Medicare Part D Deductible in 2024: Costs at a Glance
Part D is prescription drug coverage. In 2024, the highest deductible that a stand-alone prescription drug plan (PDP) can charge is $545.
The deductible is the amount that you will pay each year before your Medicare plan pays its portion.
Some drug plans charge a $0 yearly deductible, but this amount can vary depending on the provider, your location, and more.
What other costs can you expect with a Part D plan?
Your deductible usually isn’t your only out-of-pocket cost. When you enroll in a Part D plan, you’re also responsible for paying premiums, copayments, and coinsurance amounts.
Premiums
The premium is the monthly amount you will pay to enroll in your prescription drug plan. Some drug plans charge a $0 monthly premium.
The monthly premium for any plan can vary depending on several factors, including your income.
If your income exceeds a certain threshold, you may have to pay an income-related monthly adjustment amount (IRMAA). The adjusted amount for 2024 is based on your 2022 tax return.
If you file an individual tax return and make:
$103,001 to $129,000, you’ll pay an additional $12.90
$129,001 to $161,000, you’ll pay an additional $33.30
$161,001 to $193,000, you’ll pay an additional $53.80
$193,001 to $500,000, you’ll pay an additional $74.20
$500,001 or more, you’ll pay an additional $81
If you file a joint tax return and make:
$206,001 to $258,000, you’ll pay an additional $12.90
$258,001 to $322,000, you’ll pay an additional $33.30
$322,001 to $386,000, you’ll pay an additional $53.80
$386,001 to $750,000, you’ll pay an additional $74.20
$750,001 or more, you’ll pay an additional $81
If you file a married and separate tax return and make:
$103,001 to $397,000, you’ll pay an additional $74.20
$397,001 or more, you’ll pay an additional $81
Copays and coinsurance
The copayment and coinsurance amounts are the costs you pay after your deductible has been met. Depending on the plan you choose, you will either owe copayments or coinsurance fees.
A copayment is a set amount that you pay for each drug, while coinsurance is the percentage of the drug cost that you are responsible for paying.
Copayment and coinsurance amounts vary depending on the drug’s “tier.” The price of each drug in the plan’s formulary increases as the tiers progress.
For example, your prescription drug plan may have the following tier system:
Tier 1 ($): generics
Tier 2 ($$): preferred brand names
Tier 3 ($$$): nonpreferred brand names
Tier 4 ($$$$): specialty
What is the Part D coverage gap (“donut hole”)?
Most Part D plans have a coverage gap, also called a “donut hole.” This is a temporary limit on how much your plan will pay for your prescription drugs.
The coverage gap begins after you and your plan spend a certain amount — $5,030 in 2024 — on prescriptions. This amount may change yearly, and it only applies to enrollees who do not receive Extra Help.
So, what happens when you’re in the coverage gap of your Part D plan? That depends on the following:
Brand-name drugs
Once you hit the coverage gap, you pay up to 25% of the cost of any brand-name drugs covered by your plan. The manufacturer pays 70%, and your plan pays the remaining 5%.
Example: If your brand-name drug costs $500, you’ll pay $125 (plus a dispensing fee). The drug manufacturer and your Part D plan will pay the remaining $375.
Generic drugs
Once you hit the coverage gap, you pay 25% of the cost of the generic drugs covered by your plan. Your plan pays the remaining 75%.
Example: If your generic drug costs $100, you’ll pay $25 (plus a dispensing fee). Your Part D plan will pay the remaining $75.
Catastrophic coverage
To make it out of the coverage gap, you must pay a total of $8,000 in out-of-pocket costs. These costs can include:
your Part D deductible
your drug copayments and coinsurance
your drug costs in the gap
the amount the drug manufacturer pays during the donut hole period
Once you’ve paid this out-of-pocket amount, your catastrophic coverage kicks in. You won’t have to pay anything for your covered prescriptions for the rest of the calendar year.
How can I get help with my prescription drug costs?
Medicare beneficiaries who have trouble meeting prescription drug costs may benefit from the Extra Help program.
Extra Help is a Part D program that assists in paying premiums, deductibles, copayments, and coinsurance costs associated with your prescription drug plan.
To qualify for Extra Help, your resources must not exceed a set total amount. Your resources include cash on hand or in the bank, savings, and investments. If you qualify for Extra Help, you can apply through your prescription drug plan with supporting documents, such as an official Medicare notice.
Even if you don’t qualify for Extra Help, you may still qualify for Medicaid. Medicaid provides healthcare coverage for people with limited income who are under age 65.
However, some Medicare beneficiaries are also eligible for Medicaid coverage, depending on income level. To determine eligibility for Medicaid, visit your local social services office.
Other cost-savings tips
Shop at different pharmacies: Pharmacies may sell drugs for different amounts, so you can call around to ask how much a specific drug might cost.
Use manufacturer coupons: Manufacturer websites, drug savings websites, and pharmacies may offer coupons to help lower your out-of-pocket drug cost.
Ask your prescribing physician about generic versions: Generic medications often cost less than the name-brand versions, even if the formula is almost identical.
The bottom line
Part D helps pay for the prescription drugs. It’s optional and offered to everyone with Medicare.
When shopping around for prescription drug coverage, consider which of your medications are covered and how much they will cost.
To compare Part D or Medicare Advantage with prescription drug (MA-PD) plans near you, visit Medicare’s Find a Plan tool.
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