Healthcare is a major expense for seniors, and that's due in part to the many costs they're liable for under Medicare. And next year, you might end up spending more on healthcare than you did in 2023.
Part of the reason is that the cost of Medicare Part B is increasing. The standard monthly Part B premium is rising from $164.90 to $174.70 for a total increase of $9.80. And the annual deductible for Part B is rising by $14 in 2024 as well.
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But it's not just an uptick in the cost of Part B you have to think about. Your costs under Medicare Part D might rise in the new year as well. Here are some of the reasons why.
1. Your current plan is getting more expensive, but you're sticking with it anyway
Medicare Part D plans can cost more from one year to the next. First, your actual premium cost may be increasing in the new year. But also, it may be that your plan's formulary is changing, leaving you with higher costs for your prescriptions.
All Medicare Part D plans use a formulary to group medications into different tiers. If a drug you take is being bumped into a higher tier for 2024, the result is apt to be more out-of-pocket spending for you.
2. Your prescription needs are changing
It may be that your Medicare Part D plan isn't changing in 2024. But if your needs are changing, then your costs might increase.
It could be that your doctor wants to move you off of a lower-cost medicine and onto one that costs more but offers added benefits. If so, you can anticipate an uptick in prescription-related spending.
3. You're on the hook for a surcharge
While there's a standard monthly premium for Medicare Part B, the same doesn't hold true for Part D, since costs can vary from one plan to another. But if your income was on the higher side in 2022, then you may be on the hook for a Part D surcharge in 2024 known as an income-related monthly adjustment amount, or IRMAA.
IRMAAs are based on income from two years prior. If, in 2022, your modified adjusted gross income (MAGI) was more than $103,000 and you were single, you'll be on the hook for a Part D surcharge in 2024. The same holds true if your 2022 MAGI was more than $206,000 and your tax-filing status was married filing jointly.
You should also know that the higher your income, the higher your IRMAA might be. For example, someone with a MAGI of $550,000 is going to be looking at a larger IRMAA than someone with a MAGI of $150,000.
Know what costs to anticipate
Medication and prescription drug coverage are things you can't afford to skimp on as a senior. So it's important to know what might drive those costs up and plan accordingly.
Now if your costs are rising due to changes in your Part D drug plan, you could always try to find a more affordable plan during Medicare open enrollment, which runs through Dec. 7. You can also try talking to your doctor about switching to generic drugs to lower your costs.
But either way, it's a good idea to figure out if your Part D costs will be increasing in 2024. That way, you can make changes to your budget as needed to avoid a financial crunch.
