Medicare Part D Drug Plans Get a Facelift

There’s been much debate about the Inflation Reduction Act President Biden signed into law on August 16, 2022. No matter what your political persuasion is or whether you consider the contents of the Act to be good, bad, or ugly, it does contain provisions that will improve Medicare Part D Prescription plans for seniors.

Medicare recipients have long argued that the unending rise in prescription drug prices eats away at their income and severely affects their ability to survive financially, especially seniors on fixed incomes. Because of the new law, there will be significant Changes to Part D Prescription Drug plans beginning in 2023.


Out-of-Pocket Costs

For the first time since Medicare began in 1965, the amount Medicare recipients will have to pay for prescriptions will be capped. Starting in 2025, out-of-pocket expenses for Medicare-approved prescription drugs will be capped at $2,000.

The cap will increase based on Medicare’s annual spending for covered drugs. For example, if Medicare spends 5% more in 2025, then an individual’s cap will increase by 5% in 2026.


Part D Premium Increases

Beginning in 2024 and running through 2029, Part D premiums cannot increase by more than 6% per year.


Drug Prices

Starting in 2023, drug manufacturers will have to send rebates to Medicare if their prices for most prescription drugs covered by Medicare go up faster than the rate of inflation.


Insulin Costs

2023-2025, the monthly out-of-pocket cost for covered insulin products will be capped at $35. Deductibles won’t apply to insulin products even if an enrollee hasn’t met their annual deductible. Beginning in 2026, monthly copays for insulin will be limited to the lowest of:

  • $35
  • 25% of Medicare’s maximum fair price
  • 25% of the negotiated price under the drug plan


Adult Vaccines

On January 1, 2023, there will no longer be any deductible, coinsurance or other cost-sharing requirements for vaccines that the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices recommends for adults. Currently, Medicare Part B pays for flu shots, pneumonia vaccines, hepatitis B inoculations and coronavirus vaccines plus boosters. However, other vaccines, such as the shingles shot, are covered under Part D, and many plans require you to share the cost of those shots. The new law eliminates cost-sharing for those vaccines.


Drug Price Negotiation

Starting in 2026, Medicare is required to negotiate with drug manufacturers on the cost of select drugs that are covered by Medicare. The federal government has never negotiated drug prices before.


Catastrophic Drug Coverage

Currently, when a Medicare recipient enters the catastrophic phase of Part D, they have to pay 5% coinsurance on all covered drugs. In 2022, a person enters the catastrophic phase once they’ve spent $7,050 out-of-pocket. Beginning in 2024, coinsurance in the catastrophic phase is eliminated.


Extra Help Subsidies

Starting in 2024, Full Extra Help subsidies will be available to more Medicare beneficiaries. Individuals with income up to 150% of the federal poverty level (FPL) will be eligible for the full Medicare Part D low-income subsidy. (In 2022 that amount is $20,385) Under current rules, full subsidies are available at 135% of FPL.

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