CMS is again adjusting the Medicare Part D coverage for all those enrolled.  This will affect anyone with a standalone Part-D drug plan, or anyone with a Part-C Medicare Advantage plan.

These planned changes are part of the 2022 Inflation Reduction Act.  

The Inflation Reduction Act of 2022

In 2022 the Inflation Reduction Act (IRA) was signed into law and included several provisions to lower prescription drug cost for people with Medicare and reduce drug spending by the federal government.  It also included a number of changes to Medicare Part D.  All of these changes were planned to be to rolled out between 2023 and 2027.

Changes we have seen so far; 2023 & 2024

Some of the planned changes that have occurred already include

  • Adjusted the Part D deductible to $505 in 2023 and $545 in 2024.
  • Insulin cost were capped at $35 per month.
  • Part-D members can now receive recommended vaccines without having to pay their cost-share amounts.
  • Overhauling the coverage phases.  This vastly changed the ‘doughnut hole,’ what beneficiaries were required to pay out of pocket, and who paid for the excess charges.  Overall, out or pocket cost fell from roughly $8,000 to $3,300 over the two year period.
  • In 2024, coinsurance was elimination during the catastrophic phase, further lowering drug cost for enrollees that require expensive drugs.
  • Expansion of the Extra Help program, which provides prescription drug coverage to certain medications to certain individuals at a reduced cost.

What we can expect in 2025

Changes in 2025 include a new $2,000 out-of-pocket spending cap, eliminating the coverage cap completely, requiring the insurance company pay a higher percentage of drug cost, and drug manufacturers being required to offer discounts on certain drugs.

Perhaps the biggest change is the new ways in which enrollees will be able to pay for the prescriptions over a period of time instead of all at once. 

Out of Pocket Drug Spending Cap

Out of pocket spending cap will be further reduced to $2,000 from its current cap of roughly $3,300.

This disproportionately effects members who take name brand drugs as they simply pay more for them through required coinsurance and copayment amounts at the higher tiers.

This is a savings of about $1,300 per enrollee who max out their coverage gap in 2024.

Elimination of the Coverage Gap Phase

Previously, with the original Part D design, enrollees face 100% of their coverage gap phase drug cost.  This amount was reduced by the IRA in 2024 to 25%, and will be eliminated completely starting 2025.

This will remove the fluctuation of drug cost, as the cost-sharing amounts often changed depending on which phase of coverage an enrollee was in.

Insurance Companies & Drug Manufacturers Will Pay More

Depending on which phase of coverage a person is in, who pays what percentage of the total cost varies.

In 2023 and 2024, during the catastrophic phase, Medicare paid 80% of all cost.  In the 2023, the enrollee paid 5%; this was reduced to 0% in 2024.  The remainder of the cost was covered by the insurance company.

2025 is again adjusting there number, requiring the Part D plan to pay a larger percentage, and requiring the drug manufacturers to pay a part as well.

This change will help combat the rising cost of reinsurance by Medicare for drug coverage during the catastrophic phase.  In 2022, reinsurance cost account for 48% of all Part D spending, up from 14% in 2006.

Medicare Prescription Payment Plan

Starting in 2025, this option provides people with Medicare prescription drug coverage to spread the cost of their prescriptions over the calendar year rather than paying in full at the pharmacy counter each time they will a prescription

This is something that you will need to opt into in order to take advantage of.  Those that choose to go this route will have much more predictable monthly cost as they will be able to spread the payments over the remainder of the calendar year instead of all at once.

As this coincides with the drug cost cap of $2,000. this is a needed financial relief for many Americans that require high-cost prescription drugs.

2026 and Beyond

**This information is subject to change as future administrations will have the ability to alter the rules and laws set in place currently**

In 2023, the government began negotiating drug prices with the manufacturers.  The 10 drugs selected are Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Fiasp.  These are all name brand drugs that have no competition and as a result, cost Medicare Part D enrollees a lot of money.

By negotiating with the manufacturer directly, the cost for these drugs is lowered and unable to fluctuate.  Manufacturers that do not follow the negotiated requirements will have to pay a tax and penalties.

The prices decreases to these 10 drugs starts in 2026.

Future negotiated prices are

  • 15 Part D drugs in 2027
  • 15 Part B & Part D drugs in 2028
  • 20 Part B & Part D drugs in 2029 and every year after.

Takeaways

These changes are enormous.  For many Americans that face increasing cost on their prescription drugs, the Inflation Reduction Act has brought much needed relief.  Between the capped cost of insulin and removal of the doughnut hole, many Americans are in a more stable financial state.

The changes for 2025, capping the out of pocket max and structuring payment plans to better budget cost, further expand on the goal of helping the consumer.  Looking forward to 2026 and beyond, negotiated prices for prescription drugs will continue to safeguard the consumer.

Aaron

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