If you are one of the 37.3 million Americans who has diabetes, you are all too familiar with the high cost of insulin. In response to the rising cost of this medication, in August 2022 President Biden signed the Inflation Reduction Act — an expansive bill that aims, in part, to lower the cost of insulin and other prescription drugs for Medicare beneficiaries. Some of the price cuts came into effect in 2023, whereas others will roll out over the coming years.
Capping the Cost of Insulin
The increasing cost of insulin has placed an unsustainable burden on diabetics, forcing many to choose between their medication and other necessities. Thanks to provisions in the Inflation Reduction Act, the cost of insulin will now be capped at $35 dollars a month. The law has two phases:
- Phase One – In effect as of January 1, 2023. For insulin medications covered under Medicare Part D — those not administered with an insulin pump.
- Phase Two – Goes into effect on July 1, 2023. For insulin medications covered by Medicare Part B — those administered with an insulin pump.
There are no longer any deductibles to worry about and no restrictions – even if you receive Extra Help. If you take more than one type of insulin, you will not pay more than $35 a month for each insulin.
Any non-insulin prescription drugs to treat diabetes are not included in the new law. However, they may be addressed in the future as Medicare begins to negotiate drug prices directly with drug manufacturers.
Are All Types of Insulin Covered by the $35 Cap?
The new ruling says the $35 cap applies to “any insulin covered by your plan.” Each insurance plan has its own unique drug formulary – or list of medications it covers. There are more than 70 insulin medications on the market and insurers are not required to cover all of them. You may find one insurer covers your insulin but another does not.
If your insulin is not on your insurer’s formulary, you can take advantage of a one-time Special Enrollment Period created for insulin users to change plans before December 31, 2023.
If your insurance company has overcharged you for a covered insulin, you will be receiving a refund. Insurers have been given until the end of March 2023 to update their systems to reflect the new pricing.
Other Drug News
The Inflation Reduction Act will have a significant impact on other aspects of prescription drug costs over the next few years. Medicare beneficiaries can expect lower costs and more predictable expenses.
For the first time, Congress has given Medicare the power to negotiate with manufacturers to bring down the cost of high-priced drugs that treat a variety of chronic conditions including diabetes, heart disease, cancer, and kidney disease. This will result in a gradual implementation of lower drug prices, starting in 2026. Drug manufacturers who increase their drug prices faster than the rate of inflation will have to reimburse Medicare for the difference and manufacturers who fail to comply will face financial penalties.
The drug manufacturer Eli Lilly has already responded to the changes by announcing that, effective March 1, 2023, they will be capping all their insulin medications at $35 for everyone, regardless of insurance coverage. They make several brands of insulin including Humalog.
Other pending changes:
- More people will be eligible for full benefits with Extra Help, starting January 2024. This helps consumers pay the out-of-pocket expenses for prescription drug coverage. It includes $0 Part D premiums and deductibles and reduced copayments.
- The 5% coinsurance for those who reach the catastrophic coverage phase of the Part D coverage gap – also known as the donut hole – will be eliminated in January 2024.
- In January 2025, out-of-pocket costs for Part D prescription drugs will be capped at $2,000 each year.
Although all this is good news, the constantly changing Medicare landscape can be confusing. The knowledgeable and experienced team at Medicare Educators can help you find the benefits that best suit your needs.