The Centers for Medicare and Medicaid Services (CMS) announced
in their July 31, 2023 press release entitled, "CMS Releases 2024 Projected Medicare Part D Premium and Bid Information", that the "average total monthly premium" for 2024 Medicare Part D coverage is projected to decrease 1.8% to $55.50 from the 2023 average total monthly premium of $56.49.
As a departure from past years, CMS based the 2024 Part D premium prediction on the "Average Total" Part D premium taking into consideration both "Basic" Part D premiums and additional Part D "Supplemental" premiums weighted by June 2023 Part D plan enrollment. Since 2006, CMS has been using the estimated "basic" Medicare Part D premium to predict upcoming premium changes.
In the Fact Sheet accompanying the government's press release, CMS reasoned that the "average total" Part D premium was "the most accurate current projection of what people will pay in 2024 for Part D premiums" since approximately 75% of Medicare beneficiaries are enrolled in an Enhanced Alternative Medicare Part D plan providing benefits beyond "basic" or standard Part D coverage (such as plans with a $0 deductible and formulary drug cost-sharing below the standard 25% of retail cost). And although the 2024 average "basic" Part D premium is projected to increase 7.5%, the reduction in the average 2024 "supplemental" premium offsets the estimated "basic" premium increase.
CMS also adds some clarification to different terminology when discussing the estimation of Medicare Part D plan premiums ultimately paid by Medicare Part D plan members:
- 2024 National Average Monthly Bid Amount: 85% increase
As noted by CMS, "[t]he national average monthly bid amount is [an
enrollee] weighted average of the standardized bid amounts for each
stand-alone prescription drug plan (PDP) and MA plan with prescription
drug coverage (MA-PD)". The calculation excludes certain Medicare plans such as MSA plans, MA PFFS plans, and PACE plans. CMS calculated that the 2024 Part D "national average monthly bid amount" is $64.28 - an 85% increase over the 2023 average monthly bid $34.71.
- 2024 Part D Base Beneficiary Premium (BBP) - with IRA premium stabilization: 6% increase
The Part D Base Beneficiary Premium is calculated every year by
CMS using, in part, the Part D national average monthly premium bid
which is weighted by Medicare plan enrollment. With the increase in the national average bid, the increase in the 2024 BBP would have been $39.35, a 20% increase over the 2023 Base Beneficiary Premium of $32.74.
However, as noted by Medicare:
"[b]eginning in [plan year] 2024, the annual growth in the Base
Beneficiary Premium [BBP] will be capped at 6 percent. The Base Beneficiary
Premium for Part D is limited to the lesser of a 6 percent annual
increase, or the amount that would otherwise apply under the prior
methodology had the [Inflation Reduction Act] not been enacted." Therefore, "the premium stabilization provision reduced the increase in the base beneficiary premium by 14 percentage points; the base beneficiary premium will increase by 6% in 2024 to $34.70".
The Part D Base Beneficiary Premium is also used each year to determine the amount of a person's Part D late-enrollment penalty. The annual late-enrollment penalty is calculated as 1% of the annual BBP multiplied by the number of months a person was without some form of creditable prescription drug coverage. (For example, if you waited 12 months to join a Part D drug plan after becoming eligible for Medicare, and did not have any other form of creditable drug coverage, your 2024 penalty would be 12 * $0.3470 or $4.20 per month paid in addition to your Part D drug plan premium (rounded to nearest $0.10).
The following chart shows how the National Average monthly Part D premium bid has changed in comparison with the Medicare Part D Base Beneficiary Premium and how the BBP would have increase in 2024 if the value was not capped at a 6% increase.
- 2024 estimated Part D average Basic Part D premium: 7.5% increase
The annual Part D Base Beneficiary Premium is then "used to calculate a
plan-specific monthly premium for the basic benefit offered by each
Part D plan, called the basic Part D premium".
In 2024, the average basic Medicare Part D premium will increase 7.5% to
$34.50 from the actual average 2023 Part D basic premium of $32.09 - accordingly, as per CMS estimates, approximately 25% of Medicare Part D beneficiaries are enrolled in a Medicare Part D plan offering basic or standard Part D coverage and may be affected by this 7.5% average premium increase.
Question: Does the Base Beneficiary Premium predict Part D plan-specific basic Medicare
Part D plan premiums?
Not exactly. As noted by CMS, the "plan-specific
basic premium can be higher or lower than the base beneficiary premium
depending on if the plan’s bid is higher or lower than the national
average bid." "[T]he plan-specific basic Part D premium is calculated as the sum of the base beneficiary premium and the difference between the plan’s monthly bid and the national average monthly bid amount. Thus, the plan-specific basic premium can be higher or lower than the base beneficiary premium, depending on if the plan’s bid is higher or lower than the national average monthly bid amount. These plan-specific basic premiums across all plans that submit bids are then averaged together to calculate the average basic Part D premium."
The following chart shows how the estimated monthly Basic Part D premium has changed in comparison with the Medicare Part D Base Beneficiary Premium and how the BBP would have increase in 2024 if the value was not capped at a 6% increase.
Question: How have projected average basic Medicare Part D premiums changed over time?
The following are Medicare's annual projected "basic" Medicare Part D premiums weighted by enrollment. The actual annual average basic Medicare Part D premium reported by Medicare may be slightly higher or lower than the projected premium depending on actual Medicare plan enrollment for the year.
For example, in 2022,
the annual CMS press release entitled, "CMS Releases 2023 Projected
Medicare Basic Part D Average Premium", noted that "the average basic
premium for standard  Medicare Part D coverage is projected
approximately $31.50 . . .. This expected amount is a decrease of
from the actual 2022 basic premium of $32.08. The calculated 2022 Basic Part D premium, based on June 2021 plan enrollment, was $33.
Below is a list of the past CMS' estimates of basic Medicare Part D premiums with links to a brief analysis of the annual prediction.
- 2024 estimated Supplemental D premium: 14% decrease
Medicare Part D plans
can have either basic or standard Medicare Part D plan coverage (plans designated as (BA, DS, AE)) or the Part D plans can add coverage features beyond basic Part D coverage and these plans are called Enhanced Alternative Medicare Part D plans (or Part D plans designated as (EA)). To cover these additional coverage features ($0 deductible or cost-sharing less than paying 25% of retail drug prices) Enhanced Alternative Medicare Part D plans will have a Supplemental premium added to the plan's Basic Part D premium. According to CMS, the vast majority (75%) of Medicare Part D
beneficiaries are currently enrolled in a Part D plan with enhanced
The past average Supplemental premiums provided by CMS are:
- 2020: $13.47
- 2021: $15.22
- 2022: $19.51
- 2023: $24.40
- 2024: $21.00
In the press release Fact Sheet, CMS reasoned that the decrease in the 2024 Supplemental Part D premium was "largely driven by the enhancements described below to the 2024 Part D basic benefit mandated by the IRA and CMS’ recent rulemaking on pharmacy price concessions. These basic benefit enhancements reduce the need for additional benefit enhancements traditionally offered by enhanced alternative [EA] Part D plans, resulting in a lower supplemental premium."
Question: When can I see the 2024 Medicare Part D and Medicare Advantage plans?
Starting in October, people with Medicare Part D can begin to research their Medicare health and
prescription plan options. During the annual Open Enrollment Period (AEP
that begins October 15th and ends December 7, 2023, beneficiaries can
switch Medicare plans by enrolling in their newly selected plan. If you
are not sure where to begin with the annual plan review process, you
can start by calling a Medicare representative at 1-800-MEDICARE for
Question: Will my 2023 Medicare Part D plan inform me about 2024 plan changes?
Everyone enrolled in a Medicare Part D or Medicare Advantage plan
should review their Medicare plan's Annual Notice of Change letter (ANOC
) that will be mailed in late-September. Even if your Medicare Part D plan premium remains stable (or decrease) – this
does not mean that your 2024 Medicare plan’s drug coverage costs will decrease. Your
Medicare drug plan's prescription coverage - which drugs are covered and
at what cost - usually changes every year
, even if your monthly Medicare plan premium remains the same or decreases slightly.
Finally, Medicare Part D plan members should review their Medicare
plan's 2024 Evidence of Coverage (EOC) document mailed to them in
early-October - or made available electronically for download. The EOC
is a 200+ page document that includes detailed information about the
Medicare plan's coverage.
Medicare Part D plans change each year, so please be
prepared to review your 2024 Medicare plan options starting in early
The full text of the July 31, 2023 CMS Press Release
is included below:
CMS Releases 2024 Projected Medicare Basic Part D Average Premium
July 31, 2023
The Centers for Medicare & Medicaid Services (CMS) today
announced that the average total monthly premium for Medicare Part D
coverage is projected to be approximately $55.50 in 2024. This expected
amount is a decrease of 1.8% from $56.49 in 2023
. Stable premiums for
Medicare prescription drug coverage in 2024 are
supported by improvements to the Part D program in the Inflation
Reduction Act that allow people with Medicare to benefit from reduced
CMS is releasing the projected average total monthly Part D premium—calculated based on plan bids submitted to CMS—to help individuals understand overall Part D premium trends before Medicare Open Enrollment when they can select from plan options for the upcoming benefit year.
The Medicare Part D program helps people with Medicare pay for both brand-name and generic prescription
drugs. Part D remains one of Medicare’s most popular programs, with more than 51 million Medicare beneficiaries enrolled for prescription drug coverage. CMS continues to analyze changes to the Part D program carefully and engages with stakeholders to identify opportunities for improvements, particularly for reducing costs.
CMS is also releasing additional information—such as the Part D national average monthly bid amount—to help Part D plan sponsors finalize their premiums and prepare for Medicare Open Enrollment. Medicare Open Enrollment for coverage beginning January 1, 2024, will run from October 15 to December 7, 2023. CMS anticipates releasing the 2024 premium and cost-sharing information for 2024 Medicare Advantage and Part D plans in September 2023.
For more information on the Part D
national average monthly bid amount, the Part D regional low-income
premium subsidy amounts, the de minimis amount, the Medicare
Advantage employer group waiver plan regional payment rates, and the
Medicare Advantage regional preferred provider organization benchmarks,
visit: www.cms.gov/medicare/health-plans/ medicareadvtgspecratestats/ratebooks-and-supporting-data/655541402/2024
In addition, more details are available in the accompanying Fact Sheet [www.cms.gov/newsroom/fact-sheets/cms-releases-2024- projected-medicare-part-d-premium-and-bid-information].[emphasis added]
CMS Press Release -
Fact Sheet accompanying the CMS Press Release -
Annual Release of Part D National Average Monthly Bid Amount and Other Part C & D Bid Information -
2022 CMS Press Release -