For plan year 2025, the Inflation Reduction Act of 2022 makes a number of significant updates to the Part D benefit aimed at reducing enrollees’ out-of-pocket costs. 

Beginning, 2025 The updates include capping enrollee out-of-pocket spending for covered Part D drugs at $2,000, eliminating the Coverage Gap Phase.

Medicare Prescription Payment Plan. That offer enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly installment payments instead of all at once at the pharmacy. 

Source: Medicare.gov

The Low-Income Subsidy (LIS) or Extra Help program. Historically, there have been two versions of the program, the full program, which provides a higher level of financial support for people with an income of up to 135% of the federal poverty level, and a partial program, which provides a lower level of financial support for people with an income between 135% and 150% of the federal poverty level (FPL).

 Beginning January 1, 2024, there will no longer be a partial program. Anyone who qualifies for the program will get full program benefits. With full benefits, the majority, if not all out-of-pocket costs for prescription medications will be covered. 

Beginning January 1,2024, the five percent prescription cost-sharing obligation in the catastrophic phase for Part D will be removed.

This will have the biggest impact on people with Part D who have expensive medications, and who don’t qualify for the Extra Help program.