The passing of the Inflation Reduction Act of 2022 (IRA) has meant more than just lower drug prices. The bill is intended to provide substantial relief to beneficiaries of Medicare. This Act was signed into law in August 2022. The changes are exciting for all Medicare beneficiaries making their benefits much more affordable.
The Expedited Budget Reconciliation Procedures
The expedited procedures are possible only when the changes directly impact federal spending or revenue as determined by the senate parliamentarian. Congress uses a reconciliation process to expedite the process of bringing existing spending, revenue, and debt limit laws into compliance with the annual budget resolution’s fiscal priorities. When Congress adopts a budget resolution, it sets budgetary goals for the next fiscal year (as well as for at least four more years).
The Federal Government May Now Negotiate Prices of Some Medications for Medicare Beneficiaries
The negotiation of prescription medications has been a priority for years, and this Act is finally taking steps to have the ability to negotiate.
Negotiate Prices of Thirty Expensive Medications By 2028
The drug pricing provisions will result in an anticipated savings of more than $100 billion dollars by 2028. These changes will begin with pharmacies and eventually roll out drugs directly at doctor’s offices.
Capping Out of Pocket Costs for Medicare Beneficiaries
With this new act, the cap for catastrophic is $7,050, and the beneficiary doesn’t pay for drugs after reaching that limit. Previously there was no catastrophic cap, and after hitting the threshold, beneficiaries still pay 5% of the expensive drugs.
Limits On Insulin Cost Sharing To $35 Per Month
The out-of-pocket cost cap for insulin for Medicare beneficiaries would be $35 starting in 2026. It would be $35 or 25% of the negotiated price.
Banning Drug Companies from Raising Costs Greater Than the Inflation Rate
If drug companies raise costs higher than the inflation rate, they will need to pay rebates back to Medicare. This leaves a strong incentive for drug companies not to exceed yearly inflation.
$2,000 Cap on Out-of-Pocket Drug Costs Beginning In 2025
This cap is expected to benefit more than 1.5 million Medicare beneficiaries, and at least 3.5 million are expected to incur savings of at least $1,500. Currently, there is also no out-of-pocket cap on catastrophic drug expenses.
Enhanced Premium Subsidies for Persons Who Purchase Insurance Under the Affordable Care Act Marketplace
During COVID-19, enhanced premium subsidies were put into effect. These have now been extended. Without this extension of enhanced subsidies, more than 13 million people will incur a premium increase of at least 50%. This extension of Medicare benefits is expected to cost $64 billion.
Low-Income Subsidies Will Be Increased for Persons Previously Not Considered Eligible
Medicare has increased for beneficiaries who earn between 135% and 150% of the poverty threshold.
Premium Hikes Limited To 6% From 2024 through 2029
The 6% premium hike limit applies each year from 2024 through 2029. Failure to comply will result in rebates being mandated back to Medicare.
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