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What is the Inflation Reduction Act?

In mid-2021, the US economy experienced a mass increase in inflation rates. Prices increased dramatically, and many consumers struggled to make ends meet. In June 2022, the US annual inflation rate peaked at 9.1%, and many other global economies saw similar increases.

The Biden administration addressed these high inflation rates and many other large-scale economic issues by passing the Inflation Reduction Act in August 2022. 

The legislation took effect in January 2023 and addresses issues like the ongoing climate crisis and healthcare accessibility. Here’s a look at what the Inflation Reduction Act covers:

Healthcare Reforms

The Inflation Reduction Act contains notable healthcare and insurance reforms. Healthcare costs are a significant expense for many Americans, and this legislation aims to make them less burdensome.

The Inflation Reduction Act Medicare components provide access to affordable prescription drugs for older adults who need them. Most notably, patients with Medicare Part D plans can get insulin prescriptions for $35 per month. In 2024, the Inflation Reduction Act reduced the catastrophic coverage level from a 5% cost share to a 0% cost share. 

Starting in 2025, there will be a $2,000 cap on medication costs on all Medicare Part D plans. The “donut hole” will be phased out, and the new phases for Medicare Part D will be the deductible phase, initial phase, and catastrophic phase. 

This legislation also allows CMS to negotiate directly with drug companies to lower Medicare drug prices. Drug manufacturers will also need to provide rebates to Medicare when raising prices faster than the rate of inflation.

Drug Price Negotiations 

The Inflation Reduction Act introduces several measures to lower prescription drug costs.

One of the most significant changes is allowing the Centers for Medicare & Medicaid Services (CMS) to negotiate directly with drug companies.

This negotiation aims to lower the costs of high-priced medications for Medicare beneficiaries, potentially saving billions in healthcare expenses.

The ability to negotiate drug prices is expected to help reduce the financial burden on seniors who rely on these medications.

Additionally, the Act requires drug manufacturers to provide rebates if their drug prices increase faster than inflation.

This provision is designed to curb rapid price hikes and ensure that drug prices remain fair and stable.

By linking price increases to inflation, the Act aims to protect consumers from unexpected and substantial cost increases, making prescription drugs more affordable and predictable for those on Medicare

Vaccine Accessibility

The Inflation Reduction Act also focuses on improving vaccine accessibility for adults.

Beginning in January 2023, all ACIP-recommended vaccines are available at no cost for individuals covered under Medicare prescription drug plans and Medicaid.

This means that important vaccines, such as those for shingles, pneumonia, and the flu, will be more accessible to millions of Americans without any out-of-pocket expenses.

The removal of cost barriers is a significant step towards increasing vaccination rates among adults, especially seniors and low-income individuals who may have previously avoided getting vaccinated due to high costs.

 By ensuring that these vaccines are free, the Act aims to promote public health and prevent the spread of infectious diseases.

Financial Assistance

The Inflation Reduction Act includes provisions to enhance financial assistance for healthcare, making it more affordable for low-income individuals and families.

Starting in 2024, the Low-Income Subsidy (LIS) program, also known as the “Extra Help” program under Medicare Part D, will expand to include individuals with incomes up to 150% of the federal poverty level.

This expansion will provide the following:

  • Helping to cover premiums.
  • Deductibles.
  • Co-payments for prescription drugs.

This means that more Medicare recipients and disabled individuals will receive the support they need to afford their medications, reducing their financial burden and improving their access to necessary treatments.

Additionally, the Act extends financial assistance for purchasing affordable health insurance plans through and state-based Marketplaces.

This extension ensures that the subsidies introduced under the Affordable Care Act (ACA) remain available, helping millions of Americans afford their health insurance premiums.

By making healthcare more affordable, these provisions aim to increase coverage rates and ensure that more people have access to essential medical services.

Focus on Insurance Impacts

The Inflation Act promises some key changes in insurance. Starting in 2025, there will be a cap on Medicare Part D premium increases.

Additionally, the Act supports various energy efficiency improvements aimed at reducing greenhouse gas emissions and promoting climate resilience.

This means that the premiums for Medicare prescription drug plans cannot increase by more than a set percentage each year.

This change is designed to protect beneficiaries from sudden and significant cost hikes, providing more stability and predictability in their healthcare expenses.

These changes will significantly affect Medicare beneficiaries by making prescription drugs more affordable and predictable.

The cap on premiums increases and issues provisions such as the $2,000 annual out-of-pocket cap and the elimination of the “donut hole.”

This ensures that seniors and disabled individuals will face fewer financial barriers to accessing their medications.

Moreover, the Act is creating thousands of good-paying jobs in clean energy sectors. This serves to boost domestic manufacturing and invest in America’s clean energy future.

Protect Your Health with Senior Insurance Agency

Since the Inflation Reduction Act is still relatively new, it will take time before we can assess its long-term impact on the economy and the American public.

Senior Insurance Agency helps Nevada residents find the right Medicare plan for their needs. We also help people find proper dental and vision insurance, life insurance, and travel insurance.

If you’re looking for healthcare coverage you can trust, get in touch with our agents today.

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