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2024 Medicare Part D Outlook

Below are the finalized 2024 defined standard Medicare Part D prescription drug plan parameters as released by the Centers for Medicare and Medicaid Services (CMS), April 2023.



2024 defined standard Medicare Part D prescription drug plan coverage parameters

Each year, the Centers for Medicare and Medicaid Services (CMS) releases the Medicare Part D drug plan benefit parameters for the "Defined Standard Benefit" plan and the Low-Income Subsidy (LIS) benefits. Medicare Part D plan providers then can use these standardized benefit parameters to determine drug plan coverage for the next plan year.

The CMS "Part D Benefit Parameters for Defined Standard Benefit" outline the minimum allowable Medicare Part D plan coverage. However, CMS allows Medicare Part D plans to offer a variation on the defined standard benefits (for example, a Medicare Part D plan can offer a $0 Initial Deductible instead of the standard deductible).

Accordingly, although an actual Part D drug plan's coverage can vary from the CMS standardized benefits, you can use these parameters as a preview of how your Medicare Part D plan coverage may change in January, 2024. Actual Medicare drug plan options and benefit details will be available for your review beginning October 1, 2023.

Here are a few highlights of the defined standard Medicare Part D plan changes from 2023 to 2024. And the chart below shows the changes in defined standard Medicare Part D design for plan years 2020, 2021, 2022, 2023 and 2024.
  • Initial Deductible:
    The Initial Deductible is an amount you will pay yourself before your Medicare drug plan coverage begins to pay a share of the retail drug cost. Insulin covered by your Medicare drug plan is always excluded from the deductible and some drug plans will exclude certain low-costing drugs tiers from the deductible. The standard Initial Deductible will increase from $505 in 2023 to $545 in 2024.

  • Initial Coverage Limit (ICL):
    The Initial Coverage Limit represents the border between your Initial Coverage Phase and the Coverage Gap - and is a measure of the negotiated retail value of your formulary drug purchases (not what you pay for a drug, but the plan's retail drug cost). The ICL will increase from $4,660 in 2023 to $5,030 in 2024. In 2025, the ICL will be eliminated and replaced by your annual out-of-pocket spending limit.

  • Coverage Gap (Donut Hole):
    The Coverage Gap begins once you exceed your Medicare Part D plan’s Initial Coverage Limit ($5,030 in 2024) and ends when your formulary drug spending exceeds your annual out-of-pocket spending limit (TrOOP) which is $8,000 out-of-pocket in 2024. See: But isn’t the Coverage Gap (Donut Hole) closed? Note: In 2025, the Coverage Gap or Donut Hole will be eliminated and a person who exceeds the 2025 annual out-of-pocket spending limit will not pay anything for formulary drugs through the remainder of the year.

  • 2024 Donut Hole Discount:
    Part D enrollees will receive a 75% Donut Hole discount on the total cost of their brand-name drugs purchased while in the Donut Hole. The discount includes, a 70% discount paid by the brand-name drug manufacturer and a 5% discount paid by your Medicare Part D plan. The 70% paid by the drug manufacturer combined with the 25% you pay, count toward your TrOOP or Donut Hole exit point.
    For example: If you reach the Donut Hole and purchase a brand-name medication with a retail cost of $100, you will pay $25 for the medication, and receive $95 credit toward meeting your 2024 total out-of-pocket spending limit.

    Medicare Part D beneficiaries who reach the Donut Hole will also pay a maximum of 25% copay on generic drugs purchased while in the Coverage Gap (receiving a 75% discount).
    For example: If you reach the 2024 Donut Hole, and your generic medication has a retail cost of $100, you will pay $25. The $25 that you spend will count toward your TrOOP or Donut Hole exit point.

  • Out-of-Pocket Threshold (or TrOOP):
    will increase from $7,400 in 2023 to $8,000 in 2024.

  • The Catastrophic Coverage phase:
    The Catastrophic Coverage phase will remain the last phase of Medicare Part D coverage, however, starting January 1st, 2024, Medicare beneficiaries will no longer pay any cost for formulary drugs purchased in the Catastrophic Coverage stage (after exceeding the annual TrOOP threshold).






Chart comparing 2020 through 2024 defined standard Medicare Part D prescription drug plan parameters

Click here to see a comparison of plan parameters for all years since 2006

Medicare Part D Benefit Parameters for Defined Standard Benefit
2020 through 2024 Comparison

Part D Standard Benefit Design Parameters 2024* 2023 2022 2021 2020
Deductible - After the Deductible is met, Beneficiary pays 25% of covered costs up to total prescription costs meeting the Initial Coverage Limit. $545 $505 $480 $445 $435
Initial Coverage Limit - The Coverage Gap (Donut Hole) begins when retail drug cost exceed this value. $5,030 $4,660 $4,430 $4,130 $4,020
Out-of-Pocket Threshold (OOP threshold) - The Coverage Gap ends when Total Out-of-Pocket (TrOOP) costs exceed this value. $8,000 $7,400 $7,050 $6,550 $6,350
Total covered Part D drug out-of-pocket spending to exit the Coverage Gap - (LIS). See note (1) below. $11,477.39 $10,516.25 $10,012.50 $9,313.75 $9,038.75
Total estimated Part D drug out-of-pocket spending to exit the Coverage Gap - (non-LIS). See note (2) below. $12,447.11

plus a 75% discount on all formulary drugs
$11,206.28

plus a 75% discount on all formulary drugs
$10,690.20

plus a 75% discount on all formulary drugs
$10,048.39

plus a 75% discount on all formulary drugs
$9,719.38
plus a 75% discount on all formulary drugs
Catastrophic Coverage Benefit: From 2006 through 2023 the Catastrophic Coverage cost-sharing was the greater of 5% or the values shown below.
Beginning in 2024, beneficiary cost-sharing in the Catastrophic Coverage stage of the Medicare Part D coverage will be eliminated - and shown below as not applicable.
Generic/Preferred Multi-Source Drug Not Applicable $4.15 $3.95 $3.70 $3.60
Other Drugs Not Applicable $10.35 $9.85 $9.20 $8.95

Parameters for Medicare Beneficiaries qualifying for the Low-Income Subsidy (LIS) (Extra Help) program

Part D Full Benefit Dual Eligible (FBDE) Beneficiaries Parameters See note (3):
2024 2023 2022 2021 2020
• Deductible $0.00$0.00$0.00$0.00 $0.00
• Copayments for Institutionalized Beneficiaries [category code 3] $0.00$0.00$0.00$0.00 $0.00
• Copayments for Beneficiaries Receiving Home and Community-Based Services [category code 3] see note (4) $0.00$0.00$0.00$0.00 $0.00
• Maximum Copayments for FBDE Non-Institutionalized Beneficiaries
   Up to or at 100% FPL [category code 2]:
• Up to Out-of-Pocket Threshold
- Generic / Preferred Multi-Source Drug $1.55$1.45$1.35$1.30 $1.30
- Other Drugs $4.60$4.30$4.00$4.00 $3.90
• Above Out-of-Pocket Threshold Not Applicable $0.00$0.00$0.00$0.00
• Maximum Copayments for FBDE Non-Institutionalized Beneficiaries
   Between 100% and 150% FPL [category code 1]:
• Up to Out-of-Pocket Threshold
- Generic / Preferred Multi-Source Drug $4.50$4.15$3.95$3.70 $3.60
- Other Drugs $11.20$10.35$9.85$9.20 $8.95
• Above Out-of-Pocket Threshold Not Applicable $0.00$0.00$0.00$0.00
Part D Full-Subsidy - Non-FBDE Beneficiary Parameters:
2024 2023 2022 2021 2020
Applied or eligible for QMB/SLMB/QI or SSI, income at or below 150% FPL and resources ≤ $17,220 (individuals in 2024) or ≤ $34,360 (couples in 2024) [category code 1] see note (5).
See resources for prior years. Prior to 2024, the full-subsidy income limit was ≤ 135% FPL.
• Deductible $0.00$0.00$0.00$0.00 $0.00
• Maximum Copayments up to Out-of-Pocket Threshold
- Generic / Preferred Multi-Source Drug $4.50$4.15$3.95$3.70 $3.60
- Other Drugs $11.20$10.35$9.85$9.20 $8.95
• Maximum Copay above Out-of-Pocket Threshold Not Applicable $0.00$0.00$0.00$0.00
Partial-Subsidy Parameters (Partial-LIS was eliminated January 1, 2024, when Full-LIS was expanded to include former partial-LIS):
2024 2023 2022 2021 2020
Prior to 2024, Partial-LIS included beneficiaries who have applied for benefits and have income below 150% FPL and limited resources [category code 4] (5). See resources for prior years.
• Deductible Not Applicable $104.00$99.00$92.00$89.00
• Coinsurance up to Out-of-Pocket Threshold Not Applicable 15%15%15%15%
• Maximum Copayments above Out-of-Pocket Threshold
- Generic / Preferred Multi-Source Drug Not Applicable $4.15$3.95$3.70$3.60
- Other Drugs Not Applicable $10.35$9.85$9.20$8.95
*These parameters reflect additional plan coverage required for covered insulin products under section 1860D-2(b)(9) of the Act, as added by section 11406 of the IRA, and ACIP-recommended vaccines under section 1860D-2(b)(8) of the Act, as added by section 11401 of the IRA.
(1) For a beneficiary who is not considered an "applicable beneficiary" (i.e. LIS-eligible), as defined at section 1860D-14A(g)(1) of the Social Security Act, and is not eligible for the Medicare Coverage Gap Discount Program, this is the amount of total drug spending required to reach the OOP threshold in the defined standard benefit. Medicare notes, that in 2024, "There is a 7 percent adjustment for the estimated total covered Part D spending at catastrophic for non-applicable beneficiaries, because beneficiaries take a longer time to reach the catastrophic phase threshold when they pay less cost sharing for insulins and vaccines (no more than $35 copay per month's supply of insulin and $0 copay on ACIP-recommended adult vaccines) under the 2024 defined standard benefit."
(2) For a beneficiary who is an "applicable beneficiary" (non-LIS), as defined at section 1860D-14A(g)(1) of the Act, and is eligible for the Medicare Coverage Gap Discount Program, this is the estimated average amount of total drug spending required to reach the OOP threshold in the defined standard benefit. Medicare notes, that in 2024, "there is a 9 percent adjustment for the estimated total covered Part D spending at catastrophic for applicable beneficiaries, because beneficiaries take a longer time to reach the catastrophic phase threshold when they pay less cost sharing for insulins and vaccines (no more than $35 copay per month's supply of insulin and $0 copay on ACIP-recommended adult vaccines) under the 2024 defined standard benefit".
(3) The LIS eligibility categories and corresponding cost-sharing benefits are sometimes referred to using category codes as follows:
  • Category Code 1 – Non-institutionalized FBDE beneficiaries with incomes between 100% and 150% of FPL (beginning in CY 2024) and full-subsidy-non-FBDE beneficiaries. Note that LIS beneficiaries that would previously fall into category code 4 fall into category code 1 beginning in CY 2024 – see note for category code 4 below.
  • Category Code 2 – Non-institutionalized FBDE beneficiaries with incomes up to 100% of the FPL.
  • Category Code 3 – FBDE beneficiaries who are institutionalized or would be institutionalized if they were not receiving home and community-based services
  • Category Code 4 – Partial subsidy beneficiaries through CY 2023. As described in Section C2 above, beneficiaries with incomes between 135 percent and 150 percent of the FPL, who meet the resource standards under either of sections 1860D-14(a)(3)(D) or (E) of the Act, and who would have been eligible for the partial LIS benefit absent the enactment of the IRA, will be eligible for the full LIS benefit. These category 4 beneficiaries will now have the same Part D benefit parameters as beneficiaries in category 1 of the LIS. Category 2 and 3 of the LIS remain unchanged.
(4) Per section 1860D-14(a)(1)(D)(i) of the Act, full-benefit dually eligible beneficiaries who are receiving home and community-based services qualify for zero cost sharing if the individuals (or couple) would have been institutionalized otherwise.
(5) The resource limits for CY 2024 will be provided via the annual HPMS memo entitled "2024 Resource and Cost-Sharing Limits for Low-Income Subsidy (LIS)" that is expected to be released during the usual timeframe after the September 2023 CPI has been made available by the Bureau of Labor Statistics. Additionally, these amounts include $1,500 per person for burial expenses. Also, beneficiaries that would have been eligible for the partial LIS benefit had the IRA not been enacted will be eligible for the full LIS benefit if they meet either of the resource standard described at sections 1860D-14(a)(3)(D) or (E) of the Act.

Click here to see a comparison of plan parameters for all years since 2006





Medicare Part D standard benefit trends 2006 to 2024

The graph below shows the finalized Medicare Part D defined standard benefit parameters.

2024 Finalized Medicare Part D defined standard benefit parameters -- annual changes since 2006

Click here to see a comparison of plan parameters for all years since 2006






2024 Medicare Part D program changes beyond the standard parameters

The 2022 Inflation Reduction Act (IRA) identified many improvements to the standard Medicare Part D drug benefit to be rolled out between 2023 and 2029. The following are highlights of the Part D related IRA updates that will be in place for the 2024 plan year:
  • No cost-sharing for Medicare Part D formulary drugs purchased after reaching the 2024 TrOOP threshold of $8,000.
    Beneficiary cost-sharing in the Catastrophic Coverage phase will be eliminated with the introduction of a prescription drug maximum out-of-pocket limit (RxMOOP) capping beneficiary costs for formulary drugs at the 2024 total out-of-pocket cost threshold (TrOOP) threshold ($8,000 - equating to Part D formulary drugs with an estimated retail value of $12,447).

  • Full-LIS status expanded to include previous Partial-LIS status.
    Benefits for the low-income subsidy (LIS) program will be extended with full-LIS benefit qualifications increased to 150% of the Federal Poverty Level (FPL) and consequently, eliminating the current partial-LIS status (135% to 150% of FPL).  With full-LIS or Extra Help benefits, Medicare Part D beneficiaries can have a $0 monthly premium, no deductible, and very-low drug copays.

  • Eliminate large Part D premium increases.
    In 2024, the CMS Base Beneficiary Premium (BBP) is $34.70 which was held at to the statutory-maximum 6% increase over the 2023 BBP of $32.74. The IRA stipulates that the annual Part D "Base" plan premium will not increase more than 6% per year. You can read more in our article, "CMS projects a 1.8% decrease in 2024 average total Medicare prescription drug plan premium."

  • Maximum $35 copay for Insulin.
    Insulin products covered by your 2024 Medicare drug plan will remain at a $35 (or less) copay for a 30-day supply throughout all phases of your Part D coverage.

  • $0 copay for approved vaccines.
    Adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) will continue to be available at no cost throughout all phases of your Part D coverage.

Read more in our article:
How 2024 Medicare Part D drug coverage is changing and will help save on prescription costs.





Federal Poverty Level Guidelines: Extra Help / Low-Income Subsidy (LIS) Qualifications

The Extra Help / Low-Income Subsidy (LIS) qualifications using the 2024 Federal Poverty Level (FPL) guidelines are shown below. The 2024 FPL guidelines will also be used for determining LIS qualifications at the beginning of the 2025 plan year.

Beginning in 2024, full-LIS will be increased to 150% of FPL and partial-LIS will be eliminated.

If your income is at or below 150% of the FPL ($22,590 if you are single or $30,660 for married couples), you could qualify for the Low-Income Subsidy (resource limits also apply - see chart above). Remember, the LIS subsidy helps to pay both your monthly plan premium and drug costs.

Learn more in our article, 2024 Federal Poverty Level Guidelines (FPL): 2024/2025 LIS Qualifications and Benefits.

Full Low-Income Subsidy Income Requirements (150% of FPL)
using the 2024 Federal Poverty Level Guidelines (FPL)
Persons
in Family
48 Contiguous
States & D.C.
AlaskaHawaii
1$22,590$28,215$25,965
2$30,660$38,310$35,250
3$38,730$48,405$44,535
4$46,800$58,500$53,820
5$54,870$68,595$63,105
6$62,940$78,690$72,390


Click here for additional family member figures and for partial-LIS figures.   Learn more about the Extra-Help program.





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2025 Medicare Part D Plan Reminder Service

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  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
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