New cap on Medicare prescription drug costs starts in 2025

SEATTLE — With so many expenses on the rise, millions of Americans will soon see a massive cut to a critical cost.

“Previously people in Medicare prescription drug plans did not have a limit on how much they had to spend out of pocket every year,” said Leigh Purvis, Prescription Drug Policy Principal for AARP Public Policy.

Starting in 2025, Medicare Part D enrollees, about 56 million Americans, will benefit from a $2,000 cap on their out-of-pocket prescription drug costs.

“We were hearing of people spending upwards of ten thousand dollars just on their prescription drugs,” said Purvis.

According to AARP, 3 million people will benefit in 2025. That will increase to 4 million by 2029.

“A lot of Medicare beneficiaries don’t have very high incomes. They’re often on fixed incomes and the median income is around $36k per year so we are talking about a lot of money for people who are facing some high prescription drug costs,” Purvis said.

Once people enrolled in Medicare’s drug plan meet the cap, AARP says about 40% of them will see savings of $1,000 or more.

Some people may save as much as $5,000. The provision is part of the Inflation Reduction Act passed by Congress and signed by President Biden in 2022.

It also includes limits on co-pays for insulin and allows Medicare to negotiate drug prices.

“It’s going to result in some very important savings for a lot of people,” said Purvis.

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