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About 1.4 million Medicare prescription plan participants will save $1,000-plus each year with new out-of-pocket cap starting in 2025
Retirees who are worried about the high costs of prescription drugs are set to get new relief starting in 2025.
Starting in January, Medicare drug plan enrollees will have their annual out-of-pocket drug costs capped at $2,000.
Between 2025 and 2029, on average, about 1.4 million participants in Medicare drug coverage (also known as Medicare Part D) who reach the new out-of-pocket cap will see an estimated annual savings of $1,000 or more, according to a new report from AARP.
More than 420,000 will see savings of more than $3,000 during that time.
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In 2025, average out-of-pocket spending will be roughly $1,100 for retirees who reach the out-of-pocket cap, down from about $2,600 without the changes, resulting in a 56% savings, according to AARP.
“That’s money that can be used instead to buy groceries and pay bills,” Nancy LeaMond, executive vice president and chief advocacy and engagement officer at AARP, said during a Wednesday presentation on the research.
The new limits on prescription drug spending are due to changes enacted by Congress in the 2022 Inflation Reduction Act. The legislation also gave Medicare the ability to negotiate certain prescription drug prices. Earlier this month, the Biden administration released the prices for the first 10 drugs that are part of those negotiations.
Prior to the Inflation Reduction Act, many Medicare Part D participants were required to pay 5% of their prescription drug costs with no limit for expensive medications, even after surpassing a certain spending threshold and entering into what’s known as catastrophic coverage.
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