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The Inflation Reduction Act (IRA) made significant improvements to Medicare prescription drug access and affordability, including by restructuring the Part D benefit to limit enrollee expenses. Those changes began in January 2024, when the IRA eliminated cost sharing in the catastrophic coverage phase. This has effectively held enrollee spending to roughly $3,400 in 2024. Starting in 2025, the IRA sets a lower, uniform cap at $2,000, which will be indexed annually for growth in Part D.
A new report from the U.S. Department of Health and Human Services (HHS) Office of the Assistant Secretary for Planning and Evaluation (ASPE) examines the impact of the catastrophic coverage phase elimination on beneficiary spending as of June 30, 2024, including the number affected, their demographic characteristics, and their savings. Among the key findings:
The cap on out-of-pocket spending for Part D enrollees is only one of the IRA policies helping lower beneficiary costs. Other important provisions include:
An earlier ASPE report estimated that beneficiary out-of-pocket savings would total $7.4 billion in 2025, once these reforms were in place.
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