Understanding the Inflation Reduction Act and new regulations

The Inflation Reduction Act introduces several key provisions aimed at reducing healthcare costs for Medicare beneficiaries. These provisions are designed to make prescription drugs more affordable and improve overall healthcare access for seniors and people with disabilities.

These key changes include:

Elimination of the Part D coverage gap: Ensuring continuous prescription drug coverage throughout the year starting in 2025.

Capping annual out-of-pocket drug costs: Setting a limit of $2,000 on out-of-pocket expenses for prescription drugs, providing significant financial relief.

Lowering insulin costs: Capping the cost of insulin at $35 per month for Medicare beneficiaries.

Expanding access to Extra Help subsidies: Increasing eligibility for low-income beneficiaries to receive assistance with Part D premiums, deductibles, and cost-sharing.

Phasing out 5% coinsurance for catastrophic coverage: Shifting more responsibility to Part D plan providers to cover these costs, which impacts premium calculations.

The Inflation Reduction Act is expected to increase Part D premiums in 2024 due to the elimination of the 5% coinsurance for catastrophic coverage and the added responsibility for plan providers to cover higher costs. However, starting in 2025, the act will cap annual out-of-pocket drug expenses at $2,000, potentially stabilizing costs for beneficiaries in the long term.