The Inflation Reduction Act of 2022 will help millions of Americans better afford their life-sustaining medications and also help them pay for other out-of-pocket health care costs. Here are the answers to some commonly asked questions about the new law. Go to AARP.org/fiercedefender to learn more about the law's health care provisions and AARP’s role in fighting for these changes.
Lowering Drug Prices
When will Medicare drug-price negotiations begin?
The U.S. Department of Health and Human Services (HHS) will begin the negotiation process in 2023. By 2024 the agency will identify which 10 prescription drugs will be the first whose prices will be negotiated. By 2029, up to 60 drugs will be subject to price negotiation.
When can we expect to see a difference in drug prices?
The first prices resulting from the negotiations between HHS and drugmakers will take effect in 2026.
Which drugs will be subject to negotiation?
The drugs selected will be among the 100 medications that Medicare spends the most on. The drugs selected for negotiation can't have any direct competition from generic or biosimilar (a generic form of a biologic drug) alternatives. And they have to have been on the market for a certain number of years.
What will happen to the money Medicare saves from lower prices?
Lower prices mean the Medicare program will save money while providing the same drugs to beneficiaries. And beneficiaries taking drugs with negotiated prices will have lower out-of-pocket costs. The money Medicare doesn't need to spend on medicines should help bolster the program's budget, reduce premiums and improve long-term solvency.
Is there anything else in the new law to help rein in soaring drug prices?
Yes. Starting in 2023 drugmakers who raise their prices more than the rate of general inflation will have to pay Medicare a rebate for the amount of their price increases above the rate of inflation.
Medicare Part D Changes
When will the $2,000 out-of-pocket cap take effect?
Beginning in 2025 Medicare beneficiaries will not have to spend more than $2,000 a year on their medications. Before that, in 2024, Medicare enrollees who reach the catastrophic phase of the Part D prescription drug program will not have to pay any more out-of-pocket for their drugs during that year.
Which vaccines will be free?
Starting in 2023 Medicare will cover at no cost to beneficiaries vaccines that have been approved for adults by the Centers for Disease Control and Prevention (CDC) Advisory Committee for Immunization Practices. Among the shots to be fully covered is the shingles vaccine, which currently requires cost-sharing for those on Part D.
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When will my insulin be capped at $35 a month?
Beginning in 2023, copays for a 30-day supply of any insulin that a Medicare drug plan covers will be capped at $35.
What will happen to my Part D premium?
Beginning in 2024 and continuing through 2029, Part D premiums cannot increase by more than 6 percent a year. Be aware that premiums for these private insurance drug plans vary widely depending on which plan you pick and where you live.
Do these changes apply to Medicare Advantage plans?
Yes. Almost all Medicare Advantage (MA) plans include prescription drug coverage, and those who belong to the few that do not can enroll in a standalone Part D prescription drug plan. All the Part D changes apply to all Medicare beneficiaries with drug coverage — whether they enroll in original Medicare with a standalone drug plan or an MA plan with prescription drug coverage.
Making Health Care More Affordable
How will the new law help Medicare beneficiaries pay Part D premiums and copays?
The new law expands eligibility for Medicare’s Part D Low-Income Subsidy (LIS) benefit, also known as the Part D Extra Help program. Beginning in 2024, Medicare beneficiaries with annual incomes of up to 150 percent of the federal poverty limit ($20,385 for an individual in 2022) who also meet the program’s resources limit can qualify for full benefits under the Extra Help program. The income threshold for full benefits currently is 135 percent of the federal poverty guidelines ($18,347 for an individual in 2022).
I'm not on Medicare yet. Is there anything in the law to help me afford ACA policies?
Yes. The new law extends until the end of 2025 the expanded Affordable Care Act (ACA) premium subsidies that were instituted under the American Rescue Plan Act of 2021. This means that more people will continue to be eligible for the ACA subsidy and no one will have to pay more than 8.5 percent of their annual income for an ACA health insurance plan premium.
Dena Bunis covers Medicare, health care, health policy and Congress. She also writes 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.