Medicare to Cap Prescription Drug Costs at $2,000 Annually for 19 Million, Saving $400 on Average

Dec 31, 2024, 07:38 PM

Starting January 1, 2025, Medicare beneficiaries will benefit from a new $2,000 annual cap on out-of-pocket costs for prescription drugs under Part D, as mandated by the Inflation Reduction Act of 2022. This cap is expected to save millions of Americans money on their medications, with an estimated 19 million seniors and people with disabilities saving an average of $400 per year. The legislation also includes other cost-saving measures such as a $35 monthly cap on insulin prescriptions, no-cost vaccines, and Medicare's ability to negotiate drug prices. Prior to this law, there was no cap on out-of-pocket costs for medications covered by Part D plans, leaving enrollees responsible for 5% of their drugs' cost in the catastrophic coverage phase, which began at $7,400 in 2023. An interim cap of $3,500 was in place for 2024. This new provision does not apply to medications administered in doctors' offices, such as certain chemotherapy or infusions covered by Medicare Part B.