More than a million U.S. seniors will save $1,100 in prescription drug costs every year under a provision in the 2022 Inflation Reduction Act, according to a new report released Wednesday.
The report was conducted by AARP, which lobbied for the passage of the Inflation Reduction Act in 2022.
Under the provision, out-of-pocket prescription drug costs for Part D of the Medicare program will be capped at $2,000 every year beginning in 2025.
Before the Inflation Reduction Act, many Medicare Part D enrollees had to pay 5 percent of their prescription drug costs regardless of how much they had already paid.
Between 3 and 4 million Medicare Part D enrollees are expected to benefit from the out-of-pocket cap every year between 2025 and 2029.
About 40 percent of Medicare drug plan enrollees — or roughly 1.4 million people — are expected to reach the new out-of-pocket cap between 2025 and 2029.
And those Medicare recipients will save an average of 56 percent in their prescription drug costs — or around $1,100 — as part of the provision, according to the analysis.
Roughly 12 percent of Medicare drug plan enrollees — or about 420,000 people — will save more than $3,000 in prescription drug costs.
“We want every senior in America to know, thanks to the new annual cap which limits their out-of-pocket costs, they will have more money to invest in their families, spend on their broader health needs or simply save to achieve greater financial stability,” said AARP CEO Jo Ann Jenkins.
The new cap will impact Medicare Part D enrollees differently depending on their age, sex and race or ethnicity, the analysis found.
Almost half of all Part D enrollees who are expected to reach the new out-of-pocket limit next year are between the ages of 75 and 84, and slightly more women will benefit than men.
A higher share of Part D enrollees who are part of a North American Indigenous group will benefit from the new cap compared to Part D enrollees who are white, Black, Asian or Hispanic, the report also found.