The new cap on out-of-pocket prescription drug costs enacted as part of the 2022 Inflation Reduction Act will save more than 3 million Medicare beneficiaries an average of $1,500 next year, according to an analysis published by the AARP Public Policy Institute.
“Prior to the recent changes to the Medicare Part D benefit, these enrollees’ average out-of-pocket spending would have been approximately $2,600 in 2025; under the redesigned benefit, their average out-of-pocket spending is estimated to be roughly $1,100, a savings of 56 percent,” the report says.
The analysis finds that an estimated 3.2 million Medicare Part D enrollees will reach the new law’s $2,000 cap on out-of-pocket prescription costs next year, and the number of people hitting the limit will climb to 4.1 million by 2029. On average, about 1.4 million Part D enrollees will see annual savings of $1,000 or more between 2025 and 2029. And some 420,000 enrollees (or 12% of those in Medicare Part D) are expected to save $3,000 or more over that timeframe.
AARP, the nonprofit focused on seniors, had lobbied for the Inflation Reduction Act, which included several landmark healthcare changes, including the limit on annual out-of-pocket drug costs, a $35 monthly cap on insulin costs in Medicare and the first-ever Medicare price negotiations with drugmakers.
"AARP was instrumental in Congress passing the prescription drug law of 2022 to lower prices and out-of-pocket costs for Medicare enrollees,” AARP CEO Jo Ann Jenkins said in a statement. “As we approach January 2025, we want every senior in America to know that, thanks to the new annual cap which limits their out-of-pocket costs, they will have more money to invest in their families, spend on their broader health needs or simply save to achieve greater financial stability.”
