The Inflation Reduction Act (IRA) was enacted in August 2022 to bring substantial reforms aimed at controlling inflation, boosting clean energy, and reducing healthcare costs. Among its notable healthcare provisions are:
- Prescription Drug Price Negotiation: The IRA allows the government to negotiate prices for select high-cost drugs, potentially lowering out-of-pocket expenses for beneficiaries.
- Coverage Gap Elimination: The act removes the coverage gap phase, aiming to reduce costs for those with high drug expenses.
- Out-of-Pocket Cap: It establishes a $2,000 cap on out-of-pocket spending for prescription drugs.
- Insulin Cost Cap: Out-of-pocket insulin costs are capped at $35 per month.
- Expanded Preventive Services: Coverage for preventive services and vaccines is enhanced to improve health outcomes and reduce long-term costs.
Medicare Advantage (MA) plans, offered by private insurers as an alternative to traditional Medicare, often come with additional benefits but also varying premiums. The IRA's impact on these premiums includes:
- Drug Cost Reductions: Lower drug costs through IRA provisions can indirectly influence MA premiums.
- Expanded Coverage: Increased coverage options and preventive care under the IRA might lead to more comprehensive (and potentially more expensive) MA plans, though this can provide better value for beneficiaries.
- CMS Payment Updates: Changes in payment methodologies from CMS, influenced by IRA provisions, can affect premiums and benefits in MA plans.
The IRA changes outlined above are expected to significantly increase Medicare Advantage premiums for 2025 and beyond. Bolton consultants will continue to monitor the IRA’s impact on MA plan premiums and other areas impacting plan sponsors and plan participants. Contact your Bolton consultant for additional guidance or visit us at www.boltonusa.com.
