The Inflation Reduction Act of 2022 signed into law; Medicare beneficiaries expected to see the greatest impact

President Joe Biden recently signed the Inflation Reduction Act of 2022 into law. The legislation is broad, and not all parts of it have immediate effect. Below, we’ll outline four key items that agents and brokers should be aware of – and let you know when to expect the changes.

Effective immediately, expanded subsidies on the individual marketplace are extended through 2025

One pillar of the American Rescue Plan is the temporary removal of the subsidy cliff, and the expansion of premium tax credits. The expansion meant that individuals purchasing coverage on the Marketplace would be expected to pay no more than 8.5% of their income in premiums. The expansion has proven popular among consumers and industry groups, and is now in effect through 2025. This news may help to stabilize premiums in the near term.

Beginning in 2023, insulin prices for Medicare beneficiaries will be capped at $35 per month

This provision, of course, is a boon to insulin-dependent beneficiaries. No matter how many vials of insulin they use, their cost will be capped at $35 per month. This portion of the law will help ease the burden on beneficiaries who may have had to make tough choices between life-saving medication and essentials like food and housing.

In 2025, the Medicare Part D out-of-pocket maximum will be lowered to $2,000

In the current state, beneficiaries must spend $7,050 out of pocket before they qualify for catastrophic coverage. Under this coverage, patients are responsible for either a low copay or 5% coinsurance. In 2024, the coinsurance will be eliminated. The following year, the out-of-pocket limit will be reduced. In effect, the true out of pocket maximum will actually be a true out-of-pocket maximum. Beneficiaries undergoing cancer treatments or other extensive illnesses are the most like to be impacted by this provision.

Beginning in 2026, Medicare will be able to negotiate Part D drug prices

In 2026, the Secretary of Health and Human Services will propose the government’s offer prices for 10 Part D drugs that do not have generic alternatives. The list will expand to 25 drugs in 2027 and to 45 drugs in 2029. Part B drugs will be included in these later phases. We expect the list of the first 10 drugs to be released in 2023.

Final thoughts

The extension of premium tax credits is in the individual market is significant, in that subsidies will remain available to about 92% of consumers. We encourage agents to certify on the Federally Facilitated Marketplace, or to refer their individual business to Action, so their clients can access the lowest cost premiums.

The law makes significant alterations to Part D coverage. Action will continue to educate agents as changes come into effect, so that you can best advise your Medicare beneficiaries.