Is the Inflation Reduction Act going to save Medicare Beneficiaries at the pharmacy in 2025?

The Inflation Reduction Act of 2022 has large implications for Medicare Beneficiaries! This article is an attempt to help our clients and community understand what to expect in 2025 regarding changes to Medicare Part D and what your user experience might be.

First, if you are receiving Extra Help with Prescriptions, or Low-Income Subsidy (LIS), you need not worry about the cost of your prescriptions increasing! As of January of 2024, the Inflation Reduction Act expanded eligibility guidelines for the LIS program through Social Security to include all those on Medicare with incomes below 150% Federal Poverty Level (FPL). In 2024, you will qualify for Extra Help if your income is as much as $22,596 per year, if you are a single person, or $30,660 if you are a married couple.

When you qualify for Extra Help with Prescriptions, benchmark premiums and Deductibles are waived, while Co-pays, and Coinsurance for Prescriptions are limited to very low set amounts each year. You also may qualify for certain Medicare Advantage plans that may provide $0 copays for all your medications.

If you are not qualified for Extra Help with Prescriptions and you take insulin, insulin is dependably affordable! The Trump Administration began the $35 cap on insulin in 2020 , through the Insulin Savings Model. The IRA expanded the insulin cap to include all formulary insulin and to include not only insulin covered through Part D, but also through Part B.

As of 2023, the IRA makes it possible for you to get your Medicare covered vaccines at $0 cost at the pharmacy. Please remember to get your vaccines at the pharmacy and NOT the doctor’s office. When you get a prescription from the pharmacy, it will be covered under Part D. When you get the same shot administered by your doctor, in the doctor’s office, it will be covered under Part B. Part B medications have a 20% cost share to the beneficiary.

If you typically fall into the “Donut Hole” and enter the Catastrophic Phase of drug coverage, you should pay less for your prescriptions in 2025. Due to IRA, a person on Medicare in 2024 who reaches the Catastrophic Phase of drug coverage will pay $0 for all their covered medications.

To reach the Catastrophic Phase of coverage, in 2024, an individual would pay about $3250 in actual out of pocket costs. So you will probably experience significant less cost in 2025 due to IRA’s Part D Redesign and $2000 out of pocket maximum.

However, most people on Medicare do not fall under any of the above categories! Many take no prescriptions, few low-cost maintenance drugs, or just one name brand that might put them into the “Donut Hole” but not into the Catastrophic Phase. On average, most people on Medicare pay much less than $2000 out of pocket for their drugs each year.

Part of the confusion about drug coverage is related to the understanding of Troop (True out of pocket cost) vs. actual Out of Pocket cost. The former states that once an individual has reached $8000 in total drug cost, they will pay $0 for their prescriptions in 2024 (Catastrophic Phase). What is not clear is that no individual pays $8000 out of pocket. Currently, the $8000 is shared by the Medicare beneficiary, the

insurance company, the drug manufacturer, and the government. The individual’s share of the $8000 in 2024 would max out around $3250. So, when we are evaluating the value of our savings from the IRA, we should use apples to apples and only consider ACTUAL out of pocket cost! Not the inflated $8000 number.

If you are on Medicare and have low utilization of Part D- meaning you may take no medication or just a couple maintenance medications, or just one expensive brand that might have put you just over the edge of the “Donut Hole” in 2024- You will likely pay more for your prescriptions in 2025!

Because the IRA transfers most of the prescription cost from the government to the Drug Manufacturers and the Insurance Carriers, we will see a lot of changes in our Medicare Plan Options for 2025:

· There will be fewer Part D plans.

· There will be less generous supplemental benefits on Medicare Advantage Plans such as dental to help pay for the insurer’s increased prescription cost.

· There will probably not be any $0 Premium Plans.

· You will probably have a drug deductible on T3 and above medications.

· You will probably have coinsurance rather than a copay for most T3 and above medications.

· Formularies may be tighter, meaning some drugs may or may not be included.

· More costly prescriptions will probably have higher utilization controls, meaning prior authorization, step therapy, etc…

· Medicare Advantage with Prescription Drug Coverage will probably be more cost effective for certain beneficiaries experiencing higher out of pocket cost in January.

 

For more information about how the Inflation Reduction Act may affect your Medicare coverage in 2025, please contact Senior Benefit Advantage, LLC. Senior Benefit Advantage is an Independent Insurance Brokerage owned and operated by Rhonda Kraus, MSW and Licensed Insurance Agent/Broker. Rhonda’s social service background coupled with more than 35 years of insurance industry experience is the foundation of Senior Benefit Advantage. She and her team strive to be a valued resource to their clients in the communities they serve. For more information or questions about your Medicare, please visit their website: seniorbenefitadvantage.com or call 740-502-2784.