The COVID-19 pandemic significantly impacted all areas of American life, particularly the health industry. For example, with thousands of people suffering from severe COVID symptoms and clogging up hospitals, healthcare efficiency plummeted while care prices grew by leaps and bounds. Furthermore, inflation jumped by massive levels and made life even harder for people.
To combat these dangers, the United States Congress passed and President Joe Biden signed the Inflation Reduction Act of 2022 into law. This sweeping act is designed to reduce this widespread inflation while updating Medicare Part D. Many of these improvements are already in effect, while others become active in 2025 and may affect your coverage in several ways.
The Inflation Reduction Act of 2022
Congress passed the Inflation Reduction Act of 2022 to help people struggling financially after COVID-19. While this new law included many provisions, some of the biggest were included in Section B and focused heavily on lowering medicine prices through negotiation, allowing Medicare and Medicaid to fight for better costs for patients.
Most of these came in Medicare Part D’s prescription drug plan. Those who enroll in this coverage (mostly seniors and people with disabilities) have already seen the biggest changes in 2024, when the Medicare Prescription Payment Plan began. Health and Human Services Secretary Xavier Becerra has applauded this comprehensive overhaul of Medicare Part D:
“For people who get their prescriptions through Medicare Part D and face high costs early in the year, we are easing the burden by allowing payments to be spread out over time. HHS will continue tackling high health care costs on all fronts so that every American can benefit from access to life-saving medicines.”
Changes to the Medicare Prescription Payment Plan for You
Starting in 2025, all Medicare prescription drug plans (i.e. Medicare Part D) will include standalone medicine coverage plans that will pay for anything prescribed to you by your primary care physician or a specialist. It gives you the chance to pay out-of-pocket expenses in monthly installment plans instead of paying all at once and suffering undue financial strain.
Furthermore, annual out-of-pocket costs will be capped at $2,000 for people with Medicare Part D. Your monthly payments also receive a cap based on your current financial health and ability to pay. The goal here is to keep people from falling into excessive medical debt, particularly seniors and people with disabilities who typically utilize Medicare Part D the most.
Furthermore, any prescription plan deductible that you pay will go towards your $2,000 capped maximum. For example, if you pay a $480 deductible for your prescription drugs, your $2,000 cap would decrease to $1,520 for that year after you made this payment. That step helps reduce your payments even further and makes it easier to stay financially and medically strong.
Catastrophic Coverage Changes
As part of the Inflation Reduction Act of 2022, Medicare beneficiaries no longer have to pay out-of-pocket (OOP) costs once they hit catastrophic coverage. This term applies to anyone who has met their maximum OOP expenses. In the past, there were still some minor expenses that people with medicare Part D had to pay, regardless of reaching their maximum OOP.
Before this provision of the Inflation Reduction Act became active in 2024, people in catastrophic coverage (i.e., those who’d paid over $8,000 as of 2024) had to pay 5% of their prescription drug costs even after hitting that maximum. There was no limit on this pay, which put many people at a severe financial disadvantage if they had heavy prescriptions to manage.
As of 2024, you no longer pay that 5% charge on your prescription medications. That can add up to significant savings. Let’s say you fall into catastrophic coverage, and your medicines cost $10,000 a year. Before this change, you’d have paid $500 — which is about the cost of a month of utilities. Now, you pay nothing, which reduces your financial suffering considerably.
Medicare Insulin and Vaccine Support
Before the Inflation Reduction Act of 2022 was passed, insulin prices had skyrocketed by 600% in just 20 years. Tragically, this meant many people with diabetes who lacked strong insurance struggled to pay for this lifesaving treatment. Major protests and extensive outrage over this problem forced Congress to address the issue with the Inflation Reduction Act.
Starting in 2023, anyone with Medicare Part D coverage will pay no more than $35 a month per their covered insulin products. On July 1, 2023, this benefit expanded to include payments covered in Medicare Part B. Furthermore, coverage for vaccines was extended to those under Medicare coverage to protect people who needed this help the most.
The vaccine coverage is particularly designed for older adults and those with disabilities who suffer from common diseases more heavily. For example, anyone who’s more prone to common immune system disorders may need specialized vaccines that minimize their adverse reactions. With these Medicare D upgrades, their payments are significantly reduced.
Updates for Drug Manufacturers
Beyond helping the average person manage their medical expenses more effectively, the changes to Medicare Part D also apply to drug producers. For example, manufacturers who work with the new law can join the discount program to receive financial support from the government. This replaces the existing Coverage Gap Discount Program in place for Part D.
Drug manufacturers could also sign up for the third-party administrator or TPA agreement on the CMS Health Plan Management System to receive further discounts. The goal of these sections of the act was to minimize financial loss for drug manufacturers and ease them into these new guidelines. In this way, they can cut drug prices without reducing staff sizes by downsizing.
Preparing for These Changes
If you have Medicare Part D and need more help understanding these changes, don’t hesitate to reach out to us to learn more. We can help you sort through all the important updates codified by this law and make it easier for you to keep your coverage. No matter what your needs, our team can provide the hands-on and efficient protection that makes the most sense for you.
