Joel Mekler | Medicare Moments: What’s in the Inflation Reduction Act for

On Aug. 16,President Biden signed into law the Inflation Reduction Act of 2022 (IRA), which includes sweeping Medicare prescription drug reforms and changes to the Part D program to protect people with Medicare from high out-of-pocket costs.

This article summarizes the IRA’s key drug and health provisions that will directly affect the pocketbooks of the 49 million currently receiving these benefits.

First, to those new to Medicare, “Medicare Part D” refers to prescription drug coverage under Medicare. There are two ways to get Part D benefits, depending on which of the two types of Medicare a person has.

The first type of Medicare, Original Medicare, is provided directly by the federal government. The other option is Medicare Advantage plans, which private health insurance companies sell. Medicare Advantage plans generally cover outpatient prescription drugs. Original Medicare does not, but folks with Original Medicare have the option to purchase a separate Part D drug plan from a private insurer.

The following has been excerpted from the Justice in Aging Fact Sheet. The IRA accomplishes the following:

•Expands the Medicare Part D Extra Help Program

•In 2024, eligibility for the full Part D low-income subsidy (“Extra Help”) will be expanded to people with income below 150% of the federal poverty level (FPL) ($20,385 for a single person in 2022). The partial subsidy will be eliminated.

•People with incomes between 135% and 150% FPL who previously qualified for the partial subsidy will now have the full subsidy with lower co-pays and no deductible.

•Asset limits for the full subsidy will continue to apply.

This expansion efficiently targets help to those with the hardest time paying for needed medications, particularly older adults of color who make up a disproportionate share of Medicare beneficiaries with income below 150% FPL. It will provide substantial additional financial support to the more than 400,000 low-income people who currently have only partial subsidies. It will also simplify the Extra Help program and streamline eligibility, reducing barriers to enrollment for thousands more people who are eligible but not enrolled.

•Caps Medicare Part D Out-of-Pocket Costs

All people with Medicare Part D coverage will have their out-of-pocket prescription drug costs limited to $2,000 per year. This out-of-pocket cap begins in 2025 and applies to people enrolled in stand-alone prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PDs).

•In 2024, cost-sharing will be eliminated in the Part D catastrophic phase, effectively capping out-of-pocket costs at the catastrophic threshold.

•In 2025, a new monthly cost-sharing cap policy will allow people to choose to spread their out-of-pocket costs throughout the year. This option will also be available to people with Extra Help.

•In 2023, insulin costs for people with Medicare will be capped…