How is the Inflation Reduction Act Affecting my Medicare?
The Inflation Reduction Act, signed in 2022, has been reducing Medicare costs for roughly 66 million Medicare beneficiaries. Seniors also have more access to affordable treatments. The policy provides financial relief in both the short term and long term.
Many changes are coming to Medicare as a result of the IRA. This new law hopes to make many facets of Medicare more accessible for members. Let’s explore all the ways the Inflation Reduction Act affects your Medicare.
Part D Improvements
Changes to Medicare insulin coverage
The IRA capped Medicare member cost-sharing for insulin products covered by Part D at $35/month, effective January 1st, 2023. Members can purchase insulin at $35/month per covered prescription. This amount can be even less if your health plan covers some of this cost. Medicare beneficiaries get this benefit regardless of benefit phase and without needing to meet their deductible.
Medicare Part D covers these forms of insulin:
- Injectable insulin. This is insulin used in the form of syringes, pens, and non-durable patch pumps. It does not include traditional/reusable insulin pump injections.
- Insulin used with a disposable pump.
While the Part D $35/month cap does not cover traditional insulin pumps, Part B may cover it.
Changes to Medicare vaccine coverage
Some recommended adult vaccines are now available to members at no cost, effective January 1st, 2023. There are certain restrictions as to which vaccines this applies to. The vaccines must be:
- Covered by Medicare Part D
- Recommended by the Advisory Committee on Immunization Practices (ACIP)
Some examples of eligible, ACIP-recommended vaccines include:
- The Shingles vaccine
- The Tetanus vaccine
- Diphtheria vaccine
- Whooping Cough vaccine
- The Influenza vaccine
These vaccines, and other eligible vaccines are free with no cost-sharing and without meeting your deductible. The Centers for Disease Control and Prevention (CDC) website offers a complete list of vaccinations recommended by ACIP.
New for 2025: $2,000 annual cap on covered Part D drugs
Beginning in 2025, all Part D plans will have a $2,000 cap on out-of-pocket costs for covered prescriptions. If your out-of-pocket spending on drugs covered by Part D reaches $2,000, you qualify for “Catastrophic Coverage.” Catastrophic Coverage means you won’t be required to pay out-of-pocket for covered drugs for the rest of the year. This includes some payments made from other programs, such as payments from the Extra Help program. This change will provide much needed relief to seniors whose care requires prescriptions.
Medicare Drug Price Negotiation
As part of the IRA, Medicare will be able to negotiate with drug manufacturers to lower drug prices. This applies mainly to the costliest brand-name Part B and D drugs with no close alternative. Overall, this policy makes life-saving drugs and treatments more accessible and affordable for Medicare Beneficiaries.
Under the new Drug Price Negotiation Program, the number of drugs selected for price negotiation is:
- 10 Part D drugs for 2026
- another 15 Part D drugs for 2027
- another 15 Part D and Part B drugs for 2028
- another 20 Part D and Part B drugs for 2029 and later years.
These selected drugs will be the 50 drugs with the highest total spending in Part B and Part D. Over time, Medicare will add to the list of drugs with negotiated prices.
However, there are some drugs excluded from the negotiation process, including:
- Drugs that have a generic brand, or other brand of similar composition available
- Drugs that are
- less than 9 years (for small-molecule drugs), or;
- 13 years (for biological products) from their FDA-approval or licensure date
- Drugs with total Medicare spending of less than $200 million in 2021
- Drugs with an orphan designation as their only FDA-approved indication
- Any plasma-derived product
Negotiation can be delayed for drugs that have a product of similar composition enter the market. This negotiation establishes a “maximum fair price” for a given drug. Once a price is negotiated, Part D covered drugs will cost less for seniors and Medicare.
Inflation Rebates in Medicare
The Prescription Drug Law established an inflation rebate to combat unreasonable price increases and to strengthen Medicare. This policy requires companies to pay Medicare a rebate if they increase drug prices faster than the rate of inflation. This will lead to a stronger Medicare for current and future enrollees and discourage unreasonable price increases by drug companies.
How the IRA Affect my Medicare Part B
As of July 1st, 2023, insulin dispensed in traditional insulin pumps, covered under Medicare Part B as durable medical equipment (DME), is now subject to the $35/month cap.
As a result of a lot of the above, Medicare Beneficiaries may see reduced co-pays and co-insurances as well.
Conclusion
The Inflation Reduction Act provides a lot of relief to Medicare Beneficiaries. Between capping costs and disincentivizing price increases, costs should lower across the board for Medicare Policyholders. In addition, essential medicines will be significantly more accessible and affordable for the average individual.
If you aren’t sure you are getting the most out of your Medicare, give us a call. We are focused on your health needs, and can help you figure out the best coverage for you!
