The Medicare Half D program offers an outpatient prescription drug profit to greater than 50 million older adults and folks with long-term disabilities in Medicare who enroll in personal plans, together with stand-alone prescription drug plans (PDPs) to complement conventional Medicare and Medicare Benefit prescription drug plans (MA-PDs) that embody drug protection and different Medicare-covered advantages. This temporary analyzes Medicare Half D enrollment and prices in 2024 and tendencies over time, based mostly on information from the Facilities for Medicare & Medicaid Companies (CMS).
This evaluation highlights the persevering with development of Medicare Benefit drug plans as a supply of Half D drug protection, with enrollment general concentrated in a handful of enormous plan sponsors. Common premiums for drug protection are a lot decrease in MA-PDs than in stand-alone PDPs, primarily as a result of most MA-PD enrollees are in zero-premium plans, which is in flip associated to the power of Medicare Benefit plan sponsors to make use of rebates to purchase down the Half D premium. Median cost-sharing quantities for medicine lined on some formulary tiers are the identical or related in PDPs and MA-PDs, however PDP enrollees are extra seemingly than MA-PD enrollees to face coinsurance for most popular manufacturers and non-preferred medicine, whereas MA-PD enrollees face increased median coinsurance for specialty tier medicine.
These tendencies in Medicare Half D drug protection and the prices that folks with Medicare pay for drug plans and for his or her prescriptions are price watching as provisions of the Inflation Discount Act to enhance the Half D profit roll out, together with a $35 insulin copay cap and a brand new out-of-pocket drug spending cap (set at $2,000 in 2025). Such adjustments will assist to decrease out-of-pocket prices for Half D enrollees however may additionally make it more durable for some Half D plan sponsors to supply low-priced protection, notably sponsors of stand-alone drug plans. This might imply fewer inexpensive PDP plan selections for Medicare beneficiaries in conventional Medicare and additional tilt Medicare enrollment in direction of Medicare Benefit, which has broader implications for Medicare program spending.
Medicare Benefit drug plans proceed to draw extra enrollees in comparison with stand-alone drug plans
Properly over half (57%) of Half D enrollees in 2024 are in Medicare Benefit drug plans, persevering with a development of accelerating enrollment in Medicare Benefit plans and declining or comparatively static enrollment in stand-alone prescription drug plans (Determine 1).
Low-Revenue Subsidy enrollment is tilted much more in direction of Medicare Benefit drug plans than general Half D enrollment
Two-thirds of LIS enrollees – 9 million out of 13.7 million – are enrolled in Medicare Benefit drug plans in 2024 (Determine 2). Almost 6 million LIS enrollees are in Medicare Benefit Particular Wants Plans (SNPs), almost all of which (95%) are in plans designed particularly for dual-eligible people (Desk 1). On common, LIS enrollees can select from considerably extra MA-PDs than PDPs of their space which have drug premiums under the regional low-income subsidy premium benchmark quantity – 15 MA-PDs versus 3 PDPs – that means they’ll enroll in these plans for zero premium.
The highest 5 companies cowl greater than three-fourths of Half D enrollees in 2024
Half D enrollment is concentrated in a handful of prime plan sponsors, with 5 companies protecting 77% of all Half D enrollees in 2024, or 40.1 million out of 53.1 million enrollees (Determine 3). Almost 1 in 4 enrollees (12.4 million) are in Half D plans sponsored by UnitedHealth, together with each stand-alone PDPs and MA-PDs. CVS, Humana, and Centene every have round 15% of the Half D market, with enrollees in each sorts of Half D plans.
Enrollment amongst beneficiaries with out low-income subsidies declined in 11 of the 14 nationwide PDPs in 2024
Many of the nationwide PDPs accessible in 2024 misplaced enrollment amongst beneficiaries with out low-income subsidies (Determine 4). Solely Wellcare Worth Script noticed substantial enrollment good points amongst enrollees with out LIS – from 2.6 million to three.7 million – seemingly as a result of having a median month-to-month premium of lower than $1, considerably decrease than all different nationwide PDPs.
The typical month-to-month premium for Half D protection is sort of 5 occasions bigger for PDPs than for MA-PDs
On common, PDP enrollees pay considerably extra every month for his or her Half D drug protection than enrollees in Medicare Benefit drug plans. The typical month-to-month PDP premium is $43, almost 5 occasions increased than the $9 common month-to-month premium for drug protection in MA-PDs (weighted by enrollment) (Determine 5; Desk 2). (The whole common premium for MA-PDs, together with all Medicare-covered advantages, is $14 per 30 days in 2024.)
The distinction between common month-to-month premiums for drug protection supplied by PDPs and MA-PDs has been rising bigger, with the PDP common rising and the MA-PD common falling. The typical premium for drug protection in MA-PDs is closely weighted by zero-premium plans as a result of MA-PD sponsors can use rebate {dollars} from Medicare funds to decrease or get rid of their Half D premiums. Rebates to Medicare Benefit plans have greater than doubled since 2018 and now exceed $2,000 per yr per beneficiary.
The $43 weighted common PDP premium, based mostly on present enrollment after the top of the open enrollment season for 2024, is decrease than the estimated $48 month-to-month PDP premium for 2024, which was based mostly on enrollment in June 2023 and didn’t account for plan switching by present enrollees or plan selections by new enrollees through the open enrollment interval. Taking into consideration plan switching and new enrollment into decrease premium plans resulted within the decrease enrollment-weighted common month-to-month premium for 2024. Quite than an estimated enhance of 21% over the 2023 common premium (from $40 to $48), the precise enhance is 5% (from $40 to $43).
Most Medicare Benefit drug plan enrollees pay no premium for his or her drug protection, whereas greater than half of PDP enrollees pay $30 per 30 days or extra
Three-fourths of MA-PD enrollees with out low-income subsidies pay no month-to-month premium for Half D protection in 2024, whereas greater than half of PDP enrollees with out LIS (56%) pay $30 or extra – together with 1 in 7 PDP enrollees with out the LIS who pay no less than $100 per 30 days for his or her Half D plan (Determine 6). For 2024, all Medicare beneficiaries had entry to zero-premium MA-PD plans – 27 on common – whereas just one PDP was accessible for zero premium for non-LIS enrollees in solely 14 out of 34 PDP areas.
PDP enrollees are extra seemingly than MA-PD enrollees to face coinsurance for most popular manufacturers and non-preferred medicine, whereas MA-PD enrollees face increased median coinsurance for specialty tier medicine
As in earlier years, Half D enrollees face low copayments for generic medicine and better cost-sharing quantities for most popular manufacturers, non-preferred medicine, and specialty medicine, no matter whether or not they’re in PDPs or MA-PDs (Determine 7). Median cost-sharing quantities for medicine lined on some formulary tiers are the identical or related in PDPs and MA-PDs, however PDP enrollees are more likely than MA-PD enrollees to pay coinsurance, or a proportion of a drug’s worth, for most popular manufacturers and non-preferred medicine. Whereas almost all MA-PD enrollees face a median copay of $47 for most popular manufacturers, most PDP enrollees face median coinsurance of twenty-two%; for non-preferred medicine, MA-PD enrollees face a median copay of $100 whereas PDP enrollees face coinsurance of 47%.
Median coinsurance for specialty tier medicine (those who value over $950 in 2024) is increased for MA-PD enrollees than PDP enrollees – 33% vs. 25%. Plans that waive some or all the customary deductible – which is the case for many MA-PDs – are permitted to set the specialty tier coinsurance charge above 25%.
These cost-sharing quantities apply when beneficiaries fill prescriptions within the preliminary protection section of the Half D profit. As of 2024, by means of a provision within the Inflation Discount Act, beneficiaries now not face value sharing within the catastrophic protection section of the Half D profit, which interprets to a cap of about $3,300 out of pocket for brand-name medicine. In 2025, Medicare beneficiaries can pay not more than $2,000 out of pocket for pharmaceuticals lined underneath Half D.
Juliette Cubanski is with KFF. Anthony Damico is an impartial advisor.
