The Inflation Reduction Act of 2022 (IRA), signed into law by President Biden on August 16, 2023, is already providing cost-savings for Medicare beneficiaries in 2023, including a monthly cap of $35 for covered insulin and free vaccines for certain conditions.
Additional changes will go into effect in January 2024. Here's a recap of the changes as listed 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. 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, the drug price negotiation program created by the Inflation Reduction Act allows Medicare to use its bargaining power to negotiate the prices of prescription drugs for the first time. In August 2023, CMS announced the first 10 drugs that have been selected for negotiation. In October, the drug companies that manufacture all 10 of the selected drugs chose to participate in the program. Unfortunately, drug manufacturers have filed multiple lawsuits around the country alleging various constitutional claims. This is a developing story, one that has the potential to impact many Takacs McGinnis clients, so we will keep you updated.