024, down from 23 in 2023.
- Premium changes for 2024 range from a decrease of more than $11/month, to an increase of more than $31/month.
- The weighted average premium for 2024 is about 20% higher than it was in 2023, rising from $45/month to $54/month.
- Deductible changes for 2024 range from a decrease of $300 to an increase of $200. (For most plans, it’s an increase of $40.)
- 5,804 Floridians are enrolled in plans that are terminating, and need to select a new plan for 2024.
New York:
- There are 15 PDPs available for 2024, down from 19 in 2023.
- Premium changes for 2024 range from a decrease of more than $7/month, to an increase of more than $52/month.
- The weighted average premium for 2024 is about 29% higher than it was in 2023, rising from $48/month to $63/month.
- Deductible changes for 2024 range from a decrease of $300 to an increase of $200. (For most plans, it’s an increase of $40.)
- 13,220 New Yorkers are enrolled in plans that are terminating, and need to select a new plan for 2024.
Texas:
- There are 22 PDPs available for 2024, down from 27 in 2023.
- Premium changes for 2024 range from a decrease of nearly $11/month, to an increase of nearly $30/month.
- The weighted average premium for 2024 is about 25% higher than it was in 2023, rising from $37/month to $46/month.
- Deductible changes for 2024 range from a decrease of $300 to an increase of $200. (For most plans, it’s an increase of $40.)
- 8,800 Texans are enrolled in plans that are terminating, and need to select a new plan for 2024.
About this analysis
- My five-state analysis was based on data from the Medicare Advantage/Part D Contract and Enrollment Data, a central repository for publicly available data on contracts and plans, enrollment and other Medicare-related data.
- The analysis involved comparing each plan’s 2023 premium and deductible with its corresponding premium and deductible for 2024.
- For overall premiums and premium changes, I used enrollment-weighted averages, meaning that each plan’s premium was considered in conjunction with how many enrollees the plan has. So if a plan has a very large premium change but a very small enrollment, its impact on the overall weighted average will be much less significant than it would be if the plan had more enrollees.
- For the enrollment-weighted averages, the October 2023 enrollment numbers were used for each plan. Enrollment numbers for 2024 plans won’t be available until after plan selections are finalized during the annual election period. So for this analysis, the enrollment-weighted averages are calculated based on the assumption that each enrollee keeps their 2023 coverage and renews it for 2024. Since consumers can change their plans during the annual election period, the actual enrollment-weighted average premiums will be different, and are expected to be lower than they would be if all enrollees simply renewed their 2023 coverage for 2024.
- Premiums are rounded to the nearest dollar. I did not count group PDPs that are available to employees and retirees of certain businesses, organizations, or unions.
Louise Norris is an individual health insurance broker who has been writing about individual health insurance and Medicare since 2006. She has written dozens of opinions and educational pieces about Medicare for medicareresources.org. Her analysis is regularly cited by media who cover health reform and by other health insurance experts. The views expressed in this article are those of the author and may not reflect those of medicareresources.org, which is owned by Healthinsurance.org, LLC.
Footnotes
Tags: PDP, prescription drug coverage
