Q. How soon can those of us on Medicare start getting all the discounts on prescription drugs that the new Inflation Reduction Act is supposed to bring?
A. There are quite a few cost savings to Medicare prescription drug beneficiaries included in the new Inflation Reduction Act (IRA) just signed into law. Most will occur gradually over the next few years. One of the major reforms, which will take place in 2023, is the cap on insulin cost at $35.00 per month for Medicare beneficiaries. This cap does not apply for those who only have private insurance or no insurance.
Another great value for Medicare beneficiaries will be the new ability for the Department of Health and Human Services (HHS) to negotiate the prices of drugs used by many Medicare patients. Beginning in 2023, the HHS Secretary will be able to negotiate drug prices of 10 drugs with pharmaceutical companies rather than let the firms set the prices unilaterally. However, the negotiated prices will not go into effect until 2026 for drugs covered under Part D and in 2028 for drugs covered under Part B. More drugs will be up for negotiation each year for a total of 60 drugs by 2029. It has not yet been announced which 10 drugs will be included in the first negotiations.
Other cost saving features of the IRA include capping the out-of-pocket costs Medicare Part D beneficiaries spend on medication at $2,000 per year, rather than 25% of total drug costs. This will begin in 2025. Also happening, in 2024, will be the elimination of the 5% “co-insurance” cost Medicare beneficiaries who take brand-name drugs rather than generics currently must pay during catastrophic coverage (the donut hole.) Additionally, the income level that qualifies seniors for a Part D subsidy (known as Extra Help) to help pay for drug costs will increase, allowing more people to be eligible. Under the new law, an individual will need an annual maximum income of 150% of the federal poverty level ($20,385 for an individual in 2022), compared with current maximum of 135% of the federal poverty level ($18,347 for an individual in 2022.)
Finally, penalties and limits are also being imposed that will further hold drug manufacturers and drug plans accountable for costs. Under the IRA, monthly premiums for Medicare Part D plans cannot increase more than 6% per year through at least 2029. Also, beginning in October, if the price of a Part D prescription drug is raised by more than the rate of general inflation, the drug manufacturer will have to give Medicare the amount of the increase above the inflation rate. That same penalty begins for Medicare Part B drugs (outpatient drugs given in a hospital or doctor’s office, such as chemotherapy) in January 2023. Individuals won’t see that money, though. The money goes to Medicare to help cover costs.
Remember Medicare Open Enrollment is coming soon!
Medicare Open Enrollment runs from October 15 to December 7, 2022. In most cases this is the only time you can pick a new Medicare Advantage or Part D plan. Changes you make during Fall Open Enrollment will take effect January 1, 2023. As always, Region IV Area Agency on Aging (RIVAAA) and the Michigan Medicare/Medicaid Assistance Program (MMAP) are here to help!
Don’t miss this important opportunity to make the most of your Medicare coverage. To get a screening packet and sign up for an appointment, contact Mistelle at 269-408-4354 or by email at mistellelanko@areaagencyonaging.org
To learn more about Open Enrollment, to access vital information, and to download documents, visit https://areaagencyonaging.org/medicare-medicaid. Information can also be provided from our Info Line for Aging and Disability staff at 800-654-2810.