The Inflation Reduction Act In Depth
The Inflation Reduction Act (IRA) is a piece of legislation enacted in 2022 that includes certain laws affecting the Medicare Part D (prescription) program.
For 2025, the IRA removes the donut hole and also limits the out-of-pocket drug cost to Medicare beneficiaries at $2,000 per year. Although this is a positive change, there may be some negative blowbacks from the insurance carriers such as increased monthly premiums, increased copays, and tightened formularies. Nothing is set in stone yet, but the potential outcomes based on the coverage you have are listed below. We will update this page as we receive more definitive answers from the carriers.
If You Have A Part D Prescription Drug Plan
Increased Monthly Premiums
You may see increased monthly premiums on your prescription drug plan. Although the IRA includes a section that limits the premium increase to a certain percentage above the national average price of ~$35/month, most plans currently sit well below that national average price. This means plans can and may increase their premiums from $0/month to this national average price of ~$35/month, while still abiding by the new law.
Tightened Formularies and Increased Copays
Any insurance companies that choose to keep their monthly premiums low for 2025 may be able to do so by tightening their formularies and increasing copays. This means the lower premium plans will potentially cover less of the expensive brand name drugs or only cover select ones and increase the copays on said drugs.
No More Donut Hole!
Technically, the donut hole is gone! But this means that the initial coverage phase that came before the donut hole, which typically had lower copays, may have copays closer to 25% right from the start.
If You Have A Medicare Advantage Plan (MAPD)
Changes To RX Coverage
You will face the same changes as the Part D Prescription drug plans listed above like potential for increased monthly premiums, tightened formularies, higher copays, and removal of the donut hole. You must read the above information about the changes to prescription drug plans. These affect the Medicare Advantage plans in the exact same way.
Tightened Network and Less Ancillary Benefits
This is not specifically due to the IRA but because advantage companies are projected to get a lower reimbursement than expected from the federal government this year, so they are potentially making changes to the structure of certain plans. One change may be to tighten their networks, and remove some ancillary benefits like vision and dental.
If You Have A Medicare Supplement
This does NOT affect you! The IRA is specific to Medicare Part D changes. That being said, supplement premiums already have increased drastically this past year. Some by as much as 15%. To combat these increases, you can always keep the same Medicare supplement plan that you currently have and switch carriers to lower the monthly premium. Switching carriers will not change the plan you’re currently on, so there is no risk with regard to the coverage you’re accustomed to. There will be no change in network, no change in doctors and no change in coverage. Just a change in price. The letter of the plan (F, G, or N) is what determines the coverage – not the carrier! Our job is to help you navigate this process, and always keep your premiums as low as possible without changing your coverage.