by Edwin Quinabo
Remy Polanco, Moanalua, has spent tens of thousands of dollars on prescription drugs for high blood pressure and diabetes, her daughter Susan Peralta said, who lived with Remy and served as her caretaker before her mother passed on. “In her [Remy] last six years, my mom developed other chronic illnesses like liver disease and hyperthyroidism that pushed her monthly prescription drug costs to about $8,000 a year. Fortunately, my mom had the financial means to cover that cost, but I know many others in their late age with similar health conditions do not,” Peralta said.
2025 New $2,000 out-of-pocket cap on prescription drugs
While Polanco had passed on, millions like her on Medicare will soon see a dramatic cost reduction in their prescription drugs and get a much-needed financial reprieve, public health experts say.
In 2025, millions of Americans will benefit from a new law that caps out-of-pocket expenses for people with a Medicare prescription drug plan at $2,000. It is the first time ever that Medicare drug plan plans will limit out-of-pocket spending, made possible by the passage of the Inflation Reduction Act (IRA) of 2022. Part D plans have historically not had a limit on out-of-pocket spending.
“No person should have to face unaffordable prescription drug costs year after year,” says Leigh Purvis, AARP’s prescription drug policy principal. “This new law will bring relief to so many people who have been struggling with the effects of skyrocketing drug prices. It is a really meaningful protection for people on expensive drugs but also, frankly, for anyone who could potentially be prescribed an expensive drug in the future,” Purvis said.
The Centers for Medicare & Medicaid Services (CMS) announced the new law goes into effect January 2025. It covers Medicare’s outpatient drug benefit (Part D) and eliminates the 5% coinsurance requirement for patients in the catastrophic phase. The $2,000 cap includes deductibles, copayments and coinsurance for covered drugs. It doesn’t apply to premiums or to drugs a plan doesn’t cover.
How it works? In 2025, Part D plans can have a deductible up to $590. Then Medicare enrollees will pay copayments for medications until the total out-of-pocket costs reach $2,000.
The cap beyond 2025
The $2,000 cap will be indexed to the growth in per capita Part D costs, so it may well rise each year after 2025. But health experts say even if Part D premiums rise after 2025 as expected, the cap will provide long-term savings.
According to AARP, in 2025 more than three million older Americans or around 8.4% of Part D beneficiaries who do not receive other subsidies could see thousands in savings each year because of the new revision to Medicare Part D. It adds that by 2029, that number could rise to more than 4 million people.
Nearly 56 million adults in the U.S. have a plan under Medicare that helps cover the cost of outpatient prescription medications.
A Kaiser Family Foundation (KFF) report states, “Over the course of several years, far more Part D enrollees will stand to see savings from this new out-of-pocket spending cap than in any single year. A total of 5 million Part D enrollees had out-of-pocket drug costs of $2,000 or more in at least one year during the 10-year period between 2012 and 2021, while 6.8 million Part D enrollees have paid $2,000 or more out of pocket in at least one year since 2007, the first full year of the Part D program.”
Stress relief associated with cost
AARP, which lobbied in favor of the IRA law, said most Medicare enrollees expected to benefit from the spending limit are between 75 and 84 (45.6 percent) or between 65 and 74 (29.8 percent). Those diagnosed with chronic health illnesses or require expensive drugs will benefit most.
Surveys show when patients are diagnosed with long-term illnesses, the cost of treatment brings additional stress to one’s medical diagnoses. Public healthcare advocates say the new law will help reduce at least some of the financial stress associated with the need for long-term drug treatment.
AARP member Diana DiVito, 82, said the cost of the treatment she takes for chronic leukemia has averaged $858 per month over more than five years. “When I saw my first co-pay, I almost had a heart attack,” she said. “It’s a tremendous weight off my shoulders and I’m incredibly grateful [for the new cap].”
Pharma’s caveat
Pharmaceutical Research and Manufacturers of America (PhRMA) that lobbied against the IRA drug provisions, argues the new structure will mean fewer insurance plans to choose from then higher premiums for patients, along with slowing the development of new medications.
PhRMA President and CEO Steve Ubl said in a statement, “The ironically named Inflation Reduction Act is a bad deal being forced on American patients: higher costs, more frustrating insurance denials and fewer treatments and cures for our loved ones.”
Doesn’t cover Medicare Part B drugs
David Lipschutz, associate director of the Center for Medicare Advocacy, said “This new rule applies only to medications covered by your Part D plan, though, and does not apply to out-of-pocket spending on Medicare Part B drugs.” Part B drugs are typically vaccinations and injections a doctor administers. Part B drugs will still maintain their current coverge.
A big help to cancer patients on expensive drugs
Stacie Dusetzina, a cancer research and health policy professor at Vanderbilt University, wrote in an article published in the New England Journal that the out-of-pocket cost of one year of some anticancer prescriptions can range from $10,000 to $15,000. That dollar figure comes with a caveat: some patients may not fill the prescription or take it the whole year because of the cost. “This is really just a very important change, it’s a huge amount of savings for people with cancer,” Dusetzina said.
Some cancer drugs are not subject to the Part D cap because they are delivered to patients through doctors’ offices rather than through pharmacies.
The IRA was one of President Joe Biden’s biggest legislative achievements during his presidency. He said, “starting in 2025, no matter what your total bills are for prescription drugs, you’ll never have to pay more than $2,000 a year, because some of these cancer drugs are $10,000 to $15,000 bucks a year.”
Spending patterns and thoughts on prescription drugs
AARP research shows: 1) an estimated 82% of Americans age 50 and older believe that prescription drugs are too expensive; 2) Nearly 50% of people polled by AARP report not filling a prescription due to its cost, or knowing someone who has done so; 3) 21% of older adults surveyed by AARP report spending more than $1,000 out of pocket in the past year on prescriptions; and 4) Nearly 75% of surveyed adults (71%) say that they or someone they know will benefit from the new out-of-pocket cap.
Teresita Bernales, Kailua, has Medicare Advantage with Prescription Drug Coverage, a plan provided to her by her union, the NYSUT AFT with AFL-CIO.
AARP says in addition to Original Medicare Plan D, the $2,000 out-of-pocket spending cap also applies to deductibles, copayments and coinsurance in the prescription drug portion of Medicare Advantage plans (Part C, private insurance through Medicare).
Bernales said, “The new [cap] plan is beneficial for individuals with high drug costs since they will no longer face unpredictable expenses after reaching the coverage gap. This may not seem immediately impactful for those not currently affected by the coverage gap. However, as healthcare needs evolve with age and as more expensive medications become necessary, having a fixed out-of-pocket limit will be a relief. This creates greater financial security especially for retirees or those on fixed incomes.”
Peralta, 62, said “I know there will come a time when my husband and I will need pricey medications, and I feel better about this new cap on prescription drugs. I have three more years before my Medicare benefits kick in. Cross my fingers, I pray that I do not develop some of the health problems that my mom had that were very costly. My husband, 67, is already enrolled in Medicare and he’s fairly healthy as well and does not need to take prescription drugs. Seniors who are not needing pricey medications now should be grateful that there is this financial security in place.”
Peralta adds, “We have President Joe Biden and Democrats in Congress to thank for this cost-savings security. He placed the needs of seniors above Big Pharma that I believe have been charging too much for medications. Look at other countries, they pay much less for the same drugs. It’s unfair.”
Elvisa Ramos, Ewa Beach, is on Medicare but not enrolled in Part D, which is optional. She said Medicare costs should be lower than they currently are for seniors on fixed income like herself and her husband.
Medicare expanded services for 2025
CMS said Medicare is expanding services and coverage for the following:
Enhanced Telehealth Services: Medicare will continue to expand coverage for telehealth services, making it easier for beneficiaries to access care remotely.
Mental Health Services: There will be increased coverage for mental health services, including counseling and therapy, to address the growing need for mental health support.
Preventive Services: More preventive services will be covered without cost-sharing, encouraging beneficiaries to take proactive steps in managing their health.
Chronic Care Management: Enhanced support for chronic care management, including better coordination of care for individuals with multiple chronic conditions.
Home Health Services: Expanded coverage for home health services, allowing more beneficiaries to receive care in the comfort of their homes.
Bernales said she and her husband sometimes do telehealth for follow-ups but not on a regular basis. “I think expansions on Telehealth will enhance doctor and patient relationships, making consultations very accessible. Presently, I find the wait time to get connected is as long as it is when you are in for the office visit. If Telehealth response is quicker, more patients will use it.”
She said the aging population often faces isolation and expanded mental health is crucial in addressing emotional well-being. On enhanced home health care services, Bernales said that is her prime concern. “More access to in-home assistance such as housekeeping and medication assistance should be available to more patients which can be crucial if mobility is an issue and not only for those in dire situations. For chronic care management, care coordination will ensure support more effectively, it will avoid complications, reduce hospital admissions and will improve the quality of life for those with long term conditions.”
She said all these changes will mean increased accessibility to healthcare, improved mental health, enabling independent living and reduced healthcare cost and improvement in the quality of life.
2025 Medicare new Mid-Year Notification of Unused Supplemental Benefits
Starting in 2025, Medicare Advantage plans will be required to send policyholders each July a personalized “Mid-Year Enrollee Notification of Unused Supplemental Benefits.” It will list all supplemental benefits the person hasn’t used, the scope and out-of-pocket cost for claiming each one, instructions on how to access the benefits, and a customer service number to call for more information.
In 2025, Brokers can no longer be offered incentives to enroll people in Medigap or Medicare Advantage
CMS says currently salespeople sometimes get incentives like exotic vacations and hefty bonuses when they enroll Medicare beneficiaries into private insurers’ Medicare Advantage plans (alternatives to traditional Medicare), or Medigap (Medicare supplemental). As an added consumer protection, CMS will prohibit brokers from receiving sales incentives.
“This announcement is a big win for seniors because it strengthens protections against deceptive and high-pressure marketing practices,” Senate Finance Committee Chairman Ron Wyden (D-Ore.) said.
Bernales welcomes this consumer protection change, calling it a critical reform. “It helps reduce conflicts of interest that in the past may have led to aggressive and inappropriate marketing tactics. This will protect seniors from being pushed into plans that might not suit their needs. The lack of financial motivation for agents ensures that the advice beneficiaries receive is based on their actual healthcare requirements, and not on commissions offered. They will enhance access to important services, reduce the risk of unexpected costs, and strengthen protections against potential exploitations of insurance agents.”
Peralta also believes this is a significant reform. “Seniors often are on fixed budgets, and anyone involved in signing up new Medicare enrollees should only be considering health needs and not perks or added commissions. The original intention of Medicare is to provide quality healthcare at a time when in old age, we can still afford it. The added benefits in Medicare Advantage or Medigap should be covered in original Medicare in my opinion. We shouldn’t have to pay extra for these benefits offered by private insurers.
“This ultimately should be the next step, so we don’t have to worry about things like brokers steering enrollees to a plan and get something for doing it because I believe brokers will still get rewarded in some way for swaying enrollees to one plan over others. It might not come in the form of a bonus, but maybe favor in the company for future promotion or raises,” said Peralta.
Other changes for Medicare 2025
Some other changes for Medicare next year:
*For Part B (doctors’ services, outpatient care) there is an increase in monthly premium to $185 (2025) up from $174 (2024).
*For Part B, the deductible (out-of-pocket you pay before coverage kicks in) has gone up to $240 (2025) from $174 (2024).
*For Part A, inpatient hospital deductible for Medicare is $1,632 (days 1-60) for each benefit period.
“The changes to Medicare overall are steps in the right direction. It’s still too complicated. Medicare shouldn’t be a one-size fits all because seniors have different medical needs and budgets. But I hear from family and friends already on Medicare say there are too many plans, and this makes the entire process confusing. It might sound cynical, but I think all these options and the changes each year to Medicare is still designed for maximized profit under what the current law allows. I think the premiums for Medicare Part B is too high for seniors on fixed incomes,” Peralta said.
Bernales said of the 2025 changes overall, “The changes reflect a move towards more consumer-oriented healthcare, with an emphasis on transparency and maximizing benefits. This is a step forward in making Medicare more responsive to the real needs of its beneficiaries.
About Author
+ There are no comments
Add yours