For the first time in Medicare’s history, the amount of money beneficiaries in drug plans will have to pay for their prescriptions each year will be capped. That’s thanks to provisions of the Inflation Reduction Act of 2022.

AARP’s recent article entitled “Big Changes Coming to Medicare Part D Plans” explains that, as with many of the other provisions in the new law, the changes to Part D out-of-pocket spending will roll out over the next several years. Let’s look at how the new cost-sharing rules will work and when the savings will start.

Out-of-pocket costs capped. The maximum amount seniors will have to pay out of pocket for prescription drugs each year will be $2,000. This limit applies if you get your prescription drugs through a stand-alone Part D plan, or if you access your Medicare through a private Medicare Advantage plan. Most of those MA plans also cover prescription drugs. If what Medicare Part D spends on prescription drugs per enrollee increases, that $2,000-a-year cap could also rise. If your Part D or MA plan has a prescription drug deductible, that will count toward the cap.

Another change to the Medicare drug benefit that starts in 2025 is the requirement that Part D plans offer enrollees the option of what is called smoothed cost-sharing. This means you can opt to have your out-of-pocket costs spread out over the year, which is aimed at protecting seniors from being hit with such a big drug bill at one time that it may discourage them from filling their prescriptions.

Premium increases are limited. Starting in 2024 and continuing through 2029, Part D premiums can’t increase by more than 6% a year. In 2022, the national average Part D premium is $33.37 a month. The amount of these premiums varies widely, depending on where you live and what plan you select.

Insulin charges are restricted. Beginning in 2023, copays for a 30-day supply of any insulin that a Medicare drug plan covers will be capped at $35. Part D plans will be required to adhere to the $35 copay limit, even if an enrollee hasn’t met their annual deductible.

Many vaccines will be free. Starting on January 1, 2023, Medicare enrollees won’t have any out-of-pocket costs for vaccines that the CDC’s Advisory Committee on Immunization Practices recommends for adults. Medicare Part B, which applies to doctor visits, diagnostic tests and other outpatient services, already fully covers some vaccines, including flu shots, pneumonia vaccines, hepatitis B inoculations and coronavirus vaccines (initial shots as well as boosters). However, other vaccines, most notably the expensive vaccine for shingles, are covered under the Part D prescription drug plans, and many of those plans currently require enrollees to share the cost of those shots. The new law eliminates that cost-sharing.

Reference: AARP (August 15, 2022) “Big Changes Coming to Medicare Part D Plans”