Seniors Will Save in 2025 Thanks to the Inflation Reduction Act: $2,000 Annual Out-of-Pocket Cap, $35 Monthly Insulin Cost Cap, and Free Vaccines
Medicare open enrollment begins on October 15 and runs through December 7. Starting October 1, seniors can begin reviewing coverage options for 2025. It is important that seniors understand the savings available to them as they make decisions about enrolling in a Medicare plan.
As Medicare beneficiaries review plans for 2025, seniors will see new benefits thanks to the Inflation Reduction Act’s measures to drive down drug costs. Because of these changes, it is more important than ever that seniors shop around for a plan that best meets their needs. Starting January 1, 2025 people on Medicare will benefit from a $2,000 annual out-of-pocket cap on prescription drug costs. This is in addition to benefits that went into effect on January 1, 2023: recommended vaccines are now free, monthly insulin costs are capped at $35 per prescription, and drug companies cannot take advantage of seniors by raising drug prices faster than the rate of inflation without penalty. Additionally, starting in 2026 and accelerating thereafter, Medicare beneficiaries will see lower drug prices across the board thanks to the Inflation Reduction Act’s provisions to give Medicare the power to negotiate lower drug prices, which will put downward pressure on premiums and save seniors and taxpayers billions of dollars.
Seniors Will Pay Less for Health Care
The Inflation Reduction Act is drastically reducing the cost of prescription drugs for the more than 50 million Americans enrolled in Medicare’s Part D drug benefit, reducing racial, income, and geographic disparities in health care, and saving lives. Seniors will finally have the breathing room they need to pay for other essentials like food and housing, or transportation to visit their grandchildren.
- Over 50 million Medicare Part D beneficiaries will have out-of-pocket costs for prescription drugs capped at $2,000 per year starting January 1, 2025.
- Medicare beneficiaries no longer face big drug companies’ outrageous price hikes that exceed inflation.
- All Medicare Part D beneficiaries have access to free vaccines, such as shingles and pneumonia, at no cost.
- No Medicare beneficiary pays more than $35 a month for an insulin copay.
- Lower prices were negotiated for the first 10 drugs selected for the Negotiation Program, with more drugs to be named each year. Nearly 9 million people on Medicare rely on these drugs and spent $3.4 billion on them in out-of-pocket costs last year alone.
The Inflation Reduction Act Lowers Prescription Drug Prices
$2,000 Annual Out-of-Pocket Spending Cap. Starting January 1, 2025, no senior on Medicare Part D will spend more than $2,000 a year on prescription drugs. This cap could mean the difference between life and death for the countless seniors relying on high-cost drugs for complex conditions such as multiple myeloma. The 3.2 million on Medicare who are expected to reach the cap in 2025 will save an average of $1,500 per year on out-of-pocket costs. By 2029, 4.1 million enrollees, including one in ten seniors in 19 states and DC will benefit from the new annual out-of-pocket limit.
Medicare Negotiation For Lower Drug Prices. In August, the Biden-Harris administration announced new, lower prices for ten of the most expensive and commonly used drugs among people with Medicare: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and Fiasp/ NovoLog. Nearly 9 million people on Medicare rely on these drugs and spent $3.4 billion on them in out-of-pocket costs last year alone. These prices go into effect in 2026, and will save seniors $1.5 billion out-of-pocket and save taxpayers an additional $6 billion in the first year alone. Over 80 percent of Americans support Medicare negotiating lower drug prices — the most popular provision in the Inflation Reduction Act.
$35 Insulin Cap For Seniors. In 2020, there were more than 3.2 million insulin users with Medicare, with nearly 1.7 million purchasing their insulin without low-income subsidies. On average, seniors with Medicare Part D or B who are not receiving subsidies pay an average of $572 every year for this life-saving medication — an unthinkable sum for many on fixed incomes. Patients who suffer chronic complications can expect to pay upwards of an additional $650 per year. Under the Inflation Reduction Act, monthly insulin copays for people on Medicare are capped at $35 per prescription. A recent study showed that 1.5 million people on Medicare would have saved an average of $500 in 2020 from the $35 insulin copay cap.
Ends Outrageous Price Increases For Seniors. Over the past 20 years, price increases for brand-name drugs in Medicare Part D have risen at more than twice the rate of inflation. The Inflation Reduction Act penalizes drug companies for raising drug prices faster than the rate of inflation starting at the beginning of 2023. Since this provision went into effect, manufacturers of 98 drugs have been penalized, saving at least 770,000 seniors directly on their drug costs, and saving people with Medicare and taxpayers nearly $3 billion. An analysis by KFF showed that half of all drugs covered by Medicare had list price increases exceeding the rate of inflation in 2020. For example, AbbVie has hiked the price of its blockbuster drug Humira 27 times, including in January 2021 when it raised its cost by 7.4 percent.
Free Shingles, RSV, and Other Recommended Vaccinations. Thanks to the Inflation Reduction Act, 50.5 million seniors are eligible for no-cost shingles vaccinations. In 2020, nearly 4 million Medicare beneficiaries received the two-part shingles vaccination. With a single shot of Shingrix costing $212, seniors on Medicare Part D are saving over $400 on average on vaccinations in 2023. The high out-of-pocket cost of the shingles vaccine has been a key factor in low vaccination rates, especially among Black and Latino communities. This extends an important affordable preventive service to seniors on Medicare; Americans with private insurance could already typically receive shingles vaccinations at no cost.
These savings and benefits are under attack:
Republicans want to repeal the Inflation Reduction Act and hike drug costs for seniors. Trump’s Project 2025 makes the GOP’s plans clear: repeal the Inflation Reduction Act, ban Medicare from negotiating drug prices, and line drug companies’ pockets. Every Republican in Congress voted against the Inflation Reduction Act and Republicans in Congress continue to call for its repeal. The GOP’s latest attacks are just another attempt to carry out Trump’s Project 2025, do the bidding of the big drug companies, and repeal the law.
Big drug companies are charging Americans two to four times more than people in other countries. While Democrats are doing what needs to be done to ensure seniors can afford the care they need without sacrificing groceries, gas, or rent – Republicans are siding with big drug companies and playing partisan games with seniors’ access to medication.