Key Takeaways

  • The Part D coverage gap (or "donut hole") officially closed in 2020, but there are still out-of-pocket costs once people pass the initial coverage period.

  • Changes to drug spending caps due to the Inflation Reduction Act have begun to take effect—and will continue to do so in the coming years.

  • Our infographic explains what your clients, drug plans, and the government will pay in each spending phase of Part D in 2024

What will Medicare Part D cost sharing look like in the coming year? Enrollees will pay a Part D deductible up to $545 in 2024, followed by an initial coverage period in which they are responsible for 25% of costs until they reach the threshold of $5,030 spent on prescription medications.

Previously, when this threshold was reached, the Part D coverage gap (or "donut hole") began. While this gap officially closed in 2020, that doesn't mean people with Medicare won't pay anything once they pass the initial coverage period. Enrollees are still responsible for paying 25% of the costs of their generic and brand-name drugs in this phase. 

Inflation Reduction Act changes taking effect

Changes to Part D spending caps resulting from passage of the Inflation Reduction Act have begun to phase in and will continue to do so over the next few years. For example, starting Jan. 1, 2024, once an enrollee’s out-of-pocket spending reaches $8,000, they enter the catastrophic coverage phase. During this phase, they won’t have to pay a copayment or coinsurance for covered Part D drugs for the rest of the calendar year. Prior to this, a 5% coinsurance applied during the catastrophic coverage period.

Our infographic below explains who pays what in the different phases of Medicare Part D coverage in 2024.

To better understand how Part D works and how much your clients may have to spend, check out our  2024 Part D Standard Plan Cost-Sharing Chart.