Medicare coverage Medicare costs Inflation Reduction Act

The Inflation Reduction Act is about to save you a bunch of money on healthcare.

On average, people over the age of 65 spend over 13% of their annual budget on healthcare, according to the U.S. Bureau of Labor Statistics. But thanks to the Inflation Reduction Act (IRA), signed on August 16, 2022, you may spend less on healthcare in 2023 and beyond. Here’s how:

1. If you are on a Medicare Prescription Drug Plan (a.k.a. Part D) or have a Medicare Advantage plan with prescription drug coverage, there will be caps on how much you will be charged on prescription drugs:

2024: The maximum you will pay per year on prescription drugs is $4,000 per year
2025 and beyond: The maximum you will pay is $2,000 per year

If you spend more than that now (and millions of people over 65 do), you stand to save big!

2. If you have diabetes and require insulin, and you have a Prescription Drug Plan or have a Medicare Advantage plan with prescription drug coverage, monthly insulin costs were capped at $35 per month. This represents a huge savings for over 4 million Medicare beneficiaries!

3. As of 2023, Prescription Drug Plans and Medicare Advantage plans with prescription drug coverage cover the cost of ALL FDA approved vaccines, including the shingles vaccine and the Tdap, so roll up your sleeve!

4. Starting in 2024, insurance companies cannot raise your monthly premiums for a Prescription Drug Plan by more than 6% per year.

5. Medicare is now able to negotiate with the pharmaceutical companies on 100 prescription drugs. Don’t expect to see savings quite yet, because negotiations could take time, but it’s a good bet prices on your prescription drugs will go down over the years. (See the first 10 drugs chosen for negotiation.)

6. Pharmaceutical companies cannot raise the price of any drug by over the rate of inflation. If they do, they must rebate the difference to Medicare, which likely will result in lower costs to you.

7. The Low-Income Subsidy (LIS) program – better known as Extra Help – now assists with Part D plan cost-sharing, to help pay for monthly premiums and yearly deductibles. To get any Extra Help today, your income and resources must be within 150% of the “federal poverty level” (FPL).

If your income is between 135% and 150% of the federal poverty level, currently you qualify only for partial Extra Help benefits. Thanks to the Inflation Reduction Act, if your income is between 135% and 150%, you’ll now get full Extra Help. So, more people will get the Extra Help.

In the “lower 48” United States, for example, if you’re in a two-person household and your combined yearly income is $29,580 or less, you will now qualify for Extra Help.