Inflation Reduction Act: Changes Affecting Medicare Part D
Posted on September 16, 2024
The Inflation Reduction Act provides meaningful financial relief for millions of people with Medicare by improving access to affordable treatments and strengthening the Medicare Program both now and in the long-run.
The new drug law makes improvements to Medicare Part D that will expand benefits, lower drug costs, keep prescription drug premiums stable, and improve the strength of the Medicare program.
How Does the Inflation Reduction Act Improve Medicare Part D?
People with Medicare will benefit from lower prescription drug costs and a redesigned prescription drug program. Benefits include:
- Insulin available at $35/month per covered prescription
- Access to recommended adult vaccines without cost-sharing
- A yearly cap ($2,000 in 2025) on out-of-pocket prescription drug costs in Medicare
- Expansion of the low-income subsidy program (LIS or “Extra Help”) under Medicare Part D to 150% of the federal poverty level starting in 2024
- Medicare will be able to negotiate directly with drug manufacturers to lower the price of some of the costliest single-source brand-name Medicare Part B and Part D drugs.
- Medicare Part D enrollees will have the option to pay out-of-pocket prescription drug costs in the form of capped monthly payments instead of all at once at the pharmacy through the Medicare Prescription Payment Plan.
How Do These Changes Affect Your Existing Medicare Part D Clients?
The standard Medicare Part D prescription drug coverage will be increasing for 2025.
- The plan design guidelines of the Simplified Determination were created with consideration of the standard Medicare Part D benefit that was in effect in 2009.
- Because the standard Medicare Part D benefit is increasing, there was some question about whether the Simplified Determination could be used for the 2025 determination.
- Guidance from CMS confirms that the Simplified Determination can be used for 2025, but it may not be available for future years.
Oxford/UHC has already determined that all their Small Group Plans will be creditable for 2025. This may not be the case for other carriers. Oxford/UHC is the only carrier to provide us with confirmation at this time.
For other carriers our legal team has advised based on the above that if a health plan used the CMS Simplified Determination method to determine creditability for 2024, and if the plan design is not changing for 2025 (or is changing but will stay within the Simplified Determination criteria), the plan will continue to be creditable for 2025. If more substantial changes are made to a group health plan drug card we recommend the group consult with their legal council or actuarial firm to determine creditability.
