Analysis: Medicare Part D Enrollees Who Reach the $2,000 OOP Spending Cap to Save an Average of $2,474 Nationally
The latest AARP report concludes that plan members who hit this amount are expected to see savings, even when premiums are considered.
As of Jan. 1 of this year, Medicare drug plans will be limiting enrollees' annual out-of-pocket (OOP) spending to $2,000, due to a provision included in the Inflation Reduction Act. Keeping this in mind, a new AARP report shows that 94% of all Part D enrollees that are expected to reach this new cap in 2025 will have lower total (including premiums and cost sharing) OOP costs, which will have them save an average of $2,474 nationally. From a state level, the report estimates that approximately that 95% of Part D enrollees who will reach the OOP cap will have lower OOP health costs in 33 states, plus the District of Columbia.
"This report shows that most Part D enrollees who hit the new out-of-pocket spending cap this year will see substantial savings even after taking 2025 plan premiums into account, freeing up funds to invest in their families, spend on their broader health needs, or simply save to achieve greater financial stability," said Nancy LeaMond, AARP's chief advocacy and engagement officer. "AARP was instrumental in Congress passing the prescription drug law of 2022 to lower prices and out-of-pocket costs for Medicare enrollees, and we couldn't be prouder that the day has finally arrived for this provision to go into effect and that the law is working as intended."
The report also points out that an average of 62% of Part D enrollees who reach the new $2,000 OOP spending limited are predicted to see an average total savings of more than $1,000, while 12% could save more than $5,000.
"Once fully implemented, the 2022 drug law is expected to reduce Part D enrollee and program spending by billions of dollars," commented Leigh Purvis, AARP's prescription drug policy principal, and author of the report. "This report confirms that enrollees are already seeing overall savings as rollout of the law continues."
Another benefit for patients to be aware of is the Medicare Prescription Payment Plan (MPPP), a new voluntary payment option3 that has also gone into effect as of the New Year.
According to Amy Niles, chief mission officer at the PAN Foundation, individuals who are most likely to benefit from the MPPP are those who:
- Have faced $2,000+ in OOP costs during the first nine months of the year
- Have had a one-time prescription fill of at least $600
- Have difficulty affording one lump upfront payment for their prescription medications
- Opt-in to the program prior to or at the start of the plan year so that there are more months for the costs to be spread out over
- Are not eligible for assistance through the federal Extra Help Program and other assistance programs, such as those offered by charitable foundations
When considering prescription needs and when prescriptions are filled, one’s monthly costs could vary, but the program reportedly uses a formula that every month calculates one’s current drug costs, previous months’ balance, and number of months left in the year.
References
1. Fact Sheet: Most Medicare Part D Enrollees Who Reach the New $2,000 Out-of-Pocket Spending Cap Will See Substantial Savings Despite Premium Changes. AARP. January 16, 2025. Accessed January 21, 2024. https://www.aarp.org/content/dam/aarp/ppi/topics/health/prescription-drugs/medicare-part-d-enrollees-new-$2,000-out-of-pocket-spending-cap-substantial-savings-despite-premium-changes.doi.10.26419-2fppi.00354.001.pdf
2. New AARP Report: Medicare Part D Enrollees Who Reach the New $2,000 Out-of-Pocket Spending Cap Will Save Thousands Despite Premium Changes. PR Newswire. January 16, 2025. Accessed January 21, 2024. https://www.cms.gov/newsroom/press-releases/hhs-announces-15-additional-drugs-selected-medicare-drug-price-negotiations-continued-effort-lower
3. Niles A. The Advantages of New Medicare Rx Payment Plan. Pharmaceutical Commerce. December 5, 2024. Accessed January 21, 2024. https://www.pharmaceuticalcommerce.com/view/the-advantages-of-new-medicare-rx-payment-plan
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