What Does the Inflation Reduction Act Do for Medicare Rx?
In August of 2022, the Inflation Reduction Act (IRA) was signed into law. More than 80% of both political parties support this bill. Unusual in itself. Among the many, many provisions in the IRA, there are history making changes to Medicare Prescription Drug Plans. Medicare experts and attorneys are still analyzing the bill to tease out the changes that affect Medicare members. Here’s a summary of what’s been reported so far.
What Does the Inflation Reduction Act Do for Medicare Rx?
Changes affecting Medicare Rx plans go into effect over a number of years.
2022
Rebates charged to pharmaceutical companies for raising Part B and D prescription drug prices more than the rate of general inflation. The rebate charges for excessive price rises must be paid to Medicare or a penalty is assessed for nonpayment.
2023
Member costs on insulins limited to $35 per month maximum and $0 member cost on Part D vaccines.
2024
Zero dollar member payments on Part D Catastrophic Phase and expansion of Low Income Subsidy for prescription drugs – members earning up to the 150% of federal poverty line will be eligible.
2025
Annual limit of $2000 on Part D out of pocket drug costs (currently no limit).
2026
Medicare can negotiate for better prices with drug companies. Starts with ten drugs.
2027
Fifteen more drugs are added to the negotiation list.
2028
Fifteen more drugs are added to the negotiation list.
2029
Twenty more drugs are added to the negotiation list.
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The National Law Review stressed that lawsuits will inevitably be made which will have significant impact on how the bill requirements are implemented. The effects of the negotiation process are particularly uncertain. Each negotiated price will not go into effect for 2 years after the negotiations is completed. (At least that’s my reading of the Review report.)
What Does It Mean for Your Prescription Costs?
This Medicare Annual Enrollment Period, you should see changes to the 2023 prescription drug plans. By limiting insulin even further than 2022 limits, those enrolled in Medicare with diabetes will find relief from overwhelming costs. Hopefully, the rebates and penalties imposed on pharmaceutical companies will keep new price increases in line with general inflation in 2023 and going forward. That means everyone with prescription drugs should experience some protection from future drug price increases.
Next Steps:
Only time will tell what the real-life effect of Medicare drug negotiations will have on drug costs. If your annual prescription drug costs are affecting your budget, the safest approach is to compare plans each annual enrollment period.
If you’d like help comparing plans for your prescriptions, set a time to work with one of our experienced Medicare agents.
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