The Inflation Reduction Act signed by President Biden on Aug. 16 does a lot for health care, such as keeping Affordable Care Act insurance plans more affordable for three more years for working families in middle-income and upper-income households. But some of the new law’s longest-lasting impacts are for Medicare beneficiaries, especially those who’ve purchased a Part D plan to cover prescription drugs. Here’s how it breaks down:
- As people with Medicare Part D plans start their drug spending each year, they must pay a percentage of their drug prices out of pocket — the amount required changes as their cumulative spending mounts. Until now, even if they spent so much that they passed the “catastrophic threshold” of $7,050 in a single year, they would continue to owe 5% of their drugs’ prices out of pocket. But with the new law, that final 5% copay is eliminated, starting in 2024.
- The catastrophic threshold capping out-of-pocket spending under Medicare Part D is to be lowered from $7,050 in 2022 to $2,000 by 2025. That will help about 46,000 Georgians annually, whose Medicare Part D out of pocket costs exceed $2,000. This includes Medicare advantage plans.
- That $2,000 maximum that people pay each year will not just be capped, but spread over time. Anyone hit with an immediate $2,000 charge will get the year to pay it in monthly installments.
- The price of insulin will be capped at $35 per month for all Medicare Part D enrollees and for Medicare Part B enrollees who use an insulin pump. About 106,000 Georgians on Medicare Part D use insulin.
- Vaccines will be free on Medicare Part D. That will affect about 112,000 Georgians annually.
- Medicare will be allowed to negotiate drug prices on a small number of high-priced drugs. We don’t know which drugs will be chosen yet, but their prices will fall for whoever takes them on Medicare starting in 2026.
Sources: Kaiser Family Foundation and the White House
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