The Inflation Reduction Act includes many provisions that aim to reduce out-of-pocket spending for prescription drugs covered under Medicare Part D. In 2024, cost-sharing in the final phase of the Part D benefit, the catastrophic coverage phase, was eliminated. Beginning in 2025, the out-of-pocket catastrophic threshold, which determines entry into the catastrophic coverage phase, will be capped at $2,000, adjusted for inflation annually thereafter. This means that enrollees will not pay more than $2,000 out-of-pocket for their covered Part D drugs in 2025.
Under the IRA, about 11 million Part D enrollees are expected to reach the $2,000 out-of-pocket cap and these enrollees are projected to have average out-of-pocket savings of about $600 per enrollee in 2025. Among these enrollees, average out-of-pocket savings are even higher for enrollees who do not receive financial assistance for their prescription drug costs -- about $1,100 per enrollee in 2025.
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