CNN
—
Medicare beneficiaries who take a lot of expensive medications will see a big benefit in 2025. That’s when the $2,000 annual cap on out-of-pocket costs for drugs purchased at the pharmacy or by mail order will come into effect. in force.
The limit is one of Inflation Reduction Act of 2022 the most far-reaching provisions aimed at reducing prescription drug prices for Medicare enrollees. The law also established a $35 monthly cap on insulin prescriptions, allowed beneficiaries to receive more vaccines at no cost, allowed Medicare to negotiate prices of certain drugs and required drug manufacturers to pay a discount to Medicare if they raise prices faster than inflation.
Before the law, there was no cap on what Medicare enrollees could have to spend on drugs covered by their Part D drug plans. They had to pay 5% of the cost of their drugs in the phase so-called catastrophic coverage, which, in 2023, began when they reached $7,400 in out-of-pocket expenses. The federal government paid 80% of the cost, while insurers paid 15%.
An interim cap of approximately $3,500 was in place for 2024.
“The cap provides some peace of mind because you won’t have to leave the pharmacy empty-handed because you can’t afford the cost of your medication,” said Juliette Cubanski, deputy director of the drug policy program. health insurance at KFF, a nonpartisan organization. organization of health policy.
More than 3 million enrollees who don’t receive Medicare’s low-income subsidy stand to benefit from the $2,000 cap, according to AARP. This figure will reach more than 4 million in 2029. About 40% of beneficiaries who reach the limit between 2025 and 2029 will see an estimated annual savings of $1,000 or more.
More than half a million Part D enrollees reached this year’s $3,500 cap by the end of June, saving an average of about $1,800, according to the Department of Health and Human Services. (This figure does not include people eligible for the low-income Medicare subsidy, who generally do not have to pay anything for catastrophic drugs.)
The provision does not apply to drugs administered in doctors’ offices, such as certain chemotherapies or infusions covered by Medicare Part B.
Another advantage of the law is that enrollees can spread payment for their medications over a calendar year. This can be especially helpful for those who face high drug costs early in the year. They may need to ask their insurer to enroll them in a payment program or sign up while at the pharmacy, Cubanski said. Their insurer will then bill them.
However, few people are aware of the provision limiting personal expenses. Only about a third of voters aged 65 and older were aware of it, while just over a quarter of voters were generally aware of it, one study found. KFF survey carried out at the end of August and beginning of September.
The restructuring of the Medicare Part D drug benefit program has led some insurers to propose steep premium increases in their stand-alone drug plans, prompting the Biden administration to offer insurers significant new subsidies that could total about $5 billion next year to avoid the increases.
In addition to the $2,000 limit, the Inflation Reduction Act requires insurers to bear more of the costs once policyholders reach the catastrophic stage above the cap. Starting in January, insurers will cover 60% of drug costs, Medicare and drugmakers will share the remaining 40% for brand-name drugs, and Medicare will cover the full 40% for generic drugs.
“Plans are covering more of their enrollees’ prescription drug costs compared to before, when there was no out-of-pocket cap,” Cubanski said. “So when plan costs increase, it generally results in higher coverage premiums. »
The subsidy program does not apply to drug coverage under Medicare Advantage plans, which offer a broader range of health coverages and can more easily reduce premium increases by changing other benefits or making call for other government funding.