September 10, 2022 – There is good news coming for the estimated 1.5 million Medicare recipients who have been affected by the notorious prescription drug donut hole. The relief will arrive in 2025, thanks to the Inflation Reduction Act signed by President Biden. Then the new law will put a $2,000 limit on annual drug copayments by retirees, replacing the current donut hole scheme, which hits people hard when they spend over a certain amount until they hit a catastrophic limit. Along the way monthly insulin charges will be capped at $35 for Medicare recipients in 2023, and in 2024 the 5% copay on charges over the catastrophic limit is eliminated.
Current law requires retirees to pay 25 percent of the cost after they and the government pay a combined $4,430 out for their prescription drugs. The 25% figure lasts until people hit a “catastrophic” threshold amount, currently $7,050, and then they still have to pay 5% over that. Some beneficiaries were paying over $5,000 or even $10,000 because of it. The new limit eliminates these requirements; copayments will be capped at $2,000 in 2025.
The new law is a big win for retirees, and it has been a long time coming. Together with the government’s new ability to negotiate drug prices for Medicare recipients, retirees (and the government) will be saving a lot of money.