What The Inflation Reduction Act Means To Older Adults

As inflation has increased, seniors have to question whether they can afford to take care of their health or not. Luckily, the Inflation Reduction Act could help “millions of older adults by lowering the costs of medication drug prescriptions and extending Affordable Care Act insurance subsidies,” according to the National Council on Aging (NCOA). After the House & Senate passed the law, Joe Biden signed it to move forward on August 16, 2022.

The NCOA President and CEO Ramsey Alwin released a statement in approval of the health-related effects of the bill,

“The Medicare prescription drug provisions are of particular interest, as they will go a long way in making prescription drugs much more affordable for millions of older adults, including those with the lowest incomes for whom expensive medications are out of reach.”

How would Inflation Reduction Act help seniors:

The legislation addresses 4 areas, according to the NCOA:

• Decreasing Medicare prescription drug expenses
• Extending expiring Affordable Care Act (ACA) premium subsidies
• Opening new incentives to lower the impact of climate change and advocate energy efficiency
• Increases taxes on wealthy individuals and large corporations to cover for reforms and lower the deficit

What other Medicare prescription drug provisions are on the bill?

According to the NCOA,

In 2023:

• A new cap on increasing prices of drugs: Manufacturers of certain Part D drugs would be expected to reimburse, or ‘rebate,’ Medicare if the price of their drug rises faster than the rate of urban consumer price index inflation (CPI-U). Financial penalties would be imposed for non-compliance.
• Limits on insulin costs: Monthly out-of-pocket cost sharing for insulin would be capped at $35.
• Free Vaccines: All vaccines would be free for Medicare beneficiaries, the only population for which vaccines are not already free.

In 2024,

• Zero coinsurance for catastrophic costs: The current 5% coinsurance for catastrophic costs would be eliminated. This year, the out-of-pocket threshold, after which 5% coinsurance begins, is $7,050. In 2023, the threshold will be $7,400.
• From 2024-2029, limits on Part D premium increases: Annual premium growth would be capped at no more than 6%, to ensure insurers and manufacturers will not pass their new financial responsibilities on to beneficiaries.

In 2025,

• Reduced catastrophic cap: Annual prescription drug out-of-pocket cost sharing can’t be higher than $2,000. Beneficiaries would also have the choice to split that amount into more affordable monthly payments.
• Shifting financial responsibility for prescription drug costs: The bill builds incentives to cap drug prices by putting responsibility for higher prices onto insurance companies and drug manufacturers.

In 2026,

• Allow Medicare to negotiate drug prices: Starting with 10 Part D drugs, the Secretary of Health and Human Services would have new authority to negotiate prices. The drugs eligible for negotiation would be taken from the list of the 50 most expensive brand-name drugs that lack competition and would remain on the list until competition enters the market. Only older drugs would be subject to negotiation, after a period of nine years for most “small molecule” drugs and 13 years for more complex “biologic” drugs after FDA approval. There would also be an exception for drugs with less than $200 million in annual sales.

In 2027,

Price negotiation for 15 Part D drugs

In 2028,

Price negotiation for 15 Part B and Part D drugs

In 2029,

Price negotiation for 20 Part B and D drugs

While the bill lowers the costs of medications, it does not include provisions to improve access to home and community-based services. This can be a problem for seniors, as the costs of caregiving services are expected to continue to increase. In the next 30 years, long-term care annual costs are predicted to grow by 330% to $300,000 a year for an in-home caregiver, according to American Association for Long-Term Care Insurance. 1+1 Cares provides information on how to afford in-home care services while dealing with the increase in expenses.

1+1 Cares is a referral agency that works for clients and caregivers. We match caregivers with clients and inform them of your requirements. We work for you so you and your loved one can have a safe, enjoyable caregiving experience.