Insulin caps, free shots and drug rebates: What the Inflation Reduction Act means for you
While Medicare's new right to negotiate prices on a handful of drugs has gotten the most attention, older Coloradans will start seeing lower costs from related changes in the Inflation Reduction Act far sooner.
The new law runs 273 pages with provisions related to taxes, renewable energy and preparation for droughts, among other things. It also includes seven major changes related to the cost of insurance and prescription drugs.
Most of the health care changes only apply to people covered by Medicare, though people who buy their health insurance on the marketplace may see lower monthly costs than they did before the pandemic. Below is an overview of what the act means for you:
Marketplace insurance subsidies
In
The provision was set to expire
When does it start? The enhanced subsidies are already in place, and will last through the end of 2025. If you buy insurance through the Connect for Health Colorado marketplace this fall, they'll automatically be included when your coverage starts in January.
Does it affect me? If you're one of the 155,000 Coloradans who received the enhanced subsidies, they'll remain available. People in different age and income groups had different levels of savings. Some people received no benefit from the extra subsidies, while others saved
Out-of-pocket limit
When this takes effect, Medicare beneficiaries will only have to pay
As is, Medicare beneficiaries pay about
When does it start? In 2024, people who hit the catastrophic threshold won't have to pay 5% of their costs beyond that level, effectively capping their costs at about
Does it affect me? If you're one of the 1.4 million Medicare recipients the
Low-income subsidies
Medicare Part D — the part that covers prescription drugs — has subsidies covering almost out-of-pocket costs for recipients earning less than 135% of the poverty line and who have limited assets. That's about
The law extends the full benefits to Medicare-eligible people earning 150% of the poverty line (just over
When does it start? 2024
Does it affect me? If you are eligible for Medicare and earn between 135% and 150% of the poverty line each year, possibly. The way Medicare calculates assets is somewhat complicated, though, so you may have to call and work through the application to be sure.
Insulin price cap
Medicare recipients will only have to pay
When does it start?
Does it affect me? It does if you're a Medicare beneficiary who uses insulin and isn't in one of the plans that already cap insulin costs at
Free vaccines
Medicare splits how it covers vaccines, with some falling under the Part D drug program and others under Part B, which covers most medical costs other than hospitals and prescription drugs. Part B already covers vaccines without out-of-pocket costs, meaning it's free for recipients to get a shot for flu, COVID-19, hepatitis B and some other conditions.
Part D plans can charge out-of-pocket costs for vaccines, though, and how much they charge varies. The most prominent vaccine under Part D is the shingles shot. Under the new law, all vaccines recommended by the
When does it start?
Does it affect me? It will if you're covered by Medicare and your Part D plan didn't already offer vaccines for free. It's not a huge savings — people are paying an average of about
Drug rebates
This gets a little complicated. The
If it has, the drug maker has to pay a rebate to Medicare, which is basically the difference between the actual average price, and what the average price would have been if it only rose as much as the inflation rate. There are exceptions for drugs with a current shortage and for those that cost less than
Say HHS determines the average price is
When does it start?
Does it affect me? Not directly, because the rebate goes to Medicare, not to the people taking the medications. Since the average price includes both the prices charged to Medicare and commercial insurers, however, it could put pressure on drug makers to limit increases. On the other hand, they may set starting prices higher, knowing they won't be able to raise them as much in subsequent years.
Drug price negotiations
For the first time, Medicare is going to negotiate the prices it pays for a handful of drugs that don't have generic alternatives. Under the law, most of those drugs have to be at least seven years old. In the case of more complicated biologic drugs, they have to have been on the market for 11 years.
Technically, drug makers don't have to accept the price, but the law gives powerful incentives to play ball. If they don't, they can stop selling all of their medications to people covered by Medicare or Medicaid, or pay an excise tax that starts at 65% on sales of the drug in question.
When does it start? CMS will announce the first 10 drugs it intends to negotiate in September and will announce the prices in 2024. The negotiated prices won't take effect until 2026, though.
Does it affect me? Not directly; the rebates are paid to Medicare, not to individuals. If it succeeds in lowering drug costs, that could leave more tax dollars available for other priorities, but any clear benefit is a long way off.
Some senators have raised concerns about drug shortages or that Americans will lose out on new medications because of limits on prices. Secretary of Health and Human Services
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