Medicare is changing. According to Morningstar, the Inflation Reduction Act is responsible for the most significant changes to Medicare in nearly two decades. The massive piece of legislation contains many provisions that will affect Medicare in the years to come.
The Inflation Reduction Act
Although the Inflation Reduction Act contains many provisions that will impact Medicare, it is not just a healthcare act. It also includes many provisions impacting everything from the minimum tax rate on corporations to the use of clean energy.
As can be expected, the act has been met with both criticism and support. In regards to the Medicare provisions, the Medicare Rights Center says that the legislation includes many policies that they have supported for a long time.
Major Changes to Medicare Prescription Costs
High prescription drug costs have been a problem for many Americans, especially seniors who often need to take multiple prescriptions while sticking to fixed budgets. A statement from the White House says that Americans pay two to three times more for prescription drugs compared to citizens in other countries.
The Inflation Reduction Act includes many provisions that address prescription costs in Medicare.
- Medicare will be able to negotiate prescription drug costs. According to Fierce Pharma, Medicare will be empowered to negotiate the prices for 10 medicines in 2026. By 2029, the number of medicines will go up to 60. Additionally, although at first only Medicare Part D prices will be up for negotiation, starting in 2028, prices can also be negotiated in Medicare Part B. The White House says that five to seven million Medicare beneficiaries could see lower prescription costs as a result.
- Out-of-pocket Medicare Part D prescription drug costs will be capped at $2,000 per year. The White House says this will help approximately 1.4 million beneficiaries each year. According to KFF, the $2,000 cap will go into effect in 2025. However, in 2024, the 5% coinsurance for Part D catastrophic coverage will be eliminated.
- The cost for a month’s supply of insulin will be capped at $35. The CDC says that 25% of U.S. adults aged 65 or older have diabetes. As a result, the cost of insulin is a major concern for many Medicare beneficiaries, and high insulin prices have meant that some seniors cannot afford life-saving care. Under the Part D Senior Savings Model, some plans capped monthly insulin costs at $35, but not all plans participated in this program. With this new legislation, all Medicare beneficiaries will have access to affordable insulin. KFF says that this change will go into effect starting in 2023, and the White House says this will help 3.3 million Medicare beneficiaries with diabetes.
- More people will qualify for the Medicare Part D full low-income subsidy. Currently, some Medicare beneficiaries who do not qualify for the full low-income subsidy to help with prescription costs may qualify for a partial subsidy. According to Medicare Rights Center, the Inflation Reduction Act eliminates the partial subsidy while expanding eligibility for the full subsidy. This means that more people will receive a greater level of help.
- Medicare enrollees will have access to vaccines with no out-of-pocket costs. According to Medicare, some vaccines are covered by Medicare Part B, including flu shots, hepatitis B shots, the COVID-19 vaccine and pneumococcal shots. However, certain other vaccines are not covered under Medicare Part A or B, including the shingles vaccine and Tdap shot. These vaccines are typically covered under Medicare Part D, but there may be associated out-of-pocket costs. The Medicare Rights Center says that the Inflation Reduction Act eliminates cost-sharing and deductibles for vaccines that are covered by Medicare D if they are recommended by the Advisory Committee on Immunization Practices.
- Medicare Part D premium growth will be capped. With all of these changes, some people might be worried about the impact on premium costs. According to KFF, Medicare Part D premium growth will be capped at 6% per year between 2024 and 2030.
Helping Your Clients Navigate These Changes
This AEP, many of your clients may have questions about the Inflation Reduction Act and what it means for their Medicare coverage. Many of the provisions impacting Medicare prescription costs will be received as good news for beneficiaries struggling to afford their prescriptions. Keep in mind that some provisions, including the $35 monthly cap on insulin, go into effect in 2023, but beneficiaries won’t see some of the other changes until later.
Do you have questions or concerns? Are you unsure about the best way to approach your clients with this information? Reach out to our Broker Sales Support team for answers. Contact our team today.