Few Beneficiaries Know Part D Out-of-Pocket Cap Now in Effect

A newly effective Inflation Reduction Act (IRA) provision is improving prescription drug affordability for many people with Medicare Part D — but too few know about it, potentially limiting its efficacy.

As of January 1, 2024, Part D enrollees are no longer required to pay 5% coinsurance after they reach the catastrophic threshold. According to a new KFF report, this means that in 2024, Part D enrollees will pay no more than about $3,300 for all brand-name drugs they take. And starting in 2025, out-of-pocket (OOP) drug spending will be capped at an even lower amount, $2,000, indexed annually for growth in Part D costs.

Although 5% may not seem like much, with many drugs priced at $150,000 or more per year, it can add up quickly. Affording thousands of dollars in medication costs a year can be particularly burdensome for people with Medicare, many of whom live on fixed or limited incomes that cannot keep pace with high and rising prescription drug prices.

To illustrate the impact of this coinsurance change, KFF examined three commonly taken cancer drugs, each priced at well over $100,000 a year. In 2023, Medicare Part D enrollees who used any of these drugs for the entire year faced nearly $12,000 in OOP costs. In 2024, their portion will drop by eight to nine thousand dollars. And next year, when the $2,000 cap takes effect, they’ll save even more.

Notably, recent KFF polling finds only a quarter of older adults know about this change to Part D coinsurance rules. This suggests an urgent need for beneficiary outreach and education, as cost concerns may be preventing some people from getting the treatment they need. If you or someone you know has questions about navigating or affording Medicare, call Medicare Rights National Helpline at 800-333-4114, or your local SHIP.

Read more from Medicare Rights about Part D coverage phases and costs in 2024.

Read the KFF report, The New Help for Medicare Beneficiaries with High Drug Costs That Few Seem to Know About.