Money and medication affected by 2024 Medicare changes

2024 Changes to Medicare You Need to Know

In the arena of health insurance, things are always changing. Those changes may be about what
type of care is covered, who is eligible for that care, or how much patients have to pay out-of-
pocket for that care.

Staying on top of those changes can feel challenging for patients, caregivers, and other
members of the health care community.

That is no different for navigating changes to Medicare coverage. Medicare is a federal health
insurance program that covers more than 65 million Americans. Each year, there are changes to
Medicare costs and people who have Medicare coverage have to make decisions about how
they want to access that coverage.

This blog provides an overview of important 2024 changes to Medicare coverage and out-of-pocket
costs, including:

  1. Coverage of lymphedema compression garments;
  2. Coverage of mental health services;
  3. Expanded eligibility for the Extra Help Program; and
  4. Part D out-of-pocket costs.

Coverage of Lymphedema Compression Garments
As of January 1, 2024, Medicare expanded Part B coverage to include: standard and custom-fitted
gradient compression garments prescribed by a doctor to treat lymphedema; and other devices
determined to be effective in the prevention or treatment of lymphedema

Coverage of Mental Health Services
As of January 1, 2024, Medicare covers mental health services and visits with marriage & family
therapists (MFTs) and mental health counselors. To find a mental health care provider, you can use the Medicare Provider Compare Tool.

Services include individual and group therapy, family counseling, psychotherapy for crisis, diagnostic
tests, inpatient hospitalization, intensive outpatient services, and substance use disorder treatment for patients who are eligible for Medicare Part A and Part B.

Depression screenings are offered to patients at no cost through annual wellness visits. Medicare Part D prescription drug plans also cover prescription drugs related to mental health and substance use disorders.

You may also be able to access mental health care through a telehealth appointment. Telehealth
services are covered under Part B and include services that diagnose, evaluate, and treat mental health needs.

If you need help accessing telehealth services, there are financial assistance programs that help with
internet costs
and with devices to use the internet, such as a tablet, or computer.

Expanded Eligibility for the Extra Help Program
As of January 1, 2024, individuals with Medicare, who have household incomes up to 150% of
the federal poverty level, may now qualify for the full benefit of the Extra Help Program. This
program is also called the Low Income Subsidy (LIS) and helps people pay the premiums for
Medicare Part D and out-of-pocket costs for prescription drugs. Read our 2024 Quick Guide to
Medicare Savings Programs
for details.

Part D Out-of-Pocket Costs
In 2023, a standard Part D plan had a maximum deductible of $505. Then, an individual would
pay 25% of their drug costs. When the total out-of-pocket drug costs reached $7,400, the
patient would enter catastrophic coverage. Then, patients would pay the greater of 5% of the
drug costs, or $10.35 for brand-name drugs ($4.15 for generics) for the rest of the year. There
was no out-of-pocket maximum for Part D prescription drug costs.

In 2024, the structure of the standard Part D drug benefit changes. The maximum deductible for a Part D plan is $545. After paying the deductible, patients pay 25% of their drug costs, until their total out-of-pocket drug costs reach $8,000. On its face, you would think the math would look like this:

However, the devil is in the details. The total out-of-pocket drug costs include what patients have actually spent out-of-pocket, plus the value of the 70% manufacturer price discount on brand-name drugs in the former coverage gap.

This means that individuals who take only brand-name drugs in 2024, will reach the $8,000 catastrophic coverage threshold by spending a total of $3,333 out-of-pocket. Then, they will have no additional out-of-pocket costs for Part D prescriptions for the rest of the year. 

The brand-name discounts and the math involved are causing a lot of confusion. 

So, if a patient is taking an oral chemotherapy brand-name drug covered under Part D that costs $12,000, here is a breakdown of what the patient will pay:

Initial Coverage Period (ICP)
25% of cost of covered drugs = $1,121.25

How you get there:
$545 up to $5,030 in total drug costs (what a patient and their plan pays together) = $4,485
$4,485 * 25% = $1,121.25
Former Coverage Gap (FCP)
$5,030 – $8,000
25% of cost of covered drugs = $1,666.75

How you get there:
$8,000 catastrophic threshold – $545 deductible already paid – $1,121.25 ICP amount already paid = $6,333.75 left to pay (95% of total drug costs)

However, the total amount a patient gets credit for spending during the former coverage gap = 95% of total drug costs. This includes the 25% actually paid by patient and a 70% drug manufacturer’s discount on brand name drugs. The 5% paid by the plan, is not included. 

100% of the costs during this period are $6,667.11. 
$6,667.11 * 25% = $1,666.75
Catastrophic Coverage$0
Total amount a patient actually pays out-of-pocket if they only take brand name drugs$3,333

How you get there: 
$545 deductible + $1,121.25 ICP + $1666.75 FCP = $3,333

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