Medicare Part D 2023 drug plan rules
The really big news for Part D prescription drug plans is contained in the Inflation Reduction Act. Here are major provisions of the new law, which was passed last August:
In 2023, the cost to consumers of insulin in Part D drug plans will be capped at $35 a month for covered insulin, with no deductibles.
Also, drug companies must pay stiff penalties in 2024 if they increase prices next year by more than the general rate of inflation.
In 2024, people with high drug costs will no longer have to pay 5 percent for their drugs when they are in what’s called the catastrophic phase of their Part D plan. Also at this time, Medicare low-income drug support payments will be expanded.
From the years 2024 to 2030, annual Part D premium increases can be no more than six percent.
In 2025, out-of-pocket drug costs will be capped at $2,000 a year.
And in 2026, for the first time, Medicare will have the right to negotiate drug prices with pharmaceutical companies.
In the current world of Part D plans, they will have annual maximum deductibles, set by Medicare, of up to $503 in 2023, an increase of $23 from 2022.
Payment obligations for specific drugs depend on which of several pricing tiers they are placed in by insurers. Plans generally have five tiers—preferred generics, other generics, preferred branded drugs, other branded drugs, and specialty medications (translation: the expensive ones). General program rules are set and overseen by Medicare; it maintains an online set of current rules.
Once a plan’s annual deductible has been met, insurance benefits kick in. Your payments will depend on the drugs you take, of course, plus charges for co-payments (a flat dollar amount) and coinsurance (a percentage of the drug’s price) that apply to whatever pricing tier your plan has selected for each of your drugs.
In the inexplicable wackiness that has attended Part D plans since their creation, your insurance simply stops once the total costs you and your plan have paid out exceed a defined spending threshold—$4,660 in 2023 (the limit rises each year with inflation).
This total is only for drugs covered by the plan and only if you have filed a claim for plan coverage. If you decide to buy a $4 subscription drug from a non-insured provider, your spending will not be included in your Part D calculations.
Once you and your plan have hit the $4,660 threshold, you will enter what’s called the “coverage gap” and, once there, you must pay the entire costs of your drugs by yourself. To soften the blow, Medicare has limited what drug companies may charge you to 25 percent of their normal charges for your drugs. Of course, that’s 25 percent of what often is a hefty price tag, and one that may have no relationship to underlying drug maker costs.
Relentless price increases for drugs—feel free to insert your epithet of choice here—have greatly increased potential out-of-pocket costs in Part D plans. You will not exit the coverage gap in 2022 until you alone (not you and your plan) have paid $7,400 for covered drugs.
Once you reach that figure, you enter what’s called the “catastrophic” phase of your Part D plan. Here, you may pay only a few dollars for each prescription and never more than 5 percent of the cost of your covered drugs. Five percent for an expensive drug can still be a big number. And there is no out-of-pocket limit on drug spending in a Part D plan.
For example, I take an expensive brand-name medication, still under patent protection, whose manufacturer charges me more than $5,000 a month. I hit the catastrophic phase of my Part D plan in February each year! Even so, I still must pay about $315 a month for this drug. By the way, my insurer pays 15 percent of that $5,000-plus amount, and Uncle Sam pays the other 80 percent! This means that taxpayers ultimately pay for my medications. This includes you, so thank you, readers!
