The Inflation Reduction Act of 2022 (IRA), signed into law by President Biden on August 16, 2022, has already provided cost-savings for Medicare beneficiaries through provisions that took effect last year in 2023, including a monthly cap of $35 for covered insulin and free vaccines for certain conditions, as outlined in previous CMA Alerts (e.g., here and here).
As outlined in a recent CMA Alert (Oct. 26, 2023), additional changes are now in effect as of January 1, 2024. As noted on the www.medicare.gov website:
- If you have drug costs high enough to reach the catastrophic coverage phase in your Medicare drug coverage, you won’t have to pay a copayment or coinsurance, starting in 2024. (Note that according to KFF, this provision will effectively cap out-of-pocket costs at approximately $3,250 in 2024).
- Extra Help affording prescription drug coverage (the Part D Low-Income Subsidy (LIS) program) will expand to cover more drug costs for people with limited resources who earn less than 150% of the federal poverty level, starting in 2024. People who qualify for Extra Help generally will pay no more than $4.50 for each generic drug and $11.20 for each brand-name drug.
In 2025, the annual Part D out-of-pocket cap will be lowered to $2,000. Individuals will also have the option to pay out-of-pocket costs in monthly amounts over the plan year, instead of when they happen.
In addition, as discussed in a previous CMA Alert, the drug price negotiation program created by the Inflation Reduction Act allows Medicare to use its bargaining power to negotiate the prices of certain prescription drugs for the first time. The first group of drugs subject to negotiation have been announced, with negotiated prices effective 2026.
January 4, 2024 – D. Lipschutz