HHS Announces Cost Savings for 64 Prescription Drugs Thanks to the Medicare Rebate Program Established by the Biden-Harris Administration’s Lower Cost Prescription Drug Law (2024)

FAQs

What is the Inflation Reduction Act for HHS? ›

This new law provides meaningful financial relief for millions of people with Medicare by expanding benefits, lowering drug costs, and strengthening Medicare for the future.

Starting January 1, 2024, for the first time ever, patients with high prescription drug costs are no longer required to pay out-of-pocket costs once they reach a certain level of spending known as the catastrophic phase of Medicare Part D.

Part of the issue is that Medicare does not pay for Part D drugs, and so has no actual leverage. Part D drug providers are using the private insurer leverage, which is generally a larger block of consumers than the 40 million or so actually using Medicare parts A and B for medical care.

Annual limit of $2,000 for prescription drug costs in Part D

Beginning in 2025, people with Medicare Part D will have an annual limit, capping their out-of-pocket prescription drug costs at $2,000.

For households with annual income between 80 percent to 150 percent of an area's median income, the household can receive rebates up to 50 percent of the project cost. For households with annual income below 80 percent of an area's median income, the household can receive rebates up to 100 percent of the project cost.

Starting in January 2023, the IRA capped the cost of insulin for Medicare Part D beneficiaries at $35 a month for certain covered insulin products.

In 2025, all people with Medicare Part D will benefit from a $2,000 cap on annual out-of-pocket prescription drug costs. The Inflation Reduction Act requires drug companies to pay rebates to Medicare when prices increase faster than the rate of inflation for certain drugs.

Millions of People with Medicare Will Benefit from the New Out-of-Pocket Drug Spending Cap Over Time. In 2025, Medicare beneficiaries will pay no more than $2,000 out of pocket for prescription drugs covered under Part D, Medicare's outpatient drug benefit.

Specifically, the bill caps cost-sharing under private health insurance for a month's supply of selected insulin products at $35 or 25% of a plan's negotiated price (after any price concessions), whichever is less, beginning in 2024.

You'll pay an extra 1% for each month (that's 12% a year) if you: Don't join a Medicare drug plan when you first get Medicare. Go 63 days or more without creditable drug coverage.

What is the major flaw in Medicare? ›

The biggest challenges reported by those in Traditional Medicare and Medicare Advantage: Out-of-pocket medical costs and health services they needed but weren't covered. “The gaps in Medicare coverage can really be notable,” says Jacobson.

Can Doctors Refuse Medicare? The short answer is "yes." Thanks to the federal program's low reimbursem*nt rates, stringent rules, and grueling paperwork process, many doctors are refusing to accept Medicare's payment for services. Medicare typically pays doctors only 80% of what private health insurance pays.

Other drugs may be taken for only a short time to treat such problems as infections, some kinds of pain, and constipation. Almost 90% of older adults regularly take at least 1 prescription drug, almost 80% regularly take at least 2 prescription drugs, and 36% regularly take at least 5 different prescription drugs.

Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $5,030 on covered drugs in 2024, you're in the coverage gap. This amount may change each year.

Prices for drugs in the US in 2022 were nearly three times as high as the average in 33 other countries where incomes are high or relatively high, according to an analysis by the research group Rand Health Care. It's a gap that has widened in recent years.

The Inflation Reduction Act extends enhanced financial help to purchase plans on HealthCare.gov and State-based Marketplaces, saving enrollees money on their premiums. National estimates show that, on average, consumers receiving tax credits continue to save over $800 in premiums per year.

The Inflation Reduction Act is a new federal law that helps improve Medicare. It expands Medicare benefits. And it helps lower out-of-pocket drug costs. The Inflation Reduction Act lowers costs of insulin and other drugs under Medicare.

The Inflation Reduction Act is a transformative law that is helping the United States meet its climate goals and strengthen energy security, investing in America to create good-paying jobs, reducing energy and health care costs for families, and making the tax code fairer.

The Inflation Reduction Act requires drug companies to pay rebates to Medicare when prices increase faster than the rate of inflation for certain drugs. CMS intends to begin invoicing prescription drug companies for rebates owed to Medicare no later than fall 2025.