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The Inflation Reduction Act

In 2022, the Inflation Reduction Act (IRA) was signed into law. The IRA touches on many things, like changing tax laws, investing in energy infrastructure, creating jobs, and fighting climate change. It also notably impacts the Medicare program by improving and expanding benefits, lowering Part B (Medicare-covered) and Part D (plan-covered) drug costs, providing stable and predictable out-of-pocket costs for covered drugs, and more. Improvements to Medicare started in 2022 and will continue to roll out over time.

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Benefits available now

Insulin cost-sharing capped at $35 a month

The IRA limits the cost of all Part B and Part D covered insulins to no more than $35 per one-month supply, regardless of what drug tier the insulin is on or what Part D coverage phase a member is in. For Part B insulins that are administered through durable medical equipment like pumps, the $35 monthly limit applies only to the insulin, not the cost of the equipment.

$0 cost-share for recommended Part D vaccines

All Medicare plans with prescription drug coverage now cover the full cost of many Part D vaccines, including shingles, hepatitis A, and hepatitis B. People with Part D plans will not have to pay a deductible, coinsurance, or any other cost-sharing for vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), whether they are received in or out of network.

  • If you receive a Part D ACIP-recommended adult vaccine at a pharmacy, no payment will be required.
  • If you receive a Part D ACIP-recommended adult vaccine at a doctor's office, you may be asked to pay the cost for both the vaccine and administration up front. Reimbursement requests can be made by following the instructions outlined in your Evidence of Coverage (EOC). You will be reimbursed for the full amount.

$0 cost-share for Part D medications during the catastrophic coverage phase

The IRA limits the amount of money Part D plan members may spend out of pocket on their prescriptions per year. Once they reach the catastrophic coverage phase, which in 2024 begins when they have reached $8,000 in total out-of-pocket costs, they pay nothing for their medications until the beginning of the next calendar year.

  • Prior to the IRA, people with Part D plans who reached the catastrophic coverage stage would continue to pay five percent of their drug costs for the rest of the year.
  • Now, they will pay nothing after they reach this limit until the next year begins.
  • Most people never reach the catastrophic coverage phase. However, those who do in 2024 and beyond will get significant savings.

Learn more about Catastrophic Coverage.

Expansion of the Low-Income Subsidy (LIS) Program

Before the IRA, Medicare beneficiaries could get low-income subsidies (or "Extra Help") if their household income was up to 135 percent of the federal poverty limit. Thanks to the IRA, people earning up to 150 percent of the federal poverty limit may be eligible. For 2024, this means an enrollee's annual income must be below $22,590 for an individual or below $30,660 for a couple. Resources like stocks, bonds, and checking or savings accounts are also limited to below $17,220 for an individual or below $34,460 for a couple.

The IRA also ensures that "Extra Help" recipients have a $0 monthly Part D premium and a $0 plan deductible, and do not need to pay a Part D late enrollment penalty if they receive one. Additionally, it caps your costs for a single prescription at up to $4.50 for generics and $11.20 for brand-name drugs.

To see if you may qualify for Extra Help, use our Tax Credit and Subsidy Calculator.

Upcoming benefit changes

Annual out-of-pocket (OOP) threshold

Effective January 1, 2025, total out-of-pocket spending for people with Part D prescription drug coverage will be capped at $2,000 for the year. That means they will never pay more than $2,000 in out-of-pocket costs for covered drugs in 2025.

Medicare Prescription Payment Plan

The Medicare Prescription Payment Plan will allow individuals with prescription drug coverage to ease their cost-sharing burden by spreading out their out-of-pocket (OOP) medication spending over the course of the year. It won't lower their total drug costs, but it can help them manage their costs by making smaller, more predictable monthly payments. Beneficiaries must opt in to take advantage of the program, which they will be able to do beginning October 15, 2024, by phone, mail, or online. Further information and instructions will be released in the coming months.

Negotiated maximum fair prices for Part B and Part D drugs

A negotiated maximum fair price (MFP) will be rolled out for 10 Part D drugs in 2026, 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029. This will help keep the cost of these drugs lower than they would be otherwise.

Resources

For more resources and information on the IRA:

How can we help?

Call our Member Help Team

Call the number on the back of your member ID card to speak to our Member Help Team. Representatives are available seven days a week from 8 a.m. to 8 p.m. Please note that on weekends and holidays from April 1 through September 30, your call may be sent to voicemail.

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Website last updated: 6/18/2024