Starting in 2025, Medicare Part D plans will introduce a $2,000 annual cap on out-of-pocket prescription costs, a significant change brought by the Inflation Reduction Act of 2022. This new rule aims to help beneficiaries, especially those on expensive brand-name drugs, by limiting their annual spending on medications. Currently, once out-of-pocket spending exceeds $3,300, catastrophic coverage kicks in, eliminating further costs for the year. However, the new cap applies only to Part D drugs, not Part B drugs like vaccinations and injections administered by doctors.
The $2,000 cap will adjust annually based on the growth in per capita Part D costs, likely increasing over time. While this cap is expected to save money for many, it might also lead to unintended consequences. Health insurers may seek ways to offset their increased costs, potentially leading to more prior authorizations, stricter medication coverage, and higher premiums and co-pays. Some experts even predict that insurers might withdraw from offering Part D plans altogether.
Beneficiaries are advised to scrutinize their Medicare Part D plan options carefully to ensure their needed prescriptions are covered. If a desired medication isn’t covered, an exception request, supported by a treating clinician, may be worth pursuing. Overall, the new cap represents a significant shift in Medicare’s approach to managing prescription costs, with the potential for both positive and negative impacts on beneficiaries and insurers alike.