5 Changes to Medicare from the Inflation Reduction Act

The Inflation Reduction Act of 2022, recently enacted into law, will bring sweeping financial reforms to make life more affordable for the everyday American. One of the largest federal programs affected by this legislation is Medicare. Whether you’re about to turn 65, or already have Medicare, you may be wondering: How will the Inflation Reduction Act impact my Medicare premiums and benefits?

The answer to that question takes multiple forms – though not every aspect of the new legislation will be felt by Medicare recipients right away. Read on to learn five ways the Inflation Reduction Act will impact Medicare:

1) Vaccines will be completely covered under Part D

Previously, only three vaccines – flu, pneumonia, and Hepatitis B – were completely covered by Medicare, under Part B. Others received partial coverage through Part D, but they came with varying out-of-pocket expenses depending on factors such as vaccine type and location of delivery. This will no longer be the case: all adult vaccines covered by Part D will incur no out-of-pocket costs.  

Changes in vaccine coverage will go into effect starting in 2023.

2) Insulin will not cost more than $35 a month

Diabetics know first-hand the immense financial burden paying for insulin can be. Thankfully, Medicare enrollees can soon expect relief, as insulin products covered by Medicare Part D will be capped at $35 a month. Insulin coverage will also no longer require meeting your Part D deductible, meaning you will always pay no more than $35 a month, regardless of whether you have met your deductible or not.

Caps on covered insulin products will go into effect starting in 2023.

3) Medicare Part D premium increases will be limited

The national base beneficiary premium for Medicare Part D will only be allowed to increase by up to 6% of the previous year’s. Theoretically, this should keep your Part D premiums from rapidly growing each year. However, beyond the national base, other factors such as your state or individual plan may impact how much this change will affect your own premiums. 

The 6% raise limit for Medicare Part D will go into effect starting in 2024.

4) Out-of-pocket spending on Medicare Part D will be capped 

For the first time, a Medicare Part D enrollee will have a yearly cap on their out-of-pocket expenses. You will not be expected to pay above $2,000 – after that amount is reached, any other drugs or products insured through Part D will be completely covered by insurance. 

The $2,000 cap for Medicare Part D will go into effect starting in 2025.

5) Medicare will be allowed to negotiate prices for costly drugs

For nearly two decades, the law has prevented Medicare from negotiating drug costs with pharmaceutical companies. The Inflation Reduction Act has removed this barrier: Medicare will be able to negotiate what it pays for expensive drugs, in turn helping enrollees to spend less as well.

The first 10 drugs to be negotiated will go into effect in 2026. The amount of drugs eligible for negotiation will increase in the coming years: 15 additional drugs each will be added in 2027 and 2028, then increasing to 20 additional drugs a year starting in 2029. 

Evidently, it will take some time before the Inflation Reduction Act’s changes to Medicare are completely implemented, with the biggest savings still being years away. If you’re looking to reduce your Medicare expenses right now or you want to make sure you’re getting the most out of your Medicare benefits, consider meeting with Cowen Tax Advisory Group. Our Medicare specialist will determine the best plan for you. Schedule a free consultation today!

Lindsey Restelli

lindsey@cowentaxgroup.com

As Cowen Tax Advisory Group’s Digital Marketing Assistant, Lindsey provides in-house copywriting and manages the company’s electronic records system, email marketing, and blog.