Not long ago we were talking about the Inflation Reduction Act of 2022 (IRA2022). (See my blog post What Does the Inflation Reduction Act of 2022 Mean for You?) In particular, we were looking foward to 2025 when the $2,000 annual max out-of-pocket (MOOP) for prescription drugs would be introduced for Medicare beneficiaries. The MOOP will apply to all prescription drugs in the formulary, no matter the cost tier or actual cost of the drug. Now, 2025 is right around the corner and Medicare carriers are starting to get serious about how this legislation will affect prescription drug plan designs and what this will actually mean for Medicare beneficiaries.
The $2,000 MOOP will no doubt be welcome news for anyone taking brand name drugs that fall on the higher cost tiers (tiers 3, 4, 5) of their drug plan. However, if costs to drug plans increase as a result of IRA2022, the plans may respond by pursuing savings elsewhere, including through more aggressive use of formulary exclusions, prior authorization, and step therapy. These cost control measures are already used by all Medicare prescription drug plans to some degree but may be more widely deployed and become more restrictive in order to control costs to the drug plan. (For more on this see: Study Shows Part D Plans Ratcheting Up Restrictions on Coverage)
Right now, we can't be sure what drug plans will look like in 2025. For those of you on Original Medicare with a Part D stand-alone prescription drug plan (PDP), we are expecting that these plans will have premium increases. If you're on a Medicare Advantage (aka, Part C) plan that has a built-in Part D prescription drug plan, those plans will also have to adjust for added costs.
Planning ahead for these changes is important. The Annual Election Period starts October 15th. Do your research. I will be studying the plan changes and working with my clients to find the best drug coverage fit for each of them for the 2025 plan year. In the meantime, feel free to contact me with questions.