When 9 Big Medicare Prescription Drug Changes Take Effect

A year-by-year timeline of the Inflation Reduction Act’s health provisions

Dena Bunis and Kimberly Lankford,

Updated September 10, 2024

AARP

Comments

En español

Published September 20, 2022

/ Updated September 10, 2024

Matt Chase

The Inflation Reduction Act of 2022 is transforming Medicare’s prescription drug coverage through provisions that, for the first time, allow the agency to:

Negotiate prices of some medications with drugmakers.
Cap out-of-pocket costs for beneficiaries.
Make vital vaccines free to enrollees.

The benefits of the law apply both to people enrolled in original Medicare and those who belong to private Medicare Advantage plans. The U.S. Department of Health and Human Services (HHS) has a website, lowerdrugcosts.gov, that outlines the prescription provisions of the law.

Here’s a year-by-year look at how the changes are rolling out and when the landmark legislation affects Medicare beneficiaries.

2023

1. Vaccinations. Vaccines that the federal Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) recommends for adults became free for Medicare beneficiaries. Medicare Part B already covered some vaccines, including flu and pneumonia inoculations, plus hepatitis B shots for people at medium or high risk for the virus.

The law eliminated cost sharing for other vaccines, including shingles and RSV that Part D prescription drug plans pay for. More than 10 million Americans received a free vaccine in 2023 that Medicare Part D covered, according to HHS.

2. Insulin cap. Copayments on a 30-day supply of insulin that Part D covers are capped at $35, even if you haven’t satisfied your annual Part D deductible.

3. Price hike penalties. Pharmaceutical companies are subject to penalties if they raise prices more than the general inflation rate. These companies must pay Medicare a rebate for the amount they priced drugs above the inflation rate. The penalty applies to all Medicare sales of that drug.

In June 2024, HHS identified 64 drugs that more than 750,000 Medicare enrollees use whose prices rose faster than the inflation rate. The coinsurance percentages for these drugs, which Medicare Part B covers, were adjusted from July 1 to Sept. 30, 2024, to match the inflation rate.

2024

4. Part D out-of-pocket costs. Part D plan members whose high drug costs elevate them to the catastrophic coverage phase no longer pay out of pocket for the rest of the year. In 2024, the out-of-pocket threshold for that coverage phase is $8,000, which includes your costs and drug manufacturers’ discounts. Previously, plan participants had to pay 5 percent of their costs in this phase.

5. Part D premium limitation. From 2024 through 2029, Part D plans can’t increase base premiums more than 6 percent a year. The base premium is $34.70 in 2024 and $36.78 in 2025.

However, the base premium may not equal the total monthly premium that a plan enrollee pays. Because plan costs vary widely, premiums may have dropped for some while others saw increases. Beyond 2029, the HHS secretary will determine the premium growth limit.

6. Financial aid. The government expanded eligibility for the Part D Extra Help program, which assists people with limited incomes in affording prescription costs such as premiums and copays. The income limit to qualify for full Extra Help increased from 135 percent of the federal poverty level to 150 percent, which is $22,590 for an individual or $30,660 for a married couple in 2024.

2025

7. Out-of-pocket-cap. The maximum amount that people with Medicare will pay out of pocket for covered prescription drugs will be $2,000 a year. This new limit will apply to stand-alone Part D plans and drug coverage through a Medicare Advantage plan.

An AARP report found that nearly 3.2 million Americans are expected to save on prescription medications in 2025 because of the $2,000 cap.

8. Help with Part D budgeting. Part D members will have the option of spreading cost-sharing payments throughout the year, something Medicare calls “smoothed” cost sharing. This move is designed to protect people from being hit with one big drug bill, which can discourage some from filling a prescription. People can opt into this Medicare Prescription Payment Plan through Part D.

2026

9. Price negotiations. Consumers will begin to benefit from the first 10 prescription drugs subject to Part D price negotiations. In August 2024, Medicare announced negotiated prices for the initial 10 drugs, which include expensive medications for arthritis, blood clots, cancer, diabetes, heart failure and kidney disease. Those prices take effect in 2026.

Medicare will negotiate price reductions on up to 15 drugs for 2027 and 2028, and up to 20 drugs in 2029 and beyond. By 2029, as many as 60 drugs could be subject to negotiation. For Medicare Part B drugs, typically administered in a hospital or doctor’s office, price negotiations will take effect in 2028.

This story, originally published Sept. 20, 2022, was updated with additional information about the status of the changes and their effects so far.

%{postComment}%

Dena Bunis covered Medicare, health care, health policy and Congress. She also wrote the “Medicare Made Easy” column for the AARP Bulletin. An award-winning journalist, Bunis spent decades working for metropolitan daily newspapers, including as Washington bureau chief for the Orange County Register and as a health policy and workplace writer for Newsday.

Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at Kiplinger’s Personal Finance and has written for The Washington Post and Boston Globe. She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.

Unlock Access to AARP Members Edition

Join AARP to Continue

Already a Member? Login

Recommended for You

Benefits Recommended For You

See All