Seniors won’t pay more than $2,000 for drugs at the pharmacy starting in January

Medicare beneficiaries who take a lot of pricey medications will get a big break come 2025. That’s when the $2,000 annual cap on out-of-pocket costs for drugs bought at the pharmacy or through mail order takes effect.

Medicare beneficiaries who take a lot of pricey medications will get a big break in 2025. That’s when the $2,000 annual cap on out-of-pocket costs for drugs bought at the pharmacy or through mail order takes effect. The limit is one of the 2022 Inflation Reduction Act’s most consequential provisions to lower prescription drug prices for Medicare enrollees. The law also instituted a $35 monthly cap on insulin prescriptions, enabled beneficiaries to get more vaccines at no cost, allowed Medicare to negotiate the prices of certain medications and required drug makers to pay a rebate to Medicare if they hike prices faster than inflation. Before the law, there was no cap on what Medicare enrollees might have to spend on medications covered by their Part D drug plans. They were on the hook for 5% of their drugs’ cost in the so-called catastrophic coverage phase, which, in 2023, began when they hit $7,400 in out-of-pocket spending. The federal government paid 80% of the cost, while insurers paid 15%. An interim ceiling of roughly $3,500 was in place for 2024. “The cap offers some peace of mind that you won’t have to leave the pharmacy empty handed because you can’t afford the cost of your drug,” said Juliette Cubanski, deputy director of the Program on Medicare Policy at KFF, a nonpartisan health policy organization. More than 3 million enrollees who do not receive Medicare’s low-income subsidy should benefit from the $2,000 cap, according to AARP. That figure will rise to more than 4 million in 2029. About 40% of beneficiaries who reach the limit between 2025 and 2029 will see an estimated annual savings of $1,000 or more.