2023 Medicare Part D Changes

Each year, there are changes to the Part D Prescription Drug Coverage of Medicare.  We won't have visibility to the actual Part D Plans until October 1, but there are some structural changes that occur each year with Part D.  Key updates for 2023 are below.

• Annual Deductible Limit - increase of $25 from $480 in 2022 to $505 in 2023
  
• Initial Coverage Level increase of $230 from $4,430 in 2022 to $4,660 in 2023
  
• True-out-of-Pocket Limit increase of $350 from $7,050 in 2022 to $7,400 in 2023
  

Annual Deductible
The government sets a maximum deductible amount for the Part D Plans.  In 2022, the maximum deductible was $480.  In 2023, this is increasing $25 to $505.  On most of the Part D Plans, the deductible only applies to higher tiered drugs (e.g. Tiers 3, 4, 5).  Also, some Part D Plans have a $0 deductible, or other amounts lower than the maximum deductible.  

Initial Coverage Level
The Initial Coverage Level will increase $230 from $4,430 in 2022 to $4,660 in 2023. This amount is based on the Retail Cost of the Medication for the year (Calendar Year).  Most people (about 85%) do not exceed the Initial Coverage Level and thus continue to pay their Copay/Coinsurance amount for the entire year.  However, for the people that have very expensive medications that exceed the Initial Coverage Level, they will reach the Part D Coverage Gap, aka Donut Hole where they have to pay 25% the cost of their medications.  The increase of $230 to the Initial Coverage level will have a minimal impact on Drug Costs in 2023.  Basically, for those 15% of people with expensive medications, there will be a slight delay to reaching the Part D Donut Hole.

True Out of Pocket Limit (Tro-oP)
The True Out of Pocket limit will increase $350 from $7,050 in 2022 to $7,400 in 2023. The Tro-Op is used to determine when someone exits the Part D Coverage Gap, aka Donut Hole, and moves into Catastrophic Coverage where they only have to pay 5% the cost of their medications.  The increase of $350 in the Tro-oP only effects about 5% of people (those that would reach Catastrophic Coverage), and it creates a slight delay for when they will reach Catastrophic coverage. 

The net impact to these individuals with expensive drugs is likely about $100 cost increase for the year.

​Click the link to the video for a more detailed explanation of these changes, including a detailed example for someone who reaches the Part D Donut Hole.