Healthcare tends to be a major expense for older Americans. A big reason for this is because Medicare won't pick up the tab for healthcare costs in full.
There are different out-of-pocket expenses Medicare enrollees face regularly. Under Part A, there can be a hefty deductible per hospital stay. With Part B, there can be expensive coinsurance costs. And with Part D, enrollees have the potential to shell out a lot of money for prescription drug copays. But Part D enrollees may be in for a world of relief starting in 2025.
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The rules are changing
As part of the Inflation Reduction Act of 2022, beginning in 2025, Medicare Part D enrollees will pay no more than $2,000 out of pocket for prescription drugs covered by their plans. That's a change that has the potential to save a lot of people a lot of money.
In fact, the Kaiser Family Foundation reports that had a $2,000 spending cap been in place in 2021, a good 1.5 million Medicare beneficiaries would've saved money on out-of-pocket drug costs that year. Among the people in this boat, 12% spent $5,000 or more out of pocket on medication in 2021.
The right Part D coverage can help, too
The fact that Medicare enrollees are getting somewhat of a reprieve from high drug costs is a good thing. But there's another step you can take to spend less on medication as a Medicare participant, and it's to choose your Part D drug plan wisely.
At this point, the Part D plan you have at present may be the plan you're stuck with for the remainder of 2024. But once Medicare's annual open enrollment kicks off in October, you'll have an opportunity to make changes to your Part D coverage for 2025. That could result in not just lower premiums, but lower costs in total.
In fact, you may want to start looking into other Part D options now. Talk to fellow seniors in your area with Part D coverage and ask what their plans cost and cover. It never hurts to do a little preliminary work so you have more information going into open enrollment.
Another option you can explore is moving over to a Medicare Advantage plan, which typically comes with prescription drug coverage. Whether you're able to reap savings with an Advantage plan, though, will depend on the plan options available where you live and your specific healthcare needs and circumstances.
Of course, there are additional steps you can take to lower your drug-related spending, like talking to your doctor about switching to generics or even seeing if it's possible to make lifestyle changes in lieu of taking certain pills. But either way, if you're someone who's been spending upward of $2,000 a year on drugs under Medicare, know that relief is on the way. That's good news if the cost of your medication has been so burdensome that you've resorted to measures like skipping doses -- something cash-strapped seniors have, unfortunately, been known to do.
