How the New Part D Out-of-Pocket Spending Cap Will Benefit Beneficiaries Over Time
Medicare open enrollment begins in October, and we like to keep you up to date on the changes and developments of note. This month, we’re focusing on something you probably care a lot about: prescription drug costs.
According to the Kaiser Family Foundation (KFF), nine out of 10 adults age 65 and over take prescription medicine. A new provision kicking in next year could help them save money on those drugs.
The Inflation Reduction Act of 2022 institutes a $2,000 cap on out-of-pocket prescription drugs covered under the Medicare outpatient drug benefit, Part D. The aim of the provision is to reduce out-of-pocket costs for Medicare beneficiaries while also decreasing what Medicare spends on prescriptions.
Thousands of Dollars in Savings Each Year
KFF projects that Medicare beneficiaries could save thousands of dollars thanks to these changes. It notes the cap will be particularly impactful for seniors who need high-priced drugs to treat chronic conditions such as rheumatoid arthritis and cancer.
For cancer, for instance, the popular cancer treatment Ibrance can cost up to $12,000 annually out of pocket (which is already well off the $100,000 retail price). With the institution of the cap next year, cancer patients taking Ibrance will only pay $2,000, or $10,000 less than they had been paying.
The new policy looks to have far-reaching impacts. In 2021, 1.5 million of those enrolled in Part D plans spent more than $2,000 on prescription drugs, according to KFF. That includes 200,000 people who paid $5,000 or more out of pocket and another 300,000 who spent between $3,000 and $5,000. Just think what that extra money could mean to someone who needs it.
Which States Could See the Biggest Impact From the Cap?
One of those states that could be most affected by the change is Pennsylvania. Between 50,000 and 82,000 Medicare Part D enrollees had out-of-pocket prescription costs greater than $2,000 in 2021.
The KFF analysis found that a number of other states will see considerable relief from out-of-pocket expenses, too. California, Texas and Florida, the three states with the greatest number of residents over 65, all had more than 100,000 Part D enrollees who paid over $2,000 in out-of-pocket costs in 2021.
Like Pennsylvania, New York, Ohio, New Jersey, North Carolina and Illinois had between 50,000 and 82,000 enrollees paying more than $2,000 out of pocket on prescriptions.
Who Will Benefit the Most From the Cap?
The KFF analysis finds that people who benefit from the out-of-pocket prescription spending program may vary. For instance, someone being treated for an acute but not chronic condition may benefit one year and not the next. A smaller number of people with chronic conditions may benefit consistently each year.
Interestingly, KFF’s polling found a relatively small percentage of Medicare beneficiaries are aware of the changes — so many may get a pleasant surprise next year! If you want to know more about this new provision or discuss your Medicare open enrollment options, contact Jay today.
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