NEW MEDICARE PRESCRIPTION DRUG CAP MEANS BIG SAVINGS FOR CALIFORNIA SENIORS

By Suzanne Potter, California News Service

September 12, 2024 (Sacramento) – Hundreds of thousands of older Californians will see huge savings on prescription drugs starting in January, according to a new AARP report.

This is because the Biden administration's Inflation Reduction Act caps prescription drug costs for Medicare beneficiaries at $2,000 per year starting in 2025.

An estimated 271,000 people in the Golden State will reach the deductible limit next year, said Nina Weiler-Harwell, deputy director of advocacy and community engagement at AARP California.

“Medicare drug plan enrollees across the country who meet the new out-of-pocket cap will save an average of about $1,500,” Weiler-Harwell said, “or 56 percent in 2025 on new prescription drugs.”

On average, 40% of Medicare beneficiaries who reach the cap will save $1,000 per year, and 12% will save more than $3,000.

It is estimated that between three and four million Part D plan enrollees will benefit from the new out-of-pocket limit each year between 2025 and 2029.

Weiler-Harwell said the Inflation Reduction Act introduced a number of new measures to reduce the cost of Medicare health insurance for Americans.

“Insulin copays are capped at $35 a month,” Weiler-Harwell said. “Vaccines for shingles and pneumonia are free. The Inflation Reduction Act has allowed Medicare to negotiate prices for expensive prescription drugs. But we won't really see that until 2026.”

Thanks to the IRA, pharmaceutical companies also have to pay a penalty if they raise their prices more than the rate of inflation.