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Big Changes Coming to Medicare Part D Plans

For the first time in Medicare’s history, the amount of money that beneficiaries in drug plans will have to pay for their prescriptions each year will be capped, thanks to provisions of the Inflation Reduction Act of 2022. The new law makes other changes to the program’s Part D drug benefits, including putting a limit on out-of-pocket payments for insulin and making vital vaccines free.

“There was previously no limit on how much a person on Part D could have to pay in a given year,” says Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer. “And 1.3 million enrollees spent more than $2,000 in 2020.”

As with many of the other provisions in the new law, the changes to Part D out-of-pocket spending will roll out over the next several years. Here’s a look at how the new cost-sharing rules will work and when the savings will start. Let us help you choose the right Medicare plan that is right for you and saves you money. Give our office a call at 866-454-9467.

Out-of-pocket costs capped

The big news for beneficiaries is that beginning in 2025, the maximum amount they will have to pay out of pocket for prescription drugs each year will be $2,000. Here are a few important details.

  • This out-of-pocket limit applies if you get your prescription drugs through a stand-alone Part D plan that people enrolled in original Medicare sign up for, or if you access your Medicare through a private Medicare Advantage plan. Most of those MA plans also cover prescription drugs.

  • The amount of the cap could change over time. If what Medicare Part D spends on prescription drugs per enrollee increases, that $2,000-a-year cap could also rise.

  • If your Part D or MA plan has a prescription drug deductible, that will count toward the cap. So if your deductible is $100, once you’ve met that, your out-of-pocket costs will be capped once you’ve spent another $1,900 that year. In 2022 the maximum deductible Medicare allows a Part D plan to charge is $480 a year. Many plans have lower deductibles or even no deductible.

In 2024, the year before the out-of-pocket cap takes effect, Medicare beneficiaries will no longer have any out-of-pocket costs once they enter what Medicare calls catastrophic coverage. The way catastrophic coverage works in 2022 is that once an enrollee’s out-of-pocket costs reach $7,050, they have to pay 5 percent of their prescription drug costs, with no limit. But beginning in 2024, that 5 percent coinsurance requirement will be gone and enrollees won’t have to pay anything for their prescription drugs for the rest of the year. Another change to the Medicare drug benefit that begins in 2025 is the requirement that Part D plans offer enrollees the option of what is called smoothed cost-sharing. This means you can opt to have your out-of-pocket costs spread out over the year. This is designed to protect people from being hit with such a big drug bill at one time that it may discourage them from filling their prescriptions. For more information give our office a call at 866-454-9467. #AAIG #MedicarePartD

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