Medicare Open Enrollment ends December 7. If you want to keep your premiums as low as possible, you … [+]
In several press releases over the last few months, the Centers for Medicare & Medicaid Services (CMS) touted improvements in Part D prescription drug plans. CMS projected that the average total monthly premium in 2024 would decrease 1.8% and premiums stabilization measures would limit the growth of the base beneficiary premium to 6%. These announcements were followed by a spate of news releases announcing the 1.8% decrease in Part D premiums, along with reports that the average Part D premiums were dropping from $56.49 to $55.40.
But then, Part D enrollees started opening their annual Notice of Changes and were surprised to see their plan premiums were increasing, some by considerably more than 6%. For example, a 2023 premium of $4.50 will be $18.60 next year and another will double from $28.20 to $57.20. So, if CMS said premiums would be stable and the average premium was dropping 1.8%, what gives?
Since the 2024 update of the Medicare Plan Finder, I have been digging into many of the Inflation Reduction Act changes to determine their impact. Based on those preliminary findings, I decided to review premiums, too.
I checked on 65 plans in three ZIP codes (one each in Fort Lauderdale, Los Angeles and Milwaukee). Here’s a quick summary.
- Six plans, two in each city, will lower monthly premiums on average 16.5%.
- Of note, Fort Lauderdale and Milwaukee each will have one $0 premium drug plan with a $0.50 premium plan in Los Angeles, a savings of almost $10 on average.
- That means 59 plans are increasing their monthly premiums, anywhere from 2%-84%.
- Los Angeles premiums are going up, on average, 27%. Contributing to this is a family of three plans. The premiums today range from $4.50-$69.10 and, come January 1, they will range from $18.60-$116.
- Fort Lauderdale premiums are also increasing, on average, 12% and, in Milwaukee, 17%.
This was not a scientific study. The purpose was to get an idea of what was happening with premiums. This review focused on only three ZIP codes but, since that time, I have reviewed plans in many parts of the country. The findings are the same: Premiums are rising.
Back to that headline, “Average Part D premiums will decrease 1.8%.” How can CMS report that? It all comes down to semantics. A fact sheet discusses CMS’ approach and mentions four different premiums.
- Base beneficiary premium: the starting point for calculating a plan-specific basic Part D premium and the one that will decrease 1.8% next year. However, other factors have an impact on determining monthly premiums.
- Average basic Part D premium: a complicated formula used to calculate a plan-specific monthly premium for the basic benefits.
- Average supplemental Part D premium: the premium for a richer benefit provided by some plans.
- Average total Part D premium: the most accurate projection of the likely average of premiums, determined by the average basic premium plus the average supplemental premium, before subsidies and rebates are considered.
Bottom line on all this: It is the average total Part D premium that’s decreasing 1.8% next year from $56.49 to $55.50 next year. All these other considerations and calculations come into play when establishing premiums for individual plans and that is how the 1.8% decrease disappears.
Take a lesson from my friend
Debra is a prime example of the 70% who do not pay attention during Open Enrollment. She takes one generic medication. Five years ago, she started with the lowest premium available, less than $20 at the time, and has not even looked for anything else. She just lived with premium increases every year, believing there was nothing she could do about that. Next year, her premium will be almost $60 and that got her attention. She checked other plans and will enroll in one with a $6 premium.
Open Enrollment ends December 7. This is your time to check what’s happening. Your plan premium is likely going up but, if you look, you might find something better.
